Exhibit 10.1

 

(JPMORGAN LOGO) [a132034001_v1.jpg]

EXECUTION VERSION

 

 

 

September 7, 2012

MTS Systems Corporation
14000 Technology Drive
Eden Prairie, MN 55344

Ladies and Gentlemen:

          The purpose of this letter agreement (this “Confirmation”) is to
confirm the terms and conditions of the Transaction entered into between J.P.
Morgan Securities LLC, as agent for JPMorgan Chase Bank, National Association,
London Branch (the “Seller”), and MTS Systems Corporation, a Minnesota
corporation (the “Purchaser”), on the Trade Date specified below (the
“Transaction”). This Confirmation constitutes a “Confirmation” as referred to in
the Agreement specified below.

          This Confirmation evidences a complete and binding agreement between
the Seller and the Purchaser as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of, and be
subject to an agreement in the form of the ISDA 2002 Master Agreement (the
“Agreement”) as if the Seller and the Purchaser had executed an agreement in
such form (but without any Schedule except for the election of the laws of the
State of New York as the governing law but without regard to its choice of law
provisions), on the Trade Date. In the event of any inconsistency between
provisions of the Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.

ARTICLE 1

DEFINITIONS

          Section 1.01. Definitions. (a) As used in this Confirmation, the
following terms shall have the following meanings:

          “10b-18 VWAP” means, (A) for any Trading Day described in clause (x)
of the definition of Trading Day hereunder, the volume-weighted average price at
which the Common Stock trades as reported in the composite transactions for
United States exchanges and quotation systems, during the regular trading
session for the Exchange (or, if applicable, the Successor Exchange on which the
Common Stock has been listed in accordance with Section 7.01(c)) on such Trading
Day, excluding (i) trades that do not settle regular way, (ii) opening (regular
way) reported trades in the consolidated system on such Trading Day, (iii)
trades that occur in the last ten minutes before the scheduled close of trading
on the Exchange on such Trading Day and ten minutes before the scheduled close
of the primary trading in the market where the trade is effected, and (iv)
trades on such Trading Day that do not satisfy the requirements of Rule
10b-18(b)(3), as determined in good faith by the Calculation Agent, or (B) for
any Trading Day that is described in clause (y) of the definition of Trading Day
hereunder, an amount determined in good faith by the Calculation Agent as 10b-18
VWAP. The Purchaser acknowledges that the Calculation Agent may refer to the
Bloomberg Page “MTSC US <Equity> AQR SEC” (or any successor thereto), in its
judgment, for such Trading Day to determine the 10b-18 VWAP.

          “Additional Termination Event” has the meaning set forth in Section
7.01.

JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association.
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746.
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority

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          “Affected Party” has the meaning set forth in Section 14 of the
Agreement.

          “Affected Transaction” has the meaning set forth in Section 14 of the
Agreement.

          “Affiliated Purchaser” means any “affiliated purchaser” (as such term
is defined in Rule 10b-18) of the Purchaser.

          “Agreement” has the meaning set forth in the second paragraph of this
Confirmation.

          “Alternative Termination Delivery Unit” means (i) in the case of a
Termination Event (other than following consummation of a Merger Event or
Nationalization) or Event of Default (as defined in the Agreement), one share of
Common Stock and (ii) in the case of consummation of a Merger Event or
Nationalization, a unit consisting of the number or amount of each type of
property received by a holder of one share of Common Stock in such Merger Event
or Nationalization; provided that if such Merger Event involves a choice of
consideration to be received by holders of the Common Stock, an Alternative
Termination Delivery Unit shall be deemed to include the amount of cash received
by a holder who had elected to receive the maximum possible amount of cash as
consideration for his shares.

          “Bankruptcy Code” has the meaning set forth in Section 9.07.

          “Business Day” means any day on which the Exchange is open for
trading.

          “Calculation Agent” means JPMorgan Chase Bank, National Association.

          “Capped Delivery Shares” means, for any date, (i) 8,054,585 shares of
Common Stock minus (ii) the number of shares of Common Stock delivered by the
Seller to the Purchaser in respect of this Transaction on or prior to such date,
subject to appropriate adjustments pursuant to Section 8.02.

          “Cash Distribution” has the meaning set forth in Section 7.01(f).

          “Cash Distribution Amount” means, for any “Reference Period” set forth
in the Pricing Supplement, the amount specified in the Pricing Supplement for
such Reference Period.

          “Cash Settlement Amount” has the meaning set forth in Section 3.01(d).

          “Cash Settlement Fee” means the amount specified as such in the
Pricing Supplement.

          “Cash Settlement Purchase Period” means the period during which the
Seller purchases shares of Common Stock to unwind its hedge position following
the Valuation Completion Date.

          “Common Stock” has the meaning set forth in Section 2.01.

          “Communications Procedures” has the meaning set forth in Annex C
hereto.

          “Confirmation” has the meaning set forth in the first paragraph of
this letter agreement.

          “Contract Fee” means the amount specified as such in the Pricing
Supplement.

          “Contract Period” means the period commencing on and including the
Trade Date and ending on and including the date all payments or deliveries of
shares of Common Stock pursuant to Section 3.01 or Section 7.03 have been made.

          “Default Notice Day” has the meaning set forth in Section 7.02.

          “De-Listing” has the meaning set forth in Section 7.01(c).

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          “Discount” means the amount specified as such in the Pricing
Supplement.

          “Distribution Termination Event” has the meaning set forth in Section
7.01(f).

          “Early Termination Date” has the meaning set forth in Section 14 of
the Agreement.

          “Event of Default” has the meaning set forth in Section 14 of the
Agreement.

          “Exchange” means the NASDAQ Global Select Market

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Expiration Date” means the 172nd Trading Day following the Trade
Date.

          “Extraordinary Cash Dividend” means the per share cash dividend or
distribution, or a portion thereof, declared by the Purchaser on shares of
Common Stock that is classified by the board of directors of the Purchaser as an
“extraordinary” dividend.

          “Floor Price” has the meaning specified as such in the Pricing
Supplement.

          “Indemnified Person” has the meaning set forth in Section 9.02.

          “Indemnifying Party” has the meaning set forth in Section 9.02.

          “Initial Delivery Percentage” means the percentage specified as such
in the Pricing Supplement.

          “Initial Number of Shares” means the number of shares of Common Stock,
rounded down to the nearest integer, equal to the product of (i) the Initial
Delivery Percentage and (ii) the Purchase Price divided by the Initial Share
Price.

          “Initial Payment Date” means the first Business Day immediately
following the Trade Date.

          “Initial Settlement Date” has the meaning set forth in Section 2.02.

          “Initial Share Price” means $52.53.

          “Maximum Delivery Shares” means, for any date, (i) 2,039,000 shares of
Common Stock, minus (ii) the net number of shares of Common Stock delivered by
the Purchaser to the Seller in respect of this Transaction on or prior to such
date, plus (iii) the net number of shares of Common Stock delivered by the
Seller to the Purchaser in respect of this Transaction on or prior to such date,
subject to appropriate adjustments pursuant to Section 8.02(x).

          “Merger Event” has the meaning set forth in Section 7.01(d).

          “Nationalization” has the meaning set forth in Section 7.01(e).

          “Number of Shares” has the meaning set forth in Section 2.01.

          “Obligations” has the meaning set forth in Section 9.02.

          “Ordinary Cash Dividend” has the meaning set forth in Section 8.01(b).

          “Pricing Supplement” means the Pricing Supplement attached hereto as
Annex D.

          “Private Placement Agreement” has the meaning set forth in Annex A
hereto.

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          “Private Placement Price” means the private placement value of a share
of Common Stock as determined in accordance with Annex A hereto.

          “Private Placement Shares” has the meaning set forth in Section
3.01(b).

          “Private Placement Procedures” has the meaning set forth in Annex A
hereto.

          “Private Securities” has the meaning set forth in Annex A hereto.

          “Purchase Price” has the meaning set forth in Section 2.01.

          “Purchaser” has the meaning set forth in the first paragraph of this
Confirmation.

          “Reference Period” means, for any corresponding “Cash Distribution
Amount” specified in the Pricing Supplement, the period specified in the Pricing
Supplement for such Cash Distribution Amount.

          “Registered Shares” has the meaning set forth in Section 3.01(b).

          “Registered Shares Fee” means the amount specified as such in the
Pricing Supplement.

          “Registration Procedures” has the meaning set forth in Annex B hereto.

          “Regulation M” means Regulation M under the Exchange Act.

          “Rule 10b-18” means Rule 10b-18 promulgated under the Exchange Act (or
any successor rule thereto).

          “SEC” means the Securities and Exchange Commission.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Seller” has the meaning set forth in the first paragraph hereto.

          “Seller Termination Share Purchase Period” has the meaning set forth
in Section 7.03.

          “Settlement Date” means (i) if Section 3.01 is applicable, the fourth
Business Day following the Valuation Completion Date; (ii) if settlement in cash
is applicable pursuant to Section 3.01(d), the date of such cash payment
determined in accordance with Section 3.01(d)(ii); (iii) if Section 3.01(e) is
applicable, the Business Day immediately following the day on which the Seller
informs the Purchaser, pursuant to Annex A hereto, of the number of Private
Placement Shares required to be delivered; and (iv) if Section 3.01(f) is
applicable, each of the dates so advised by the Seller pursuant to Annex B
hereto.

