Exhibit 10.40
GOLDMAN SACHS & CO. | 85 BROAD STREET | NEW YORK, NEW YORK 10004 | TEL:
212-902-1000
Opening Transaction

     
To:
  Applied Materials, Inc.
 
  3050 Bowers Avenue
 
  Santa Clara, CA 95054
 
   
From:
  Goldman, Sachs & Co.
 
   
Subject:
  Accelerated Share Buyback
 
   
Date:
  September 18, 2006

          This master confirmation (“Master Confirmation”) dated as
September 18, 2006, is intended to supplement the terms and provisions of
certain Transactions (each, a “Transaction”) entered into from time to time
between Goldman, Sachs & Co. (“GS&Co.”) and Applied Materials, Inc.
(“Counterparty”). This Master Confirmation, taken alone, is neither a commitment
by either party to enter into any Transaction nor evidence of a Transaction. The
terms of any particular Transaction shall be set forth in a Supplemental
Confirmation in the form of Annex A hereto, which references this Master
Confirmation (the “Supplemental Confirmation”). This Master Confirmation and
each Supplemental Confirmation together shall constitute a “Confirmation” as
referred to in the Agreement specified below.
          The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the “Equity Definitions”), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Master Confirmation. This Master Confirmation and each Supplemental
Confirmation evidence a complete binding agreement between the Counterparty and
GS&Co. as to the subject matter and terms of each Transaction to which this
Master Confirmation and the related Supplemental Confirmation relate and shall
supersede all prior or contemporaneous written or oral communications with
respect thereto.
          This Master Confirmation and each Supplemental Confirmation
supplement, form a part of, and are subject to an agreement in the form of the
1992 ISDA Master Agreement (Multicurrency-Cross Border) (the “Agreement”) as if
GS&Co. and Counterparty had executed the Agreement on the date of this Master
Confirmation (but without any Schedule except for (i) the election of Loss and
Second Method, New York law (without regard to the conflicts of law principles)
as the governing law and US Dollars (“USD”) as the Termination Currency,
(ii) the election that subparagraph (ii) of Section 2(c) will not apply to
Transactions and (iii) the replacement of the word “third” in the last line of
Section 5(a)(i) with the word “first”).
          All provisions contained or incorporated by reference in the Agreement
shall govern this Master Confirmation and each Supplemental Confirmation
relating to a Transaction except as expressly modified herein or in the related
Supplemental Confirmation.
          If, in relation to any Transaction to which this Master Confirmation
and related Supplemental Confirmation relate, there is any inconsistency between
the Agreement, this Master Confirmation, any Supplemental Confirmation and the
Equity Definitions, the following will prevail for purposes of such Transaction
in the order of precedence indicated: (i) such Supplemental Confirmation; (ii)
this Master Confirmation; (iii) the Agreement; and (iv) the Equity Definitions.
          1. On the fifth Clearance System Business Day following the Trade Date
for each Transaction, GS&Co. will deliver to Counterparty a number of Shares
equal to the Number of Shares for the relevant Transaction, and Counterparty
will pay to GS&Co. cash in immediately available funds in an amount to be
specified in the Supplemental Confirmation (the “Initial Purchase Price”) equal
to the product of the Initial Share Price (as set forth below) and the Number of
Shares. Each Transaction is intended to be in substance and effect an adjustment
to the Initial Purchase Price. Solely for the purposes of the Equity
Definitions, each Transaction

 

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constitutes a Share Forward Transaction. Set forth below are the terms and
conditions which, together with the terms and conditions set forth in each
Supplemental Confirmation (in respect of each relevant Transaction), shall
govern each such Transaction.

          General Terms:
 
       
 
  Trade Date:   For each Transaction, as set forth in the Supplemental
Confirmation.
 
       
 
  Seller:   Counterparty
 
       
 
  Buyer:   GS&Co.
 
       
 
  Shares:   Common Stock, $0.01 par value of Counterparty, (Ticker: AMAT)
 
       
 
  Number of Shares:   For each Transaction, as set forth in the Supplemental
Confirmation.
 
       
 
  Initial Share Price   For each Transaction, as set forth in the Supplemental
Confirmation, to be the Relevant Price as of the Trade Date.
 
       
 
  Forward Price:   For each Transaction, the Initial Share Price for such
Transaction.
 
       
 
  Prepayment:   Not Applicable
 
       
 
  Variable Obligation:   Not Applicable
 
       
 
  Exchange:   NASDAQ Global Select Market
 
       
 
  Related Exchange(s):   All Exchanges
 
       
 
  Market Disruption Event:   The definition of “Market Disruption Event” in
Section 6.3(a) of the Equity Definitions is hereby amended by replacing the
words “at any time during the one-hour period that ends at the relevant
Valuation Time” in the third line thereof with the words “at any time on any
Scheduled Trading Day during the Valuation Period or” after the word “material”.
 
       
 
  Counterparty Additional
Payment Amount:   For each Transaction, as set forth in the Supplemental
Confirmation.
 
        Valuation:    
 
       
 
  Valuation Period:   Each Scheduled Trading Day during the period commencing on
and including the first succeeding Scheduled Trading Day following the Trade
Date, to and including the Valuation Date (but excluding any day(s) on which the
Valuation Period is suspended in accordance with Section 5 herein).
 