          “Settlement Number” means a number of shares of Common Stock, rounded
down to the nearest integer and which number may be negative, equal to (i) the
Valuation Number minus (ii) the Initial Number of Shares.

          “Settlement Purchase Amount” means an amount in cash equal to (i) the
absolute value of the Settlement Number multiplied by (ii) (x) the arithmetic
average of 10b-18 VWAP for each of the Trading Days in the Cash Settlement
Purchase Period plus (y) $0.05.

          “Settlement Shares” has the meaning set forth in Section 3.01(b).

          “Share De-listing Event” has the meaning set forth in Section 7.01(c).

          “Successor Exchange” has the meaning set forth in Section 7.01(c).

          “Termination Amount” has the meaning set forth in Section 7.02.

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          “Termination Event” has the meaning set forth in Section 14 of the
Agreement.

          “Termination Price” means the value of an Alternative Termination
Delivery Unit to the Seller (determined as provided in Annex A hereto).

          “Termination Settlement Date” has the meaning set forth in Section
7.03.

          “Trade Date” has the meaning set forth in Section 2.01.

          “Trading Day” means (x) any day (i) other than a Saturday, a Sunday or
a day on which the Exchange is not open for business, (ii) during which trading
of any securities of the Purchaser on any national securities exchange has not
been suspended, (iii) during which there has not been, in the Seller’s judgment,
a material limitation in the trading of Common Stock or any options contract or
futures contract related to the Common Stock, and (iv) during which there has
been no suspension pursuant to Section 4.02 of this Confirmation, or (y) any day
that, notwithstanding the occurrence of events contemplated in clauses (ii),
(iii) and (iv) of this definition, the Seller determines to be a Trading Day.

          “Transaction” has the meaning set forth in the first paragraph of this
Confirmation.

          “Valuation Completion Date” has the meaning set forth in the Pricing
Supplement.

          “Valuation Number” means (i) the Purchase Price divided by (ii) the
arithmetic average of the 10b-18 VWAPs for all of the Trading Days in the
Valuation Period minus the Discount, as determined by the Calculation Agent in
its sole judgment; provided that if the result of the calculation in clause (ii)
is equal to or less than the Floor Price, then the Valuation Number shall be the
Purchase Price divided by the Floor Price. For the avoidance of doubt, if the
Discount is a negative number, the difference in clause (ii) of the immediately
preceding sentence shall be equal to the arithmetic average of the 10b-18 VWAPs
for all of the Trading Days in the Valuation Period plus the absolute value of
the Discount.

          “Valuation Period” means the period of consecutive Trading Days
commencing on and including the first Trading Day following the Trade Date and
ending on and including the Valuation Completion Date.

ARTICLE 2
Purchase of the Stock

          Section 2.01. Purchase of the Stock. Subject to the terms and
conditions of this Confirmation, the Purchaser agrees to purchase from the
Seller, and the Seller agrees to sell to the Purchaser, on September 7, 2012 or
on such other Business Day as the Purchaser and the Seller shall otherwise agree
(the “Trade Date”), a number of shares (the “Number of Shares”) of the
Purchaser’s common stock, par value $0.25 per share (“Common Stock”), for a
purchase price equal to $35,000,000 (the “Purchase Price”). The Number of Shares
purchased by the Purchaser hereunder shall be determined in accordance with the
terms of this Confirmation.

          Section 2.02. Delivery and Payments. On the second Business Day
immediately following the Trade Date (such day, the “Initial Settlement Date”),
the Seller shall deliver the Initial Number of Shares to the Purchaser,
following payment by the Purchaser on the Initial Payment Date of (i) an amount
equal to the Purchase Price to the Seller and (ii) the Contract Fee to J.P.
Morgan Securities LLC; provided that if the Seller is unable to borrow or
otherwise acquire a number of shares of Common Stock equal to the Initial Number
of Shares for delivery to the Purchaser on the Initial Settlement Date, the
Initial Number of Shares shall be reduced to such number of shares of Common
Stock as the Seller is able to borrow or otherwise acquire and any amounts
payable by the Purchaser pursuant to this Article 2 shall be reduced
correspondingly. Such delivery and payment shall be effected in accordance with
the Seller’s customary procedures.

          Section 2.03. Conditions to Seller’s Obligations. The Seller’s
obligation to deliver the Initial Number of Shares to the Purchaser on the
Initial Settlement Date is subject to the condition that the representations and
warranties made by the Purchaser in the Agreement shall be true and correct as
of the date hereof and the Initial Settlement Date.

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ARTICLE 3
Subsequent Payments or Share Deliveries

          Section 3.01. Subsequent Payments or Share Deliveries. (a) (i) If the
Settlement Number is greater than zero, the Seller shall deliver to the
Purchaser a number of shares of Common Stock equal to the Settlement Number on
the Settlement Date in accordance with the Seller’s customary procedures; and

 

 

 

               (ii)     if the Settlement Number is less than zero, the
Purchaser shall make a payment of cash or delivery of shares of Common Stock to
the Seller in respect of the absolute value of the Settlement Number, as
provided in this Section 3.01.

          (b)     Subject to Section 3.01(c), payment of the absolute value of
the Settlement Number by the Purchaser to the Seller shall be in cash or validly
issued shares of Common Stock (“Settlement Shares”), and if in shares of Common
Stock, then in shares to be sold in a private placement (“Private Placement
Shares”) or registered shares (“Registered Shares”), as the Purchaser shall
elect in its sole discretion, which binding election shall be made by written
notice to the Seller no later than the close of business on the second Business
Day following the Valuation Completion Date; provided that by making an election
to deliver Settlement Shares pursuant to this Section 3.01(b), the Purchaser
shall be deemed to make the representations and warranties in Section 5.01 as if
made on the date of the Purchaser’s election; and provided further that if the
Purchaser fails to make such election by such date, the Purchaser shall be
deemed to have elected settlement in cash.

            (c)          (i)     Any election by the Purchaser to deliver the
absolute value of the Settlement Number in Settlement Shares pursuant to clause
(b) of this Section 3.01 shall not be valid, and settlement in cash shall apply,
if the representations and warranties made by the Purchaser to the Seller in
Section 5.01 are not true and correct in all material respects as of the date
the Purchaser makes such election.

 

 

 

               (ii)     Notwithstanding any election by the Purchaser to make
payment of the absolute value of the Settlement Number in Settlement Shares, at
any time prior to the time the Seller (or any affiliate of the Seller) has
contracted to resell all or any portion of such Settlement Shares, the Purchaser
may elect to deliver in lieu of such Settlement Shares an amount in cash equal
to the absolute value of the Settlement Number with respect to any Settlement
Shares not yet contracted to be sold, in which case the provisions of Section
3.01(d) shall apply with respect to such amount; provided that any such election
by the Purchaser pursuant to this clause (ii) shall not be valid and settlement
in Settlement Shares shall continue to apply if the representations and
warranties made by the Purchaser to the Seller in Section 5.01(a) are not true
and correct in all material respects as of the date the Purchaser makes such
election.

 

 

 

               (iii)     If the Purchaser elects to make payment of the absolute
value of the Settlement Number (A) in Private Placement Shares and fails to
comply with the requirements set forth in Section 3.01(e) or Annex A hereto or
takes any action that would make unavailable either (1) the exemption set forth
in Section 4(2) of the Securities Act for the sale of any Private Placement
Shares by the Purchaser to the Seller or (2) an exemption from the registration
requirements of the Securities Act reasonably acceptable to the Seller for
resales of Private Placement Shares by the Seller, or (B) in Registered Shares
and fails to comply with the requirements set forth in Section 3.01(f) or Annex
B hereto; then in the case of either (A) or (B), the Purchaser shall deliver in
lieu of any Private Placement Shares or Registered Shares an amount in cash
equal to the absolute value of the Settlement Number with respect to any
Settlement Shares not yet sold, in which case the provisions of Section 3.01(d)
shall apply with respect to such amount.

          (d)          (i)     If the Purchaser elects to pay the absolute value
of the Settlement Number in cash, if settlement in cash is otherwise applicable
in accordance with this Section 3.01, or if the Purchaser elects to make payment
of the absolute value of the Settlement Number in Private Placement Shares
pursuant to Section 3.01(e), then the Calculation Agent shall determine an
amount in cash (the “Cash Settlement Amount”) equal to (i) the Settlement
Purchase Amount plus (ii) the Cash Settlement Fee.

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               (ii)     If cash settlement is applicable, payment of the Cash
Settlement Amount shall be made by wire transfer of immediately available U.S.
dollar funds on the first Business Day immediately following the date of
notification by the Seller to the Purchaser of the Cash Settlement Amount or
such later Business Day as determined by the Seller in its sole discretion.

          (e)          If the Purchaser elects to make payment of the absolute
value of the Settlement Number in Private Placement Shares, then on the
Settlement Date, the Purchaser shall deliver to the Seller a number of
Settlement Shares equal to (A) the Cash Settlement Amount divided by (B) the
Private Placement Price (determined by the Calculation Agent in accordance with
the Private Placement Procedures contained in Annex A hereto).

          (f)          If the Purchaser elects to make payment of the absolute
value of the Settlement Number in Registered Shares, then the Purchaser shall
deliver to the Seller a number of Settlement Shares equal to (A) the absolute
value of the Settlement Number plus (B) an additional number of Settlement
Shares to take into account the Registered Shares Fee on the absolute value of
the Settlement Number. Such Settlement Shares shall be delivered in such numbers
and on such dates on or following the Valuation Completion Date as are specified
by the Seller in accordance with the Registration Procedures contained in Annex
B hereto.

          Section 3.02. Private Placement Procedures and Registration
Procedures. If the Purchaser elects to deliver Private Placement Shares pursuant
to Section 3.01(b) or elects to deliver Alternative Termination Delivery Units
pursuant to Section 7.02, the Private Placement Procedures contained in Annex A
hereto shall apply, and if the Purchaser elects to deliver Registered Shares
pursuant to Section 3.01(b), the Registration Procedures contained in Annex B
hereto shall apply.

          Section 3.03. Continuing Obligation to Deliver Shares. (a) If at any
time, as a result of provisions limiting deliveries of shares of Common Stock to
the number of Maximum Delivery Shares, the Purchaser fails to deliver to the
Seller any shares of Common Stock, the Purchaser shall, to the extent that the
Purchaser has at such time authorized but unissued shares of Common Stock not
reserved for other purposes, promptly notify the Seller thereof and deliver to
the Seller a number of shares of Common Stock not previously delivered as a
result of such provisions.

          (b)       The Purchaser agrees to use its best efforts to cause the
number of authorized but unissued shares of Common Stock to be increased, if
necessary, to an amount sufficient to permit the Purchaser to fulfill its
obligations under this Section 3.03.

ARTICLE 4
Market Transactions

          Section 4.01. Transactions by the Seller. (a) The parties agree and
acknowledge that:

 

 

 

               (i)     During any Cash Settlement Purchase Period and any Seller
Termination Share Purchase Period, the Seller (or its agent or affiliate) may
purchase shares of Common Stock in connection with this Confirmation. The timing
of such purchases by the Seller, the price paid per share of Common Stock
pursuant to such purchases and the manner in which such purchases are made,
including without limitation whether such purchases are made on any securities
exchange or privately, shall be within the sole judgment of the Seller; provided
that the Seller shall use good faith efforts to make all purchases of Common
Stock in a manner that would comply with the limitations set forth in clauses
(b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 (but without regard to clause
(a)(13)(iv) of Rule 10b-18) as if such rule were applicable to such purchases.

 

 

 

               (ii)     During the Valuation Period, the Seller (or its agent or
affiliate) may effect transactions in shares of Common Stock in connection with
this Confirmation. The timing of such transactions by the Seller, the price paid
or received per share of Common Stock pursuant to such transactions and the
manner in which such transactions are made, including without limitation whether
such transactions are made on any securities exchange or privately, shall be
within the sole judgment of the Seller.

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               (iii)     The Purchaser shall, at least one day prior to the
first day of the Valuation Period, any Cash Settlement Purchase Period and any
Seller Termination Share Purchase Period, notify the Seller of the total number
of shares of Common Stock purchased in Rule 10b-18 purchases of blocks pursuant
to the once-a-week block exception set forth in Rule 10b-18(b)(4) by or for the
Purchaser or any of its Affiliated Purchasers during each of the four calendar
weeks preceding such day and during the calendar week in which such day occurs
(“Rule 10b-18 purchase” and “blocks” each being used as defined in Rule 10b-18),
which notice shall be substantially in the form set forth as Exhibit A hereto.

          (b)       The Purchaser acknowledges and agrees that (i) all
transactions effected pursuant to Section 4.01 hereunder shall be made in the
Seller’s sole judgment and for the Seller’s own account and (ii) the Purchaser
does not have, and shall not attempt to exercise, any influence over how, when
or whether to effect such transactions, including, without limitation, the price
paid or received per share of Common Stock pursuant to such transactions whether
such transactions are made on any securities exchange or privately. It is the
intent of the Seller and the Purchaser that this Transaction comply with the
requirements of Rule 10b5-1(c) of the Exchange Act and that this Confirmation
shall be interpreted to comply with the requirements of Rule 10b5-1(c)(1)(i)(B)
and the Seller shall take no action that results in the Transaction not so
complying with such requirements.

          (c)       Notwithstanding anything to the contrary in this
Confirmation, the Purchaser acknowledges and agrees that, on any day, the Seller
shall not be obligated to deliver or receive any shares of Common Stock to or
from the Purchaser and the Purchaser shall not be entitled to receive any shares
of Common Stock from the Seller on such day, to the extent (but only to the
extent) that after such transactions the Seller’s ultimate parent entity would
directly or indirectly beneficially own (as such term is defined for purposes of
Section 13(d) of the Exchange Act) at any time on such day in excess of 8.0% of
the outstanding shares of Common Stock. Any purported receipt or delivery of
shares of Common Stock shall be void and have no effect to the extent (but only
to the extent) that after any receipt or delivery of such shares of Common Stock
the Seller’s ultimate parent entity would directly or indirectly so beneficially
own in excess of 8.0% of the outstanding shares of Common Stock. If, on any day,
any delivery or receipt of shares of Common Stock by the Seller is not effected,
in whole or in part, as a result of this provision, the Seller’s and Purchaser’s
respective obligations to make or accept such receipt or delivery shall not be
extinguished and such receipt or delivery shall be effected over time as
promptly as the Seller determines, in the reasonable determination of the
Seller, that after such receipt or delivery its ultimate parent entity would not
directly or indirectly beneficially own in excess of 8.0% of the outstanding
shares of Common Stock.

          Section 4.02. Adjustment of Transaction for Securities Laws. (a)
Notwithstanding anything to the contrary in Section 4.01(a), if, based on the
advice of counsel, the Seller reasonably determines that on any Trading Day, the
Seller’s trading activity in order to manage its economic hedge in respect of
the Transaction would not be advisable in respect of applicable securities laws,
then the Seller may extend the Expiration Date, modify the Valuation Period or
otherwise adjust the terms of the Transaction in its good faith reasonable
discretion to ensure Seller’s compliance with such laws and to preserve the fair
value of the Transaction to the Seller. The Seller shall notify the Purchaser of
the exercise of the Seller’s rights pursuant to this Section 4.02(a) upon such
exercise.

          (b)       The Purchaser agrees that, during the Contract Period,
neither the Purchaser nor any of its affiliates or agents shall make any
distribution (as defined in Regulation M) of Common Stock, or any security for
which the Common Stock is a reference security (as defined in Regulation M) or
take any other action that would, in the view of the Seller, preclude purchases
by the Seller of the Common Stock or cause the Seller to violate any law, rule
or regulation with respect to such purchases.

          Section 4.03. Purchases of Common Stock by the Purchaser. Without the
prior written consent of the Seller, the Purchaser shall not, and shall cause
its affiliates and affiliated purchasers (each as defined in Rule 10b-18) not
to, directly or indirectly (including, without limitation, by means of a
derivative instrument) purchase, offer to purchase, place any bid or limit order
that would effect a purchase of, or commence any tender offer relating to, any
shares of Common Stock (or equivalent interest, including a unit of beneficial
interest in a trust or limited partnership or a depository share) or any
security convertible into or exchangeable for shares of Common Stock during the
Contract Period; provided, however, that the foregoing shall not prohibit (i)
the Purchaser’s ability (or the ability of any “agent independent of the issuer”
(as defined in Rule 10b-18)), pursuant to any plan (as defined in Rule 10b-18)
of the Purchaser, to re-acquire shares of Common Stock in connection with any
equity transaction related to such plan or to limit the Purchaser’s ability to
withhold shares of Common Stock to cover tax liabilities associated with such
equity transactions, so long as any re-acquisition, withholding or repurchase
does not constitute a “Rule 10b-18 purchase” (as defined in Rule 10b-18) or (ii)
delivery of shares of Common Stock of or to the Purchaser’s affiliates or
affiliated purchasers pursuant to the terms of convertible securities, warrants,
options or other similar securities outstanding as of the Trade Date.

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ARTICLE 5
Representations, Warranties and Agreements

          Section 5.01. Repeated Representations, Warranties and Agreements of
the Purchaser. The Purchaser represents and warrants to, and agrees with, the
Seller, on the date hereof and on any date pursuant to which the Purchaser makes
an election to deliver Settlement Shares pursuant to Section 3.01, to pay cash
in lieu of Settlement Shares pursuant to Section 3.01(c)(ii) or to receive or
deliver Alternative Termination Delivery Units pursuant to Section 7.03, that:

          (a)     Disclosure; Compliance with Laws. The reports and other
documents filed by the Purchaser with the SEC 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. The Purchaser is not in possession of any material
nonpublic information regarding the Purchaser or the Common Stock.

          (b)     Rule 10b5-1. The Purchaser acknowledges that (i) the Purchaser
does not have, and shall not attempt to exercise, any influence over how, when
or whether to effect purchases of Common Stock by the Seller (or its agent or
affiliate) in connection with this Confirmation and (ii) the Purchaser is
entering into the Agreement and this Confirmation in good faith and not as part
of a plan or scheme to evade compliance with federal securities laws including,
without limitation, Rule 10b-5 promulgated under the Exchange Act. The Purchaser
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 amendment, modification or waiver
shall be made at any time at which the Purchaser or any officer or director of
the Purchaser is aware of any material nonpublic information regarding the
Purchaser or the Common Stock.