       
 
      Notwithstanding anything to the contrary in the Equity Definitions, to the
extent that any Scheduled Trading Day in the Valuation Period is a Disrupted
Day, the Calculation Agent may postpone the Valuation Date. In such event, the
Calculation Agent must determine whether (i) such Disrupted Day is a Disrupted
Day in full, in which case such Disrupted

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      Day shall not be included for purposes of determining the Settlement
Price, or (ii) such Disrupted Day is a Disrupted Day only in part, in which case
the VWAP Price for such Disrupted Day shall be determined by the Calculation
Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted
Day effected before the relevant Market Disruption Event occurred and/or after
the relevant Market Disruption Event ended, and the weighting of the VWAP Prices
for the relevant Scheduled Trading Days during the Valuation Period shall be
adjusted by the Calculation Agent for purposes of determining the Settlement
Price, with such adjustments based on, among other factors, the duration of any
Market Disruption Event and the volume, historical trading patterns and price of
the Shares.
 
       
 
      If a Disrupted Day occurs during the Valuation Period, and each of the
nine immediately following Scheduled Trading Days is a Disrupted Day, then the
Calculation Agent, in its reasonable discretion, may either (i) determine the
VWAP Price for such ninth Scheduled Trading Day and adjust the weighting of the
VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period
as it deems appropriate for purposes of determining the Settlement Price based
on, among other factors, the duration of any Market Disruption Event and the
volume, historical trading patterns and price of the Shares or (ii) disregard
such day for purposes of determining the Settlement Price and further postpone
the Valuation Date as it deems appropriate to determine the VWAP Price.
 
       
 
  Valuation Date:   For each Transaction, the date set forth in the Supplemental
Confirmation (as the same may be postponed in accordance with the provisions
hereof).
 
        Settlement Terms:    
 
       
 
  Settlement Currency:   USD
 
       
 
  Settlement Method Election:   Applicable; provided that (a) Section 7.1 of the
Equity Definitions is hereby amended by deleting the word “Physical” in the
sixth line thereof and replacing it with the words “Net Share” and deleting the
word “Physical” in the last line thereof and replacing it with the word “Cash”
and (b) in the event that GS&Co. would deliver to the Counterparty an amount of
Shares under Net Share Settlement, Cash Settlement shall be applicable in lieu
of Net Share Settlement.
 
       
 
  Electing Party:   Counterparty
 
       
 
  Settlement Method Election Date:   The fifth Scheduled Trading Day immediately
prior to the Valuation Date.
 
       
 
  Default Settlement Method:   Cash Settlement
 
       
 
  Forward Cash Settlement Amount:   An amount in the Settlement Currency equal
to the sum of (a) the Number of Shares multiplied by an amount equal to (i) the

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      Settlement Price minus (ii) the Forward Price plus (b) the Counterparty
Additional Payment Amount.
 
       
 
  Settlement Price:   The arithmetic mean of the VWAP Prices of the Shares for
each Scheduled Trading Day in the Valuation Period minus the Settlement Price
Adjustment Amount.
 
       
 
  Settlement Price Adjustment Amount:   For each Transaction, as set forth in
the Supplemental Confirmation.
 
       
 
  VWAP Price:   For any Exchange Business Day, as determined by the Calculation
Agent based on the NASDAQ Volume Weighted Average Price per Share for the
regular trading session (including any extensions thereof) for such Exchange
Business Day (without regard to pre-open or after hours trading outside of any
regular trading session for such Exchange Business Day), as published by
Bloomberg at 4:15 p.m. New York time on such Exchange Business Day, on Bloomberg
page “AMAT.Q <Equity> AQR_SEC” (or any successor thereto). For purposes of
calculating the VWAP Price, the Calculation Agent will include only those trades
that are reported during the period of time during which Counterparty could
purchase its own shares under Rule 10b-18(b)(2), and pursuant to the conditions
of Rule 10b-18(b)(3) each under the Exchange Act (as defined herein) (such
trades, “Rule 10b-18 eligible transactions”).
 
       
 
  Counterparty’s Contact Details for Purpose of Giving Notice:   Telephone No.:
408-235 4880
Facsimile No.: 408-563 4710
Attention: Robert Friess
Corporpate Treasury
 
       
 
      Mailing Address: 2881 Scott Blvd., M/S 2047
P.O.Box 58039
Santa Clara, CA 95050
 
       
 
  GS&Co.’s Contact Details for Purpose of Giving Notice:   Telephone No.:
(212) 902-8996
Facsimile No.: (212) 902-0112
Attention: Equity Operations: Options and Derivatives
 
       
 
      With a copy to:
Tracey McCabe
Equity Capital Markets
One New York Plaza
New York, NY 10004
Telephone No.: (212) 357-0428
Facsimile No.: (212) 902-3000
 
        Net Share Settlement:    
 
       
 
  Net Share Settlement Procedures:   Net Share Settlement shall be made in
accordance with the procedures attached hereto as Annex B.

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  Net Share Settlement Price:   The Relevant Price on the Net Share Valuation
Date, as reduced by the per Share amount of the underwriting discount and/or
commissions agreed to pursuant to the equity underwriting agreement contemplated
by the Net Share Settlement Procedures.
 
       
 
  Valuation Time:   As provided in Section 6.1 of the Equity Definitions;
provided that Section 6.1 of the Equity Definitions is hereby amended by
inserting the words “Net Share Valuation Date,” before the words “Valuation
Date” in the first and third lines thereof.
 
       
 
  Net Share Valuation Date:   The Exchange Business Day immediately following
the Valuation Date.
 
       
 
  Net Share Settlement Date:   The third Exchange Business Day immediately
following the Valuation Date.
 
       
 
  Reserved Shares:   Initially, 62,800,000 Shares. The Reserved Shares for each
Transaction may be increased or decreased in a Supplemental Confirmation.
 