          (c)     Nature of Shares Delivered. Any shares of Common Stock or
Alternative Termination Delivery Units delivered to the Seller pursuant to this
Confirmation, when delivered, shall have been duly authorized and shall be duly
and validly issued, fully paid and nonassessable and free of preemptive or
similar rights, and such delivery shall pass title thereto free and clear of any
liens or encumbrances.

          (d)     No Manipulation. The Purchaser is not entering into this
Confirmation to create actual or apparent trading activity in the Common Stock
(or any security convertible into or exchangeable for Common Stock) or to
manipulate the price of the Common Stock (or any security convertible into or
exchangeable for Common Stock).

          (e)     Regulation M. The Purchaser is not engaged in a distribution,
as such term is used in Regulation M, that would preclude purchases by the
Purchaser or the Seller of the Common Stock or cause the Seller to violate any
law, rule or regulation with respect to such purchases.

          (f)     Board Authorization. The Purchaser is entering into this
Transaction in connection with its share repurchase program, which was approved
by its board of directors and publicly disclosed, solely for the purposes stated
in such board resolution and public disclosure. There is no internal policy of
the Purchaser, whether written or oral, that would prohibit the Purchaser from
entering into any aspect of this Transaction, including, but not limited to, the
purchases of shares of Common Stock to be made pursuant hereto.

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          (g)     Due Authorization and Good Standing. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota. This Confirmation has been duly authorized, executed
and delivered by the Purchaser and (assuming due authorization, execution and
delivery thereof by the Seller) constitutes a valid and legally binding
obligation of the Purchaser. The Purchaser has all corporate power to enter into
this Confirmation and to consummate the transactions contemplated hereby and to
purchase the Common Stock and deliver any Settlement Shares in accordance with
the terms hereof.

          (h)     Certain Transactions. There has not been any public
announcement (as defined in Rule 165(f) under the Securities Act) of any merger,
acquisition, or similar transaction involving a recapitalization relating to the
Purchaser that would fall within the scope of Rule 10b-18(a)(13)(iv), where such
announcement was within the Purchaser’s control.

          Section 5.02. Initial Representations, Warranties and Agreements of
the Purchaser. The Purchaser represents and warrants to, and agrees with the
Seller, as of the date hereof, that:

          (a)     Solvency. The assets of the Purchaser at their fair valuation
exceed the liabilities of the Purchaser, including contingent liabilities; the
capital of the Purchaser is adequate to conduct the business of the Purchaser
and the Purchaser has the ability to pay its debts and obligations as such debts
mature and does not intend to, or does not believe that it will, incur debt
beyond its ability to pay as such debts mature.

          (b)     Required Filings. The Purchaser has made, and will use its
best efforts to make, all filings required to be made by it with the SEC, any
securities exchange or any other regulatory body with respect to the Transaction
contemplated hereby.

          (c)     No Conflict. The execution and delivery by the Purchaser of,
and the performance by the Purchaser of its obligations under, this Confirmation
and the consummation of the transactions herein contemplated do not conflict
with or violate (i) any provision of the articles of incorporation, by-laws or
other constitutive documents of the Purchaser, (ii) any statute or order, rule,
regulation or judgment of any court or governmental agency or body having
jurisdiction over the Purchaser or any of its subsidiaries or any of their
respective assets or (iii) any contractual restriction binding on or affecting
the Purchaser or any of its subsidiaries or any of its assets.

          (d)     Consents. All governmental and other consents that are
required to have been obtained by the Purchaser with respect to performance,
execution and delivery of this Confirmation have been obtained and are in full
force and effect and all conditions of any such consents have been complied
with.

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

          (f)     Commodity Exchange Act. The Purchaser is an “eligible contract
participant”, as such term is defined in Section 1a(12) of the Commodity
Exchange Act, as amended.

          (g)     Suitability. The Purchaser (A) is capable of evaluating
investment risks independently, both in general and with regard to all
transactions and investment strategies involving a security or securities; (B)
will exercise independent judgment in evaluating the recommendations of any
broker-dealer or its associated persons, unless it has otherwise notified the
broker-dealer in writing; and (C) has total assets of at least $50 million as of
the date hereof.

          Section 5.03. Additional Representations, Warranties and Agreements.
The Purchaser and the Seller represent and warrant to, and agree with, each
other that:

          (a)     Agency. Each party agrees and acknowledges that (i) J.P.
Morgan Securities LLC, an affiliate of the Seller (“JPMS”), has acted solely as
agent and not as principal with respect to this Transaction and (ii) JPMS has no
obligation or liability, by way of guaranty, endorsement or otherwise, in any
manner in respect of this Transaction (including, if applicable, in respect of
the settlement thereof). Each party agrees it will look solely to the other
party (or any guarantor in respect thereof) for performance of such other
party’s obligations under this Transaction. JPMS is authorized to act as agent
for the Seller.

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          (b)     Non-Reliance. Each party has entered into this Transaction
solely in reliance on its own judgment. Neither party has any fiduciary
obligation to the other party relating to this Transaction. In addition, neither
party has held itself out as advising, or has held out any of its employees or
agents as having the authority to advise, the other party as to whether or not
the other party should enter into this Transaction, any subsequent actions
relating to this Transaction or any other matters relating to this Transaction.
Neither party shall have any responsibility or liability whatsoever in respect
of any advice of this nature given, or views expressed, by it or any such
persons to the other party relating to this Transaction, whether or not such
advice is given or such views are expressed at the request of the other party.
The Purchaser has conducted its own analysis of the legal, accounting, tax and
other implications of this Transaction and consulted such advisors, accountants
and counsel as it has deemed necessary.

          Section 5.04. Representations and Warranties of the Seller. The Seller
represents and warrants to the Purchaser that:

          (a)     Due Authorization. This Confirmation has been duly authorized,
executed and delivered by the Seller and (assuming due authorization, execution
and delivery thereof by the Purchaser) constitutes a valid and legally binding
obligation of the Seller. The Seller has all corporate power to enter into this
Confirmation and to consummate the transactions contemplated hereby and to
deliver the Common Stock in accordance with the terms hereof.

          (b)     Right to Transfer. The Seller will, at the Initial Settlement
Date and on any other day on which it is required to deliver shares of Common
Stock to the Purchaser hereunder, have the free and unqualified right to
transfer the Number of Shares of Common Stock to be delivered by the Seller
pursuant to Sections 2.01 and 3.01 hereof, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.

          (c)     Commodity Exchange Act. The Seller is an “eligible contract
participant”, as such term is defined in Section 1a(12) of the Commodity
Exchange Act, as amended.

ARTICLE 6
Additional Covenants

          Section 6.01. Purchaser’s Further Assurances. The Purchaser hereby
agrees with the Seller that the Purchaser shall cooperate with the Seller, and
execute and deliver, or use its best efforts to cause to be executed and
delivered, all such other instruments, and to obtain all consents, approvals or
authorizations of any person, and take all such other actions as the Seller may
reasonably request from time to time, consistent with the terms of this
Confirmation, in order to effectuate the purposes of this Confirmation and the
Transaction contemplated hereby.

          Section 6.02. Purchaser’s Hedging Transactions. The Purchaser hereby
agrees with the Seller that the Purchaser shall not, during the Contract Period,
enter into or alter any corresponding or hedging transaction or position with
respect to the Common Stock (including, without limitation, with respect to any
securities convertible or exchangeable into the Common Stock) and agrees not to
alter or deviate from the terms of this Confirmation.

          Section 6.03. No Communications. The Purchaser hereby agrees with the
Seller that the Purchaser shall not, directly or indirectly, communicate any
information relating to the Common Stock or this Transaction (including any
notices required by Section 6.05) to any employee of the Seller or J.P. Morgan
Securities LLC, other than as set forth in the Communications Procedures
attached as Annex C hereto.

          Section 6.04. Maximum Deliverable Number of Shares of Common Stock.
(a)Notwithstanding any other provision of this Confirmation, the Purchaser shall
not be required to deliver Settlement Shares, or shares of Common Stock or other
securities comprising the aggregate Alternative Termination Delivery Units, in
excess of the number of Maximum Delivery Shares, in each case except to the
extent that the Purchaser has available at such time authorized but unissued
shares of such Common Stock or other securities not expressly reserved for any
other uses (including, without limitation, shares of Common Stock reserved for
issuance upon the exercise of options or convertible debt). The Purchaser shall
not permit the sum of (i) the number of Maximum Delivery Shares plus (ii) the
aggregate number of shares expressly reserved for any such other uses, in each
case whether expressed as caps or as numbers of shares reserved or otherwise, to
exceed at any time the number of authorized but unissued shares of Common Stock.

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          (b)     Notwithstanding any other provision of this Confirmation, the
Seller shall not be required to deliver Settlement Shares, or shares of Common
Stock or other securities comprising the aggregate Alternative Termination
Delivery Units, in excess of the number of Capped Delivery Shares.

          Section 6.05. Notice of Certain Transactions. If at any time during
the Contract Period, the Purchaser makes, or expects to be made, or has made,
any public announcement (as defined in Rule 165(f) under the Securities Act) of
any merger, acquisition, or similar transaction involving a recapitalization
relating to the Purchaser (other than any such transaction in which the
consideration consists solely of cash and there is no valuation period, or as to
which the completion of such transaction or the completion of the vote by target
shareholders has occurred), then the Purchaser shall (i) notify the Seller prior
to the opening of trading in the Common Stock on any day on which the Purchaser
makes, or expects to be made, or has made any such public announcement, (ii)
notify the Seller promptly following any such announcement (or, if later, prior
to the opening of trading in the Common Stock on the first day of any Seller
Termination Share Payment Period) that such announcement has been made and (iii)
promptly deliver to the Seller following the making of any such announcement
(or, if later, prior to the opening of trading in the Common Stock on the first
day of any Seller Termination Share Payment Period) a certificate indicating (A)
the Purchaser’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18)
during the three full calendar months preceding the date of such announcement
and (B) the Purchaser’s block purchases (as defined in Rule 10b-18) effected
pursuant to paragraph (b)(4) of Rule 10b-18 during the three full calendar
months preceding the date of such announcement. In addition, the Purchaser shall
promptly notify the Seller of the earlier to occur of the completion of such
transaction and the completion of the vote by target shareholders. Accordingly,
the Purchaser acknowledges that its actions in relation to any such announcement
or transaction must comply with the standards set forth in Section 6.03.

ARTICLE 7
Termination

          Section 7.01. Additional Termination Events. (a) An Additional
Termination Event shall occur in respect of which the Purchaser is the sole
Affected Party and this Transaction is the sole Affected Transaction if, on any
day, the Seller determines, in its sole reasonable judgment, that it is unable
to establish, re-establish or maintain any hedging transactions reasonably
necessary in the normal course of such party’s business of hedging the price and
market risk of entering into and performing under this Transaction, due to
market illiquidity, illegality or lack of availability of hedging transaction
market participants.

          (b)     An Additional Termination Event shall occur in respect of
which the Purchaser is the sole Affected Party and this Transaction is the sole
Affected Transaction if (i) a Share De-listing Event occurs; (ii) a Merger Event
occurs; (iii) a Nationalization occurs, (iv) a Distribution Termination Event
occurs or (v) an event described in paragraph III of Annex C occurs.

          (c)     A “Share De-listing Event” means that at any time during the
Contract Period, the Common Stock ceases to be listed, traded or publicly quoted
on the Exchange for any reason (other than a Merger Event, a “De-Listing”) and
is not immediately re-listed, traded or quoted as of the date of such
de-listing, on another U.S. national securities exchange or a U.S. automated
interdealer quotation system (a “Successor Exchange”); provided that it shall
not constitute an Additional Termination Event if the Common Stock is
immediately re-listed on a Successor Exchange upon its De-Listing from the
Exchange, and the Successor Exchange shall be deemed to be the Exchange for all
purposes. In addition, in such event, the Seller shall make any commercially
reasonable adjustments to the terms of the Transaction that the Seller
determines appropriate in its reasonable good faith judgment to preserve the
fair value of the Transaction to the Seller.

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          (d)     A “Merger Event” means the public announcement, including any
public announcement as defined in Rule 165(f) of the Securities Act (by the
Purchaser or otherwise) at any time during the Contract Period of any (i)
planned recapitalization, reclassification or change of the Common Stock that
will, if consummated, result in a transfer of more than 20% of the outstanding
shares of Common Stock, (ii) planned consolidation, amalgamation, merger or
similar transaction of the Purchaser with or into another entity (other than a
consolidation, amalgamation or merger in which the Purchaser will be the
continuing entity and which does not result in any such recapitalization,
reclassification or change of more than 20% of such shares outstanding), (iii)
other takeover offer for the shares of Common Stock that is aimed at resulting
in a transfer of more than 20% of such shares of Common Stock (other than such
shares owned or controlled by the offeror), (iv) intention to solicit or enter
into, or to explore strategic alternatives or other similar undertaking that may
include, any of the foregoing or (v) irrevocable commitment to any of the
foregoing.

          (e)     A “Nationalization” means that all or substantially all of the
outstanding shares of Common Stock or assets of the Purchaser are nationalized,
expropriated or are otherwise required to be transferred to any governmental
agency, authority or entity.

          (f)     A “Distribution Termination Event” means a declaration by the
Purchaser of any cash dividend or distribution on shares of Common Stock, other
than an Extraordinary Cash Dividend (a “Cash Distribution”), that has a record
date during the Contract Period, the amount of which, together with all prior
declared Cash Distributions that have a record date during the same Reference
Period of the Purchaser, exceeds the Cash Distribution Amount specified in the
Pricing Supplement for such Reference Period, and in respect of which the
Calculation Agent has not made an adjustment pursuant to Section 8.01(b).

          Section 7.02. Consequences of Additional Termination Events. (a) In
the event of the occurrence or effective designation of an Early Termination
Date under the Agreement, cash settlement, as set forth in Section 7.02(b),
shall apply unless (i) the Purchaser elects (which election shall be binding),
in lieu of payment or receipt, as applicable, of the amount payable in respect
of this Transaction pursuant to Section 6(d)(ii) of the Agreement (the
“Termination Amount”), to deliver or to receive Alternative Termination Delivery
Units pursuant to Section 7.03, and (ii) notifies the Seller of such election by
delivery of written notice to the Seller on the Business Day immediately
following the Purchaser’s receipt of a notice (as required by Section 6(d) of
the Agreement following the designation of an Early Termination Date in respect
of this Transaction) setting forth the amounts payable by the Purchaser or by
the Seller with respect to such Early Termination Date (the date of such
delivery, the “Default Notice Day”); provided that the Purchaser shall not have
the right to elect the delivery or receipt of the Alternative Termination
Delivery Units pursuant to Section 7.03 if:

 

 

 

               (i)     the representations and warranties made by the Purchaser
to the Seller in Section 5.01 are not true and correct as of the date the
Purchaser makes such election, as if made on such date, or

 

 

 

               (ii)     in the event that the Termination Amount is payable by
the Purchaser to the Seller, (A) the Purchaser has taken any action that would
make unavailable (x) the exemption set forth in Section 4(2) of the Securities
Act, for the sale of any Alternative Termination Delivery Units by the Purchaser
to the Seller or (y) an exemption from the registration requirements of the
Securities Act reasonably acceptable to the Seller for resales of Alternative
Termination Delivery Units by the Seller, and (B) such Early Termination Date is
in respect of an Event of Default which is within Purchaser’s control
(including, without limitation, failure to execute a Private Placement Agreement
or otherwise comply with the requirements applicable to Purchaser set forth in
Annex A hereto).

           For the avoidance of doubt, upon the Purchaser’s making an election
to deliver Alternative Termination Delivery Units pursuant to this Section 7.02,
the Purchaser shall be deemed to make the representations and warranties in
Section 5.01 hereof as if made on the date of the Purchaser’s election.
Notwithstanding the foregoing, at any time prior to the time the Seller (or any
affiliate of the Seller) has contracted to resell the property to be delivered
upon alternative termination settlement, the Purchaser may deliver in lieu of
such property an amount in cash equal to the Termination Amount in the manner
set forth in Section 6(d) of the Agreement.

          (b)     If cash settlement applies in respect of an Early Termination
Date, Section 6 of the Agreement shall apply.

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          Section 7.03. Alternative Termination Settlement. (a) Subject to
Section 7.02, if the Termination Amount shall be payable by the Purchaser to the
Seller and the Purchaser elects to deliver the Alternative Termination Delivery
Units to the Seller, the Purchaser shall, as soon as directed by the Seller
after the Default Notice Day (such date, the “Termination Settlement Date”),
deliver to the Seller a number of Alternative Termination Delivery Units equal
to the quotient of (A) the Termination Amount divided by (B) the Termination
Price.

          (b)     Subject to Section 7.02, if the Termination Amount shall be
payable by the Seller to the Purchaser and the Purchaser elects to receive the
Alternative Termination Delivery Units from the Seller, (i) the Seller shall,
beginning on the first Trading Day following the Default Notice Day and ending
when the Seller shall have satisfied its obligations under this clause (the
“Seller Termination Share Purchase Period”), purchase (subject to the provisions
of Section 4.01 and Section 4.02 hereof) a number of Alternative Termination
Delivery Units equal to the quotient of (A) the Termination Amount divided by
(B) the Termination Price; and (ii) the Seller shall deliver such Alternative
Termination Delivery Units to the Purchaser on the settlement dates relating to
such purchases.

          Section 7.04. Notice of Default. If an Event of Default occurs in
respect of the Purchaser, the Purchaser will, promptly upon becoming aware of
it, notify the Seller specifying the nature of such Event of Default.

ARTICLE 8
Adjustments

          Section 8.01. Cash Dividends. (a) If the Purchaser declares any
Extraordinary Cash Dividend that has a record date during the Contract Period,
then prior to or on the date on which such Extraordinary Cash Dividend is paid
by the Purchaser to holders of record, the Purchaser shall pay to the Seller an
amount in cash equal to the product of (i) the amount of such Extraordinary Cash
Dividend and (ii) the theoretical short delta number of shares as of the opening
of business on the related ex-dividend date, as determined by the Calculation
Agent, required for the Seller to hedge its exposure to the Transaction.