       
 
  Relevant Price:   As provided in Section 1.23(b) of the Equity Definitions;
provided that Section 1.23(b) of the Equity Definitions is hereby amended by
replacing each occurrence therein of “the Valuation Date or Averaging Date, as
the case may be,” with the term “such day.”
 
        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.
 
       
 
  Extraordinary Dividend:   For any calendar quarter, any dividend or
distribution on the Shares with an ex-dividend date occurring during such
calendar quarter (other than any dividend or distribution of the type described
in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity
Definitions) (a “Dividend”) the amount or value of which (as determined by the
Calculation Agent), when aggregated with the amount or value (as determined by
the Calculation Agent) of any and all previous Dividends with ex-dividend dates
occurring in the same calendar quarter, exceeds the Ordinary Dividend Amount.
 
       
 
  Ordinary Dividend Amount:   For each Transaction, as set forth in the
Supplemental Confirmation.
 
       
 
  Method of Adjustment:   Calculation Agent Adjustment
 
        Extraordinary Events:    
 
        Consequences of Merger Events:    
 
       
 
  (a) Share-for-Share:   Calculation Agent Adjustment

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  (b) Share-for-Other:   Cancellation and Payment on that portion of the Other
Consideration that consists of cash; Calculation Agent Adjustment on the
remainder of the Other Consideration.
 
       
 
  (c) Share-for-Combined:   Component Adjustment
 
       
 
  Determining Party:   Calculation Agent
 
        Tender Offer:   Applicable
 
        Consequences of Tender Offers:    
 
       
 
  (a) Share-for-Share:   Calculation Agent Adjustment
 
       
 
  (b) Share-for-Other:   Cancellation and Payment on that portion of the Other
Consideration that consists of cash; Calculation Agent Adjustment on the
remainder of the Other Consideration.
 
       
 
  (c) Share-for-Combined:   Component Adjustment
 
       
 
  Determining Party:   Calculation Agent
 
       
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 also constitute a
Delisting if the Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New York Stock
Exchange, the American Stock Exchange or The NASDAQ National Market (or their
respective successors); and if the Shares are immediately re-listed, re-traded
or re-quoted on any such exchange or quotation system, such exchange or
quotation system shall be deemed to be the Exchange.
 
        Additional Disruption Events:    
 
       

  (a) Change in Law:   Applicable
 
       

  (b) Insolvency Filing:   Applicable
 
       

  (c) Loss of Stock Borrow:   Applicable; provided that Sections 12.9(a)(vii)
and 12.9(b)(iv) of the Equity Definitions are amended by deleting the words “at
a rate equal to or less than the Maximum Stock Loan Rate” and replacing them
with “at a rate of return to the stock borrower equal to or greater than zero”.
 
       
 
  Hedging Party:   GS&Co.
 
       
 
  Determining Party:   GS&Co.
 
       
Non-Reliance:
  Applicable
 
       
Agreements and Acknowledgements
   
Regarding Hedging Activities:
  Applicable
 
       
Additional Acknowledgements:
  Applicable

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Net Share Settlement Upon
Early Termination:
  Counterparty shall have the right, in its sole discretion, in lieu of making
any payment required to be made by it (the “Early Termination Amount”)
(x) pursuant to Sections 6(d) and 6(e) of the Agreement following the occurrence
of an Early Termination Date in respect of the Agreement or (y) pursuant to
Section 12.7 or 12.9 of the Equity Definitions (except with respect to any
portion of the consideration for the Shares consisting of cash in the event of a
Merger Event or Tender Offer) following the occurrence of an Extraordinary
Event, elect to settle its obligation to pay the Early Termination Amount in
Shares in accordance with the terms, and subject to the conditions, for Net
Share Settlement herein by giving written notice to GS&Co. of such election on
the day that the notice fixing an Early Termination Date is effective or the
date on which the Transaction(s) are cancelled or terminated pursuant to
Article 12 of the Equity Definitions (the “Cancellation Date”). If Counterparty
elects Net Share Settlement under such circumstances: (a) the Net Share
Valuation Date shall be (x) the date specified in the notice fixing an Early
Termination Date, which shall be either the Exchange Business Day that such
notice is effective or the first Exchange Business Day immediately following the
Exchange Business Day that such notice is effective or (y) the Cancellation
Date, as the case may be, (b) the Net Share Settlement Date shall be deemed to
be the Exchange Business Day immediately following the Early Termination Date or
the Cancellation Date, as the case may be and (c) all references to Forward Cash
Settlement Amount in Annex B hereto shall be deemed references to the Early
Termination Amount or the Cancellation Amount, as the case may be.
 
       
Transfer:
  Notwithstanding anything to the contrary in the Agreement, GS&Co. may assign,
transfer and set over all rights, title and interest, powers, privileges and
remedies of GS&Co. under any Transaction, in whole or in part, to an affiliate
of GS&Co. that is guaranteed by The Goldman Sachs Group, Inc. without the
consent of Counterparty.
 
       
GS&Co. Payment Instructions:
  Chase Manhattan Bank New York
For A/C Goldman, Sachs & Co.
A/C # 930-1-011483
ABA: 021-000021
 
       
Counterparty Payment Instructions:
  To be provided by Counterparty

          2. Calculation Agent: GS&Co. All determinations made by the
Calculation Agent shall be made in good faith and in a commercially reasonable
manner. Following any calculation by the Calculation Agent hereunder, upon a
prior written request by the Counterparty, the Calculation Agent will provide to
the Counterparty by e-mail to the e-mail address provided by the Counterparty in
such a prior 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 calculation.