          (b)     If the Purchaser declares any cash dividend on shares of
Common Stock that is not an Extraordinary Cash Dividend (an “Ordinary Cash
Dividend”) and that has a record date during the Contract Period, and the amount
of such Ordinary Cash Dividend, together with all prior declared Ordinary Cash
Dividends that have a record date during the same Reference Period, exceeds the
Cash Distribution Amount specified in the Pricing Supplement for such Reference
Period, the Calculation Agent may make corresponding adjustments with respect to
the Floor Price as the Calculation Agent determines appropriate to preserve the
fair value of the Transaction to the Seller, and shall determine the effective
date of such adjustment.

          Section 8.02. Other Dilution Adjustments. If (x) any corporate event
occurs having a dilutive or concentrative effect on the theoretical value of the
Common Stock (other than any cash dividend but including, without limitation, a
spin-off, a stock split, stock or other dividend or distribution,
reorganization, rights offering or recapitalization), or (y) as a result of the
definition of Trading Day (whether because of a suspension of transactions
pursuant to Section 4.02 or otherwise), any day that would otherwise be a
Trading Day during the Contract Period is not a Trading Day or on such Trading
Day, pursuant to Section 4.02, the Seller effects transactions with respect to
shares of Common Stock at a volume lower than originally anticipated with
respect to this Transaction, or (z) as a result of market conditions, the Seller
incurs additional costs in connection with maintaining its hedge position with
respect to this Transaction resulting from the insufficient availability of
stock lenders willing and able to lend shares of Common Stock with a borrow cost
not significantly greater than the cost as of the date hereof and otherwise on
terms consistent with those as of the date hereof, then in any such case, the
Calculation Agent shall make corresponding adjustments with respect to any
variable relevant to the terms of the Transaction, as the Calculation Agent
determines appropriate in its reasonable good faith judgment to preserve the
fair value of the Transaction to the Seller, and shall determine the effective
date of such adjustment.

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ARTICLE 9
Miscellaneous

          Section 9.01. Successors and Assigns. All covenants and agreements in
this Confirmation made by or on behalf of either of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.

          Section 9.02. Purchaser Indemnification. The Purchaser (the
“Indemnifying Party”) agrees to indemnify and hold harmless the Seller and its
officers, directors, employees, affiliates, advisors, agents and controlling
persons (each, an “Indemnified Person”) from and against any and all losses,
claims, damages and liabilities, joint or several (collectively, “Obligations”),
resulting from a breach by Purchaser of this Confirmation or any claim,
litigation, investigation or proceeding relating thereto, and to reimburse,
within 30 days, upon written request, each such Indemnified Person for any
reasonable legal or other expenses incurred in connection with investigating,
preparation for, providing evidence for or defending any of the foregoing,
provided, however, that the Indemnifying Party shall not have any liability to
any Indemnified Person to the extent that such Obligations (i) are finally
determined by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnified Person (and in such case,
such Indemnified Person shall promptly return to the Indemnifying Party any
amounts previously expended by the Indemnifying Party hereunder) or (ii) are
trading losses incurred by the Seller as part of its purchases or sales of
shares of Common Stock pursuant to this Confirmation (unless the Purchaser has
breached any agreement, term or covenant herein).

          Section 9.03. Assignment and Transfer. Notwithstanding the Agreement,
the Seller may assign any of its rights or duties hereunder to any one or more
of its affiliates without the prior written consent of the Purchaser.
Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing Seller to purchase, sell, receive or deliver any shares of
Common Stock or other securities to or from the Purchaser, Seller may designate
any of its affiliates to purchase, sell, receive or deliver such shares of
Common Stock or other securities and otherwise to perform the Seller’s
obligations in respect of this Transaction and any such designee may assume such
obligations. The Seller may assign the right to receive Settlement Shares to any
third party who may legally receive Settlement Shares. The Seller shall be
discharged of its obligations to the Purchaser only to the extent of any such
performance. For the avoidance of doubt, Seller hereby acknowledges that
notwithstanding any such designation hereunder, to the extent any of Seller’s
obligations in respect of this Transaction are not completed by its designee,
Seller shall be obligated to continue to perform or to cause any other of its
designees to perform in respect of such obligations.

          Section 9.04. Calculation Agent. Whenever the Calculation Agent is
required to act or to exercise judgment in any way with respect to this
Transaction, it will do so in good faith and in a commercially reasonable
manner.

          Section 9.05. Non-confidentiality. The Seller and the Purchaser hereby
acknowledge and agree that, subject to Section 6.03, each is authorized to
disclose every aspect of this Confirmation and the transactions contemplated
hereby to any and all persons, without limitation of any kind, and there are no
express or implied agreements, arrangements or understandings to the contrary.

          Section 9.06. Unenforceability and Invalidity. To the extent permitted
by law, the unenforceability or invalidity of any provision or provisions of
this Confirmation shall not render any other provision or provisions herein
contained unenforceable or invalid.

          Section 9.07. Securities Contract. The parties hereto agree and
acknowledge as of the date hereof that (i) the Seller is a “financial
institution” within the meaning of Section 101(22) of Title 11 of the United
States Code (the “Bankruptcy Code”) and (ii) this Confirmation is a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code,
entitled to the protection of Sections 362(b)(6) and 555 of the Bankruptcy Code.

          Section 9.08. No Collateral, Netting or Setoff. Notwithstanding any
provision of the Agreement, or any other agreement between the parties, to the
contrary, the obligations of the Purchaser hereunder are not secured by any
collateral. Obligations under this Transaction shall not be netted, recouped or
set off (including pursuant to Section 6 of the Agreement) against any other
obligations of the parties, whether arising under the Agreement, this
Confirmation, under any other agreement between the parties hereto, by operation
of law or otherwise, and no other obligations of the parties shall be netted,
recouped or set off (including pursuant to Section 6 of the Agreement) against
obligations under this Transaction, whether arising under the Agreement, this
Confirmation, under any other agreement between the parties hereto, by operation
of law or otherwise, and each party hereby waives any such right of setoff,
netting or recoupment.

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          Section 9.09. Equity Rights. The Seller acknowledges and agrees that
this Confirmation is not intended to convey to it rights with respect to the
Transaction that are senior to the claims of holders of Common Stock in the
event of the Purchaser’s bankruptcy.

          Section 9.10. Notices. Unless otherwise specified herein, any notice,
the delivery of which is expressly provided for in this Confirmation, may be
made by telephone, to be confirmed in writing to the address below. Changes to
the information below must be made in writing.

 

 

 

 

(a)

If to the Purchaser:

 

 

 

 

 

MTS Systems Corporation

 

 

14000 Technology Drive

 

 

Eden Prairie, MN 55344

 

 

Attention: Tim Radermacher

 

 

Title: Treasurer and Director of Tax

 

 

Telephone No: (952) 937-4004

 

 

Facsimile No: (952) 937-4515

 

 

 

 

 

 

 

(b)

If to the Seller:

 

 

 

 

 

JPMorgan Chase Bank, National Association

 

 

c/o J.P. Morgan Securities LLC

 

 

EDG Marketing Support

 

 

Email: EDG_OTC_HEDGING_MS@jpmorgan.com

 

 

Fax: 1-866-886-4506

 

 

 

 

 

With a copy to:

 

 

 

 

 

Sudheer Tegulapalle

 

 

Executive Director

 

 

383 Madison Avenue, Floor 05

 

 

New York, NY, 10179, United States

 

 

Telephone No: (212) 622-2100

 

 

Facsimile No: (212) 622-0398

 

 

Email: sudheer.r.tegulapalle@jpmorgan.com

16

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          Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us.

Yours sincerely,

 

 

 

 

J.P. MORGAN SECURITIES LLC, as agent for JPMorgan
Chase Bank, National Association, London Branch

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Confirmed as of the date first

 

above written:

 

 

 

 

MTS SYSTEMS CORPORATION

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association.
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746.
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority

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(JPMORGAN LOGO) [a132034001_v1.jpg]

ANNEX A

PRIVATE PLACEMENT PROCEDURES

 

 

 

 

I.

Introduction

          MTS Systems Corporation, a Minnesota corporation (the “Purchaser”) and
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (the “Seller”) have agreed to these procedures (the
“Private Placement Procedures”) in connection with entering into the
Confirmation (the “Confirmation”) dated as of September 7, 2012 between JPMorgan
and the Purchaser relating to the sale by JPMorgan to the Purchaser of common
stock, par value $0.25 per share, or security entitlements in respect thereof
(the “Common Stock”) of the Purchaser. These Private Placement Procedures
supplement, form part of, and are subject to the Confirmation and all terms used
and not otherwise defined herein shall have the meanings assigned to them in the
Confirmation.

 

 

 

 

II.

Procedures

          If the Purchaser elects to deliver Private Placement Shares pursuant
to Section 3.01(b) of the Confirmation or elects to deliver Alternative
Termination Delivery Units pursuant to Section 7.02 of the Confirmation, the
Purchaser shall effect such delivery in compliance with the private placement
procedures provided herein.