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          3. Representations, Warranties and Covenants of GS&Co. and
Counterparty.
          (a) Each party represents and warrants that it (i) is an “eligible
contract participant”, as defined in the U.S. Commodity Exchange Act, as amended
and (ii) is entering into each Transaction hereunder as principal (and not as
agent or in any other capacity, fiduciary or otherwise) and not for the benefit
of any third party.
          (b) Each party acknowledges that the offer and sale of each
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of
Section 4(2) thereof and the provisions of Regulation D promulgated thereunder
(“Regulation D”). Accordingly, each party represents and warrants to the other
that (i) it has the financial ability to bear the economic risk of its
investment in each Transaction and is able to bear a total loss of its
investment, (ii) it is an “accredited investor” as that term is defined under
Regulation D, (iii) it will purchase each Transaction for investment and not
with a view to the distribution or resale thereof in a manner that would violate
the Securities Act, and (iv) the disposition of each Transaction is restricted
under this Master Confirmation, the Securities Act and state securities laws.
          4. Additional Representations, Warranties and Covenants of
Counterparty.
          As of (i) the date hereof and (ii) the period of time from the Trade
Date until the time that each party has fully performed all of its obligations
under the related Transaction, Counterparty represents, warrants and covenants
to GS&Co. that:
          (a) the purchase or writing of any Transaction and the transactions
contemplated hereby do not and will not violate Rule 13e-1 or Rule 13e-4 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”);
          (b) it is not entering into any Transaction (i) on the basis of, and
is not aware of, any material non-public information with respect to the Shares
(ii) in anticipation of, in connection with, or to facilitate, a distribution of
its securities, a self tender offer or a third-party tender offer or (iii) to
create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or to otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the
Shares);
          (c) Counterparty is in compliance with its reporting obligations under
the Exchange Act and its most recent Annual Report on Form 10-K, together with
all reports subsequently filed by it pursuant to the Exchange Act, taken
together and as amended and supplemented, do not, as of their respective filing
dates, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
          (d) each Transaction is being entered into pursuant to a publicly
disclosed Share buy-back program and its Board of Directors has approved the use
of the Transactions to effect the Share buy-back program;
          (e) without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that GS&Co. is not making any
representations or warranties with respect to the treatment of any Transaction
under FASB Statements 128, 133 (as amended), 149 or 150, EITF 00-19 (or any
successor issue statements) or under the Financial Accounting Standards Board’s
Liabilities & Equity Project;
          (f) Counterparty is not, and will not be, engaged in a “distribution”
of Shares or securities that are convertible into, or exchangeable or
exercisable for Shares for purposes of Regulation M promulgated under the
Exchange Act (“Regulation M”) (other than securities or activities excepted from
Regulation M by reason of Rules 101(b) and (c) and 102(b), (c) and (d) under the
Exchange Act) at any time during the Valuation Period, or the one Exchange
Business Day immediately following the Relevant Period, unless Counterparty has
provided written notice to GS&Co. of such distribution (a “Regulation M
Distribution Notice”) not later than the Scheduled Trading Day immediately
preceding the first day of the relevant “restricted period” (as defined in
Regulation M); Counterparty acknowledges that any such notice may cause the
Valuation Period to be extended or suspended pursuant to Section 5 below;
accordingly, Counterparty acknowledges that its delivery of such notice must
comply with the standards set forth in Section 6 below;

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          (g) it shall report each Transaction as required under Regulation S-K
and/or Regulation S-B under the Exchange Act, as applicable;
          (h) on the Trade Date and on each day of the Valuation Period, (i) the
assets of Counterparty at their fair valuation exceed the liabilities of
Counterparty, including contingent liabilities, (ii) the capital of Counterparty
is adequate to conduct the business of Counterparty and (iii) Counterparty 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;
          (i) it has not, and during any Valuation Period will not, enter into
agreements similar to the Transactions described herein where any initial hedge
period (however defined) or the calculation period (however defined) in such
other transaction will overlap at any time (including as a result of extensions
in such initial hedge period or calculation period as provided in the relevant
agreements) with any Valuation Period under this Master Confirmation. In the
event that the initial hedge period or calculation period in any other similar
transaction overlaps with any Valuation Period under this Master Confirmation as
a result of an extension of the Valuation Date pursuant to Section 5 herein,
Counterparty shall promptly amend such transaction to avoid any such overlap;
and
          (j) Counterparty is not and, after giving effect to the Transaction,
will not be, required to register as an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.
5. Suspension of Valuation Period.
          (a) If Counterparty concludes that it will be engaged in a
distribution of the Shares for purposes of Regulation M (other than securities
or activities excepted from Regulation M by reason of Rules 101(b) and (c) and
102(b), (c) and (d) under the Exchange Act), Counterparty agrees that it will,
on a day no later than the Scheduled Trading Day immediately preceding the start
of the relevant restricted period, provide GS&Co. with a Regulation M
Distribution Notice. Upon the effectiveness of such Regulation M Distribution
Notice, GS&Co. shall halt any purchase of Shares in connection with hedging any
Transaction during the relevant “restricted period”. If on any Scheduled Trading
Day Counterparty delivers the Regulation M Distribution Notice in writing (and
confirms by telephone) by 8:30 a.m. New York Time (the “Notification Time”) then
such notice shall be effective as of such Notification Time. In the event that
Counterparty delivers such Regulation M Distribution Notice in writing and/or
confirms by telephone after the Notification Time, then such notice shall be
effective as of 8:30 a.m. New York Time on the following Scheduled Trading Day
or as otherwise required by law or agreed between Counterparty and GS&Co. The
Valuation Period shall be suspended and the Valuation Date shall be postponed
for each Scheduled Trading Day in such restricted period.
          (b) In the event that GS&Co. concludes, in its reasonable discretion,
that as a result of an event, condition or circumstance arising after the Trade
Date it is appropriate with respect to any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by GS&Co.), for it to refrain from purchasing Shares on any Scheduled
Trading Day during the Valuation Period, GS&Co. may by written notice to
Counterparty elect to suspend the Valuation Period for such number of Scheduled
Trading Days as is specified in the notice. Unless GS&Co. is under legal,
regulatory, contractual or other obligation not to disclose the underlying
reasons for such a suspension, the notice (which may be verbal) shall specify
the reason for GS&Co.’s election to suspend the Valuation Period. The Valuation
Period shall be suspended and the Valuation Date shall be postponed for each
Scheduled Trading Day occurring during any such suspension.
          (c) In the event that the Valuation Period is suspended pursuant to
Section 5(a) or (b) above during the regular trading session on the Exchange
then the Calculation Agent in its reasonable discretion shall, in calculating
the Forward Price, extend the Valuation Period and make adjustments to the
weighting of each Rule 10b-18 eligible transaction in the Shares on the relevant
Exchange Business Days during the Valuation Period for purposes of determining
the Forward Price, with such adjustments based on, among other factors, the
duration of any such suspension and the volume, historical trading patterns and
price of the Shares.
          6. 10b5-1 Plan. Counterparty represents, warrants and covenants to
GS&Co. that for each Transaction:

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          (a) Counterparty is entering into this Master Confirmation and each
Transaction hereunder in good faith and not as part of a plan or scheme to evade
the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) or any
antifraud or anti-manipulation provisions of the federal or applicable state
securities laws and that it has not entered into or altered and will not enter
into or alter any corresponding or hedging transaction or position with respect
to the Shares. Counterparty acknowledges that it is the intent of the parties
that each Transaction entered into under this Master Confirmation comply with
the requirements of Rule 10b5-1(c)(1)(i)(A) and (B) and each Transaction entered
into under this Master Confirmation shall be interpreted to comply with the
requirements of Rule 10b5-1(c).
          (b) Counterparty will not seek to control or influence GS&Co. to make
“purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3)) under
any Transaction entered into under this Master Confirmation, including, without
limitation, GS&Co.’s decision to enter into any hedging transactions.
Counterparty represents and warrants that it has consulted with its own advisors
as to the legal aspects of its adoption and implementation of this Master
Confirmation and each Supplemental Confirmation under Rule 10b5-1.
          (c) Counterparty acknowledges and agrees that any amendment,
modification, waiver or termination of this Master Confirmation or the relevant
Supplement Confirmation must be effected in accordance with the requirements for
the amendment or termination of a “plan” as defined in Rule 10b5-1(c). 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, and no such amendment,
modification, waiver or termination shall be made at any time at which
Counterparty or any officer, director, manager or similar person of Counterparty
is aware of any material non-public information regarding Counterparty or the
Shares.
          7. Counterparty Purchases. Counterparty represents, warrants and
covenants to GS&Co. that, for each Transaction, Counterparty (or any “affiliated
purchaser” as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”))
shall not, without the prior written consent of GS&Co., directly or indirectly
purchase any Shares (including by means of a derivative instrument), listed
contracts on the Shares or securities that are convertible into, or exchangeable
or exercisable for Shares (including, without limitation, any Rule 10b-18
purchases of blocks (as defined in Rule 10b-18)) during any Relevant Period,
except for purchases from its employees that are not “Rule 10b-18 purchases” (as
defined in Rule 10b-18(a)(13)). During this time, any such purchases by
Counterparty shall be made through GS&Co., or if not through GS&Co., with the
prior written consent of GS&Co., and in compliance with Rule 10b-18 or otherwise
in a manner that Counterparty and GS&Co. believe is in compliance with
applicable requirements.
          8. Additional Termination Events. The declaration of any Extraordinary
Dividend by Counterparty during the Valuation Period for any Transaction shall
constitute an Additional Termination Event, with Counterparty as the sole
Affected Party and all Transactions hereunder as the Affected Transactions.
          9. [reserved]
          10. Automatic Termination Provisions. Notwithstanding anything to the
contrary in Section 6 of the Agreement:
          (a) If a Termination Price is specified in one or more Supplemental
Confirmations, then an Additional Termination Event with Counterparty as the
sole Affected Party and all Transactions to which such Supplemental
Confirmations relate as Affected Transactions will automatically occur without
any notice or action by GS&Co. or Counterparty if the price of the Shares on the
Exchange at any time falls below such Termination Price. The Exchange Business
Day that the price of the Shares on the Exchange at any time falls below the
Termination Price will be the “Early Termination Date” for purposes of the
Agreement.
          (b) Notwithstanding anything to the contrary in Section 6(d) of the
Agreement, following the occurrence of such an Additional Termination Event,
GS&Co. will notify Counterparty of the amount owing under Section 6(e) of the
Agreement within a commercially reasonable time period (with such period based
upon the amount of time, determined by GS&Co. (or any of its Affiliates) in its
reasonable discretion, that it would take to unwind any of its Hedge Position(s)
related to the Transaction in a commercially reasonable manner based on