          (a)          The Purchaser shall afford the Seller, and any potential
buyers of the Private Placement Shares (or, in the case of alternative
termination settlement, Alternative Termination Delivery Units) (collectively,
the “Private Securities”) designated by the Seller a reasonable opportunity to
conduct a due diligence investigation with respect to the Purchaser customary in
scope for private offerings of such type of securities (including, without
limitation, the availability of senior management to respond to questions
regarding the business and financial condition of the Purchaser and 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 the Seller (or any such potential buyer) shall be satisfied in all
material respects with such opportunity and with the resolution of any
disclosure issues arising from such due diligence investigation of the
Purchaser.

          (b)          Prior to or contemporaneously with the determination of
the Private Placement Price (as described below), the Purchaser shall enter into
an agreement (a “Private Placement Agreement”) with the Seller (or any affiliate
of the Seller designated by the Seller) providing for the purchase and resale by
the Seller (or such affiliate) in a private placement (or other transaction
exempt from registration under the Securities Act) of the Private Securities,
which agreement shall be on commercially reasonable terms and in form and
substance reasonably satisfactory to the Seller (or such affiliate) and (without
limitation of the foregoing) shall:

 

 

 

          (i)          contain customary conditions, and customary undertakings,
representations and warranties (to the Seller or such affiliate, and if
requested by the Seller or such affiliate, to potential purchasers of the
Private Securities);

 

 

 

          (ii)          contain indemnification and contribution provisions in
connection with the potential liability of the Seller and its affiliates
relating to the resale by the Seller (or such affiliate) of the Private
Securities;

 

 

 

          (iii)          provide for all reasonable steps within the Purchaser’s
control to be taken to provide for the delivery of related certificates and
representations, warranties and agreements of the Purchaser, including those
necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for the
Seller and resales of the Private Securities by the Seller (or such affiliate);
and

A-1

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          (iv)          provide for all reasonable steps within the Purchaser’s
control to be taken to provide for the delivery to the Seller (or such
affiliate) of customary opinions (including, without limitation, opinions
relating to the due authorization, valid issuance and fully paid and
non-assessable nature of the Private Securities, the availability of an
exemption from the Securities Act for the Seller and resales of the Private
Securities by the Seller (or such affiliate), and the lack of material
misstatements and omissions in the Purchaser’s filings under the Exchange Act).

 

 

          (c)          The Seller shall determine the Private Placement Price
(or, in the case of alternative termination settlement, the Termination Price)
in its judgment by commercially reasonable means, which may include (without
limitation):

 

 

 

          (i)          basing such price on indicative bids from investors;

 

 

 

          (ii)          taking into account any factors that are customary in
pricing private sales for similarly situated issuers or securities, including,
without limitation, a reasonable placement fee or spread to be retained by the
Seller (or such affiliate); and

 

 

 

          (iii)          providing for the payment by the Purchaser of all
reasonable fees and expenses in connection with such sale and resale, including
all fees and expenses of counsel for the Seller or such affiliate.

 

 

          (d)          The Seller shall notify the Purchaser of the number of
Private Securities required to be delivered by the Purchaser and the Private
Placement Price (or, in the case of alternative termination settlement, the
Termination Price) by 6:00 p.m. on the day such price is determined.

 

 

          (e)          The Purchaser agrees not to take or cause to be taken any
action that would make unavailable either (i) the exemption set forth in Section
4(2) of the Securities Act, for the sale of any Private Securities by the
Purchaser to the Seller or (ii) an exemption from the registration requirements
of the Securities Act reasonably acceptable to the Seller for resales of Private
Securities by the Seller.

 

 

          (f)          The Purchaser expressly agrees and acknowledges that the
public disclosure of all material information relating to the Purchaser is
within the Purchaser’s control and that the Purchaser shall promptly so disclose
all such material information during the period from the Valuation Completion
Date to and including the Settlement Date.

 

 

The Purchaser agrees to use its best efforts to make any filings required to be
made by it with the SEC, any securities exchange or any other regulatory body
with respect to the Transaction contemplated hereby and the issuance of the
Private Securities.

A-2

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(JPMORGAN LOGO) [a132034001_v1.jpg]

ANNEX B

REGISTRATION PROCEDURES

 

 

 

 

I.

Introduction

          MTS Systems Corporation, a Minnesota corporation (the “Purchaser”) and
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (the “Seller”) have agreed to these procedures (the
“Registration Procedures”) in connection with entering into the Confirmation
(the “Confirmation”) dated as of September 7, 2012 between JPMorgan and the
Purchaser relating to the sale by JPMorgan to the Purchaser of common stock, par
value $0.25 per share, or security entitlements in respect thereof (the “Common
Stock”) of the Purchaser. These Registration Procedures supplement, form part
of, and are subject to the Confirmation and all terms used and not otherwise
defined herein shall have the meanings assigned to them in the Confirmation.

 

 

 

 

II.

Procedures

          If the Purchaser elects to deliver Registered Shares pursuant to
Section 3.01(b) of the Confirmation, the Purchaser shall effect such delivery in
compliance with the registration procedures provided herein.

          (a)           The Purchaser shall take all actions within its control
to make available to the Seller and its affiliates an effective primary
registration statement under the Securities Act and one or more prospectuses as
necessary or advisable to allow the Seller and its affiliates to comply with the
applicable prospectus delivery requirements (the “Prospectus”) for the sale by
Seller or its affiliates of the Registered Shares to be delivered by the
Purchaser pursuant to the Confirmation (the “Registration Statement”), such
Registration Statement to be effective and Prospectus to be current until all
such sales by the Seller (or its affiliates) have been settled. The Purchaser
shall take all actions reasonably requested by the Seller to facilitate the
disposition of any Registered Shares to be sold pursuant to such Registration
Statement.

          (b)          The Purchaser shall use commercially reasonable efforts
to 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
soon thereafter as is reasonably 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, the
Purchaser shall as promptly as reasonably practicable file any required document
and prepare and furnish to the Seller 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 in connection with sales of Registered
Shares thereunder, will not contain any 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.

          (c)          The Purchaser shall afford the Seller (and its agents and
affiliates) a reasonable opportunity to conduct a due diligence investigation
with respect to the Purchaser customary in scope for registered offerings of
such type of securities (including, without limitation, the availability of
senior management and external advisors to respond to questions regarding the
business and financial condition of the Purchaser and 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
such opportunity and the resolution of any disclosure issues arising from such
due diligence investigation of the Purchaser shall be satisfactory to Seller in
all material respects. The Purchaser shall reimburse the Seller for all
reasonable out-of-pocket expenses it incurs in connection with such diligence
and otherwise in connection with the preparation of the Registration Statement
and Prospectus, including, without limitation, the reasonable fees and expenses
of outside counsel to the Seller incurred in connection therewith.

B-1

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          (d)           The Purchaser shall enter into an agreement (a
“Registration Agreement”) with the Seller (or any affiliate of the Seller
designated by the Seller) providing for the registration of the Registered
Shares, which agreement shall be on commercially reasonable terms and in form
and substance reasonably satisfactory to the Seller (or such affiliate) and
(without limitation of the foregoing) shall:

 

 

 

          (i)            contain customary conditions, and customary
undertakings, representations and warranties (to the Seller or such affiliate);

 

 

 

          (ii)          contain indemnification and contribution provisions in
connection with the potential liability of the Seller and its affiliates
relating to the sale by the Seller (or such affiliate) of the Registered Shares;

 

 

 

          (iii)          provide for the delivery of related certificates and
representations, warranties and agreements of the Purchaser;

 

 

 

          (iv)          provide for the delivery of accountants’ “comfort
letters” to the Seller in form and substance satisfactory to the Seller,
containing statements and information of the type customarily included in such
letters to “underwriters” with respect to the financial statements and certain
financial information contained, or incorporated by reference, in the
Registration Statement and the Prospectus; and

 

 

 

        (v)          provide for the delivery to the Seller (or such affiliate)
of customary opinions, including, without limitation, opinions relating to the
due authorization, valid issuance and fully paid and non-assessable nature of
the Registered Shares and the lack of material misstatements and omissions in
the Registration Statement (including any documents incorporated by reference
therein).

        (e)          The Seller shall notify the Purchaser of the numbers of
Registered Shares to be delivered by the Purchaser on the Settlement Dates, as
necessary in light of the Seller’s unwinding of its hedge positions in
connection with the Transaction and sales of Registered Shares in accordance
with these Registration Procedures, and the Purchaser shall deliver such Shares
to the Seller on such Settlement Dates in accordance with the Seller’s customary
procedures. The parties understand and acknowledge that (i) the Seller or its
affiliates expect to make contemporaneous or nearly contemporaneous (A)
purchases of Common Stock to unwind its hedge and (B) sales of Registered Shares
in accordance with these Registration Procedures, (ii) the Seller or its
affiliates intend to make such sales of Registered Shares in a manner that is
not a distribution for purposes of Regulation M, and (iii) accordingly, the
length of the period during which the Seller or its affiliates make such
purchases and sales will depend in part on prevailing trading volumes for the
Common Stock.