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relevant market indicia). For purposes of the “Net Share Settlement Upon Early
Termination” provisions herein, the date that such notice is effective shall
constitute the Net Share Valuation Date and the Early Termination Date.
          11. Special Provisions for Merger Transactions. Notwithstanding
anything to the contrary herein or in the Equity Definitions, Counterparty
shall,
          (a) prior to the opening of trading in the Shares on any day during
any Relevant Period on which Counterparty makes, or expects to be made, any
public announcement (as defined in Rule 165(f) under the Securities Act of 1933,
as amended) of any Merger Transaction, notify GS&Co. of such public
announcement;
          (b) promptly notify GS&Co. following any such announcement that such
announcement has been made;
          (c) promptly provide GS&Co. with written notice specifying
(i) Counterparty’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 GS&Co. or its affiliates and
(ii) the number of Shares purchased pursuant to the 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
Counterparty to GS&Co. that such information is true and correct. In addition,
Counterparty shall promptly notify GS&Co. of the earlier to occur of the
completion of such transaction and the completion of the vote by target
shareholders. Counterparty acknowledges that any such notice may cause the terms
of any Transaction to be adjusted or such Transaction to be terminated;
accordingly, Counterparty acknowledges that its delivery of such notice must
comply with the standards set forth in Section 6; and
          (d) GS&Co. in its reasonable discretion may (i) suspend the Valuation
Period and postpone the Valuation Date or (ii) treat the occurrence of such
public announcement as an Additional Termination Event with Counterparty as the
sole Affected Party and the Transactions hereunder as the Affected Transactions.
          “Merger Transaction” means any merger, acquisition or similar
transaction involving a recapitalization as contemplated by
Rule 10b-18(a)(13)(iv) under the Exchange Act.
          12. Special Calculation and Settlement Following Early Termination and
Extraordinary Events. Notwithstanding anything to the contrary in this Master
Confirmation or any Supplemental Confirmation hereunder, in the event that an
Extraordinary Event occurs that results in the termination or cancellation of
one or more Transactions or an Early Termination Date occurs or is designated
with respect to one or more Transactions (each an “Elected Transaction” and
collectively, the “Elected Transactions”), then GS&Co. may elect, in its sole
discretion, by notice to Counterparty, to have Counterparty deliver the Number
of Early Settlement Shares to GS&Co. on the date that such notice is effective
and either (x) GS&Co. shall pay to Counterparty the Special Termination Amount,
if such amount is positive, or (y) Counterparty shall either (1) pay to GS&Co.
the absolute value of the Special Termination Amount, if such amount is
negative, or (2) elect for the provisions set forth opposite “Net Share
Settlement Upon Early Termination” to apply except that all references in such
provision to “the Early Termination Amount” shall be replaced with references to
“the Special Termination Amount”. To the extent that Counterparty elects to
deliver Early Settlement Shares to GS&Co. accompanied by an effective
Registration Statement (as defined in Annex B and satisfactory to GS&Co. in its
sole discretion) covering such Shares, Counterparty must be in compliance with
the conditions specified in (iii) though (ix) in Annex B hereto at the time of
such delivery. If Counterparty elects to deliver Unregistered Shares (as defined
in Annex B) to GS&Co., Counterparty and GS&Co. will negotiate in good faith on
acceptable procedures and documentation relating to the sale of such
Unregistered Shares. Counterparty and GS&Co. agree that the payment of the
Special Termination Amount and the delivery of the Early Settlement Shares
satisfy in full any obligation of a party to make any payments pursuant to
Section 6(e) of the Agreement or Article 12 of the Equity Definitions, as the
case may be, in respect of the Elected Transactions.
          “Number of Early Settlement Shares” means a number of Shares (“Early
Settlement Shares”) as determined by GS&Co. in a good faith and commercially
reasonable manner based on its or any of its Affiliates’ Hedge Positions with
respect to the Elected Transactions under this Master Confirmation.

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          “Special Termination Amount” means the sum of (a) the product of
(i) the Number of Early Settlement Shares multiplied by (ii) a per Share price
(the “Early Termination Price”) determined by GS&Co. in a good faith and
commercially reasonable manner based on relevant market indicia, including
GS&Co.’s funding costs associated with Early Settlement Shares and costs
incurred or estimated to be incurred by GS&Co. in connection with the purchase
and sale of Shares in order to close out GS&Co.’s or any of its Affiliates’
Hedge Positions with respect to each Affected Transaction and, in the event that
Counterparty delivers Unregistered Shares to GS&Co., whether GS&Co. and
Counterparty have agreed on acceptable procedures and documentation relating to
such Unregistered Shares as described above and (b) any amount owing under
Section 6(e) of the Agreement or Article 12 of the Equity Definitions, as the
case may be, in respect of the Elected Transactions by GS&Co. to Counterparty
(expressed as a positive number) or by Counterparty to GS&Co. (expressed as a
negative number).
          13. Acknowledgments. The parties hereto intend for:
          (a) Each Transaction to be a “securities contract” as defined in
Section 741(7) of the U.S. Bankruptcy Code (Title 11 of the United States Code)
(the “Bankruptcy Code”), a “swap agreement” as defined in Section 101(53B) of
the Bankruptcy Code, or a “forward contract” as defined in Section 101(25) of
the Bankruptcy Code, and the parties hereto to be entitled to the protections
afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(b)(27),
555, 556, 560 and 561 of the Bankruptcy Code;
          (b) the Agreement to be a “master netting agreement” as defined in
Section 101 (38A) of the Bankruptcy Code;
          (c) a party’s right to liquidate or terminate any Transaction, net out
or offset termination values of payment amounts, and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” (as defined in
the Bankruptcy Code);
          (d) any cash, securities or other property transferred as performance
assurance, credit support or collateral with respect to each Transaction to
constitute “margin payments” (as defined in the Bankruptcy Code); and
          (e) all payments for, under or in connection with each Transaction,
all payments for the Shares and the transfer of such Shares to constitute
“settlement payments” and “transfers” (as defined in the Bankruptcy Code).
          14. Calculations on Early Termination and Set-Off.
          (a) Notwithstanding anything to the contrary in the Agreement or the
Equity Definitions, the calculation of any Settlement Amounts, Unpaid Amounts
and amounts owed in respect of cancelled Transactions under Article 12 of the
Equity Definitions shall be calculated separately for (A) all Terminated
Transactions (it being understood that such term for purposes of this paragraph
includes Transactions cancelled pursuant to Article 12 of the Equity
Definitions) in the Shares of the Issuer that qualify as equity under applicable
accounting rules (collectively, the “Equity Shares”) as determined by the
Calculation Agent and (B) all other Terminated Transactions under the Agreement
including, without limitation, Transactions in Shares other than those of the
Issuer (collectively, the “Other Shares”).
          (b) The parties agree to amend Section 6 of the Agreement by adding a
new Section 6(f) thereto as follows:
“(f) Upon the occurrence of an Event of Default or Termination Event with
respect to a party who is the Defaulting Party or the Affected Party or upon the
occurrence of an Extraordinary Event that results in the termination or
cancellation of any Transaction (such Defaulting Party, Affected Party or, in
the case of such an Extraordinary Event, either party, “X”), the other party
(“Y”) will have the right (but not be obliged) without prior notice to X or any
other person to set-off or apply any obligation of X owed to Y (or any Affiliate
of Y) (whether or not matured or contingent and whether or not arising under the

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Agreement, and regardless of the currency, place of payment or booking office of
the obligation) against any obligation of Y (or any Affiliate of Y) owed to X
(whether or not matured or contingent and whether or not arising under the
Agreement, and regardless of the currency, place of payment or booking office of
the obligation). Y will give notice to the other party of any set-off effected
under this Section 6(f).
Amounts (or the relevant portion of such amounts) subject to set-off may be
converted by Y into the Termination Currency at the rate of exchange at which
such party would be able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency. If any obligation is
unascertained, Y may in good faith estimate that obligation and set-off in
respect of the estimate, subject to the relevant party accounting to the other
when the obligation is ascertained. Nothing in this Section 6(f) shall be
effective to create a charge or other security interest. This Section 6(f) shall
be without prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which any party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).”
          (c) Notwithstanding anything to the contrary in the foregoing, GS&Co.
agrees not to set off or net amounts due from Counterparty with respect to any
Transaction against amounts due from GS&Co. to Counterparty under obligations
other than Equity Contracts. “Equity Contract” means any transaction relating to
Shares between the parties (or any of their affiliates) that qualifies as
‘equity’ under applicable accounting rules.
          15. Payment Date Upon Early Termination. Notwithstanding anything to
the contrary in Section 6(d)(ii) of the Agreement, all amounts calculated as
being due in respect of an Early Termination Date under Section 6(e) of the
Agreement will be payable on the day that notice of the amount payable is
effective.
          16. Credit Support Documents. The parties hereto acknowledge that no
Transaction hereunder is secured by any collateral that would otherwise secure
the obligations of Counterparty herein or pursuant to the Agreement.
          17. Claim in Bankruptcy. GS&Co. agrees that in the event of the
bankruptcy of Counterparty, GS&Co. shall not have rights or assert a claim that
is senior in priority to the rights and claims available to the shareholders of
the common stock of Counterparty.
          18. Transactions by GS&Co. [***]
          19. Offices.
          (a) The Office of GS&Co. for each Transaction is: One New York Plaza,
New York, New York 10004.
          (b) The Office of Counterparty for each Transaction is: 3050 Bowers
Avenue, Santa Clara, California 95054.
          20. Governing Law. The Agreement, this Master Confirmation and each
Supplemental Confirmation and all matters arising in connection with the
Agreement, this Master Confirmation and each Supplemental Confirmation shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York (without reference to its choice of laws doctrine).
 

***   information has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

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          21. Counterparts. This Master Confirmation may be executed in any
number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Master Confirmation by signing
and delivering one or more counterparts.
          22. Arbitration.
          (a) All parties to this Confirmation are giving up the right to sue
each other in court, including the right to a trial by jury, except as provided
by the rules of the arbitration forum in which a claim is filed.
          (b) Arbitration awards are generally final and binding; a party’s
ability to have a court reverse or modify an arbitration award is very limited.
          (c) The ability of the parties to obtain documents, witness statements
and other discovery is generally more limited in arbitration than in court
proceedings.
          (d) The arbitrators do not have to explain the reason(s) for their
award.
          (e) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry, unless
Counterparty is a member of the organization sponsoring the arbitration
facility, in which case all arbitrators may be affiliated with the securities
industry.
          (f) The rules of some arbitration forums may impose time limits for
bringing a claim in arbitration. In some cases, a claim that is ineligible for
arbitration may be brought in court.
          (g) The rules of the arbitration forum in which the claim is filed,
and any amendments thereto, shall be incorporated into this Confirmation.
          (h) Counterparty agrees that any and all controversies that may arise
between Counterparty and GS & Co., including, but not limited to, those arising
out of or relating to the Agreement or any Transaction hereunder, shall be
determined by arbitration conducted before The New York Stock Exchange, Inc.
(“NYSE”) or NASD Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR
decline to hear the matter, before the American Arbitration Association, in
accordance with their arbitration rules then in force. The award of the
arbitrator shall be final, and judgment upon the award rendered may be entered
in any court, state or federal, having jurisdiction.
          (i) No person shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action or who is a member
of a putative class who has not opted out of the class with respect to any
claims encompassed by the putative class action until: (i) the class
certification is denied; (ii) the class is decertified; or (iii) Counterparty is
excluded from the class by the court.
          (j) Such forbearance to enforce an agreement to arbitrate shall not
constitute a waiver of any rights under this Confirmation except to the extent
stated herein.