          (f)          In the event that (i) the Purchaser fails to comply with
the requirements set forth in this Annex B, (ii) the Registration Statement is
not effective on or prior to the date that is 30 days after the Valuation
Completion Date, or fails to remain effective until all Registered Shares have
been sold hereunder, (ii) the opportunity to conduct a due diligence
investigation with respect to the Purchaser and the resolution of any issues
arising therefrom is not satisfactory to Seller and its affiliates in all
material respects, or does not continue to be satisfactory to the Seller and its
affiliates in all material respects until all Registered Shares have been sold
hereunder, (iv) the Seller or its affiliates are not able to make sales of
Registered Shares in a manner that permits the contemporaneous or nearly
contemporaneous purchase by the Seller or its affiliates of Common Stock in
accordance with Regulation M or (v) the Registration Procedures otherwise become
unavailable for the sale by the Seller and its affiliates of the Registered
Shares delivered by the Purchaser hereunder prior to the completion of the sale
thereof, then in any such event, the provisions of Section 3.01(d) of the
Confirmation providing for cash settlement with respect to any unsold Registered
Shares shall apply, appropriately modified to take into account any Registered
Shares theretofore delivered and sold pursuant to these Registration Procedures.

B-2

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(JPMORGAN LOGO) [a132034001_v1.jpg]

ANNEX C

COMMUNICATIONS PROCEDURES

September 7, 2012

 

 

 

 

I.

Introduction

          MTS Systems Corporation, a Minnesota corporation (“Counterparty”) and
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch (“JPMorgan”) have adopted these communications
procedures (the “Communications Procedures”) in connection with entering into
the Confirmation (the “Confirmation”) dated as of September 7, 2012 between
JPMorgan and Counterparty relating to the sale by JPMorgan to Counterparty of
common stock, par value $0.25 per share, or security entitlements in respect
thereof (the “Common Stock”) of the Counterparty. These Communications
Procedures supplement, form part of, and are subject to the Confirmation.

 

 

 

 

II.

Communications Rules

          From the date hereof until the end of the Contract Period,
Counterparty and its Employees and Designees shall not engage in any
Program-Related Communication with, or disclose any Material Non-Public
Information to, any EDG Trading Personnel. Except as set forth in the preceding
sentence, the Confirmation shall not limit Counterparty and its Employees and
Designees in their communication with Affiliates and Employees of JPMorgan,
including without limitation Employees who are EDG Permitted Contacts.

 

 

 

 

III.

Termination

          If, in the sole judgment of any EDG Trading Personnel or any affiliate
or Employee of JPMorgan participating in any Communication with Counterparty or
any Employee or Designee of Counterparty, such Communication would not be
permitted by these Communications Procedures, such EDG Trading Personnel or
affiliate or Employee of JPMorgan shall immediately terminate such
Communication. In such case, or if such EDG Trading Personnel or affiliate or
Employee of JPMorgan determines following completion of any Communication with
Counterparty or any Employee or Designee of Counterparty that such Communication
was not permitted by these Communications Procedures, such EDG Trading Personnel
or such affiliate or Employee of JPMorgan shall promptly consult with his or her
supervisors and with counsel for JPMorgan regarding such Communication. If, in
the reasonable judgment of JPMorgan’s counsel following such consultation, there
is more than an insignificant risk that such Communication could materially
jeopardize the availability of the affirmative defenses provided in Rule 10b5-1
under the Exchange Act with respect to any ongoing or contemplated activities of
JPMorgan or its affiliates in respect of the Confirmation, it shall be an
Additional Termination Event with respect to the Confirmation.

 

 

 

 

IV.

Definitions

          Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Confirmation. As used herein, the following
words and phrases shall have the following meanings:

          “Communication” means any contact or communication (whether written,
electronic, oral or otherwise) between Counterparty or any of its Employees or
Designees, on the one hand, and JPMorgan or any of its affiliates or Employees,
on the other hand.

          “Designee” means a person designated, in writing or orally, by
Counterparty to communicate with JPMorgan on behalf of Counterparty.

C-1

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          “EDG Permitted Contact” means any of Mr. David Aidelson, Mr. Gregory
Batista, Mr. Elliot Chalom, Mr. James Rothschild, Mr. David Seaman, Mr. Steven
Seltzer, Mr. James F. Smith, Mr. Sudheer Tegulapalle and Mr. Jason M. Wood or
any of their designees; provided that JPMorgan may amend the list of EDG
Permitted Contacts by delivering a revised list of EDG Permitted Contacts to
Counterparty.

          “EDG Trading Personnel” means Graham Orton, Michael Tatro and any
other Employee of the public side of the Equity Derivatives Group or the Special
Equities Group of J.P. Morgan Chase & Co.; provided that JPMorgan may amend the
list of EDG Trading Personnel by delivering a revised list of EDG Trading
Personnel to Counterparty; and provided further that, for the avoidance of
doubt, the persons listed as EDG Permitted Contacts are not EDG Trading
Personnel.

          “Employee” means, with respect to any entity, any owner, principal,
officer, director, employee or other agent or representative of such entity, and
any affiliate of any of such owner, principal, officer, director, employee,
agent or representative.

          “Material Non-Public Information” means information relating to the
Counterparty or the Common Stock that (a) has not been widely disseminated by
wire service, in one or more newspapers of general circulation, by communication
from the Counterparty to its shareholders or in a press release, or contained in
a public filing made by the Counterparty with the Securities and Exchange
Commission and (b) a reasonable investor might consider to be of importance in
making an investment decision to buy, sell or hold shares of Common Stock. For
the avoidance of doubt and solely by way of illustration, information should be
presumed “material” if it relates to such matters as dividend increases or
decreases, earnings estimates, changes in previously released earnings
estimates, significant expansion or curtailment of operations, a significant
increase or decline of orders, significant merger or acquisition proposals or
agreements, significant new products or discoveries, extraordinary borrowing,
major litigation, liquidity problems, extraordinary management developments,
purchase or sale of substantial assets and similar matters.

          “Program-Related Communication” means any Communication the subject
matter of which relates to the Confirmation or any Transaction under the
Confirmation or any activities of JPMorgan (or any of its affiliates) in respect
of the Confirmation or any Transaction under the Confirmation.

C-2

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(JPMORGAN LOGO) [a132034001_v1.jpg]

ANNEX D

PRICING SUPPLEMENT

          This Pricing Supplement is subject to the Confirmation dated as of
September 7, 2012 (the “Confirmation”) between J.P. Morgan Securities LLC, as
agent for JPMorgan Chase Bank, National Association, London Branch (the
“Seller”), and MTS Systems Corporation, a Minnesota corporation (the
“Purchaser”). Capitalized terms used herein have the meanings set forth in the
Confirmation.

 

 

 

 

 

1

Discount:

 

$0.58

 

 

 

 

 

 

2

Initial Delivery Percentage

 

80%

 

 

 

 

 

 

3

Contract Fee:

 

$0.00

 

 

 

 

 

 

4

Floor Price:

 

$0.01

 

 

 

 

 

 

5

Registered Shares Fee:

 

$0.05

 

 

 

 

 

 

6

Valuation Completion Date:

 

The Trading Day, occurring during the period commencing on and including the
115th Trading Day following the Trade Date and ending on and including the
Expiration Date, specified as such by the Seller, in its sole judgment, by
delivering a notice designating such Trading Day as a Valuation Completion Date
by the close of business on the Business Day immediately following such Trading
Day; provided that if the Seller fails to validly designate the Valuation
Completion Date prior to the Expiration Date, the Valuation Completion Date
shall be the Expiration Date.

 

 

 

 

 

7

Cash Settlement Fee:

 

$0.00

 

 

 

 

 

 

8

Cash Distribution Amount:

 

 

 

 

 

 

 

 

 

Cash Distribution Amount

 

Reference Period

 

 

 

 

 

 

 

$0.00 per share of Common Stock

 

Trade Date – December 16, 2012

 

 

 

 

 

 

 

$0.30 per share of Common Stock

 

December 17, 2012 – March 10, 2013

 

 

 

 

 

 

 

$0.30 per share of Common Stock

 

Any period after March 11, 2013

 

D-1

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EXHIBIT A

[Letterhead of Purchaser]

JPMorgan Chase Bank, National Association
c/o J.P. Morgan Securities LLC
383 Madison Avenue
5th Floor
New York, New York 10172

Re:          Accelerated Purchase of Equity Securities

Ladies and Gentlemen:

          In connection with our entry into the Confirmation dated as of
September 7, 2012 (the “Confirmation”), we hereby represent that set forth below
is the total number of shares of our common stock purchased by or for us or any
of our affiliated purchasers in Rule 10b-18 purchases of blocks (all defined in
Rule 10b-18 under the Securities Exchange Act of 1934) pursuant to the
once-a-week block exception set forth in Rule 10b-18(b)(4) during the four full
calendar weeks immediately preceding the first day of the [Valuation Period]
[Cash Settlement Purchase Period] [Seller Termination Share Purchase Period] (as
defined in the Confirmation) and the week during which the first day of the
Valuation Period occurs.

          Number of Shares: __________________

          We understand that you will use this information in calculating
trading volume for purposes of Rule 10b-18.

Very truly yours,

MTS SYSTEMS CORPORATION

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Exh-A-1

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