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          23. Counterparty hereby agrees (a) to check this Master Confirmation
carefully and immediately upon receipt so that errors or discrepancies can be
promptly identified and rectified and (b) to confirm that the foregoing
correctly sets forth the terms of the agreement between GS&Co. and Counterparty
with respect to any Transaction, by manually signing this Master Confirmation or
this page hereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy to
Equity Derivatives Documentation Department, facsimile No. 212-428-1980/83.

            Yours sincerely,

GOLDMAN, SACHS & CO.
      By:   /s/ Conrad Langenegger         Authorized Signatory        Name: 
Title:   Conrad Langenegger
Vice President,
Equity Derivatives Administration     

Agreed and Accepted By:

       
APPLIED MATERIALS, INC.
    By:   /s/ Nancy H. Handel       Name:   Nancy H. Handel      Title:   Senior
Vice President and Chief Financial Officer     

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ANNEX A
SUPPLEMENTAL CONFIRMATION

     
To:
  Applied Materials, Inc.
 
  3050 Bowers Avenue
 
  Santa Clara, CA 95054
 
   
From:
  Goldman, Sachs & Co.
 
   
Subject:
  Accelerated Share Buyback
 
   
Ref. No:
  [Insert Reference No.]
 
   
Date:
  September 18, 2006

The purpose of this Supplemental Confirmation is to confirm the terms and
conditions of the Transaction entered into between Goldman, Sachs & Co.
(“GS&Co.”) and Applied Materials, Inc. (“Counterparty” and together with GS&Co.,
the “Contracting Parties”) on the Trade Date specified below. This Supplemental
Confirmation is a binding contract between GS&Co. and Counterparty as of the
relevant Trade Date for the Transaction referenced below.
1. This Supplemental Confirmation supplements, forms part of, and is subject to
the Master Confirmation dated as of September 18, 2006 (the “Master
Confirmation”) between the Contracting Parties, as amended and supplemented from
time to time. All provisions contained in the Master Confirmation govern this
Supplemental Confirmation except as expressly modified below.
2. The terms of the Transaction to which this Supplemental Confirmation relates
are as follows:

     
Trade Date:
  [                    , 200_]
Initial Share Price:
  USD [___] per Share.
Valuation Date:
  [                    , 200_]
Number of Shares:
  [                    ]
Settlement Price Adjustment Amount
  USD[___]
Ordinary Dividend Amount:
  For any calendar quarter, USD[___]
Termination Price:
  USD[___] per Share
Reserved Shares:
  [                    ] Shares
Counterparty Additional Payment Amount:
  USD[                    ]

3. Counterparty represents and warrants to GS&Co. that neither it (nor any
“affiliated purchaser” as defined in Rule 10b-18 under the Exchange Act) have
made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under
the Exchange Act during the four full calendar weeks immediately preceding the
Trade Date.
4. This Supplemental Confirmation may be executed in any number of counterparts,
all of which shall constitute one and the same instrument, and any party hereto
may execute this Supplemental Confirmation by signing and delivering one or more
counterparts.
    Counterparty hereby agrees (a) to check this Supplemental Confirmation
carefully and immediately upon receipt so that errors or discrepancies can be
promptly identified and rectified and (b) to confirm that the foregoing

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correctly sets forth the terms of the agreement between GS&Co. and Counterparty
with respect to this Transaction, by manually signing this Supplemental
Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to Equity Derivatives Documentation Department, facsimile
No. 212-428-1980/83.

            Yours sincerely,

GOLDMAN, SACHS & CO.
      By:           Authorized Signatory             

        Agreed and Accepted

APPLIED MATERIALS, INC.
    By:         Name:         Title:        

A-2

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ANNEX B
NET SHARE SETTLEMENT PROCEDURES
          The following Net Share Settlement Procedures shall apply to the
extent that Counterparty elects Net Share Settlement in accordance with the
Master Confirmation:
          Net Share Settlement shall be made by delivery of the number of Shares
equal in value to the Forward Cash Settlement Amount (the “Settlement Shares”),
with such Shares’ value based on the Net Share Settlement Price, as determined
by the Calculation Agent. Delivery of such Settlement Shares shall be made free
of any contractual or other restrictions in good transferable form on the Net
Share Settlement Date with Counterparty (i) representing and warranting to
GS&Co. at the time of such delivery that it has good, valid and marketable title
or right to sell and transfer all such Shares to GS&Co. under the terms of the
related Transaction free of any lien charge, claim or other encumbrance and
(ii) making the representations and agreements contained in Section 9.11(ii)
through (iv) of the Equity Definitions to GS&Co. with respect to the Settlement
Shares (except that the representations and agreements contained in
Section 9.11(ii) through (iv) of the Equity Definitions shall be modified by
excluding any representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a result of the
fact the Counterparty is the issuer of the Settlement Shares). GS&Co. or any
affiliate of GS&Co. designated by GS&Co. (GS&Co. or such affiliate, “GS”) shall
resell the Settlement Shares during a period (the “Resale Period”) commencing no
earlier than the Net Share Valuation Date. The Resale Period shall end on the
Exchange Business Day on which GS completes the sale of all Settlement Shares or
a sufficient number of Settlement Shares so that the realized net proceeds of
such sales exceed the Forward Cash Settlement Amount. Notwithstanding the
foregoing, if resale by GS of the Settlement Shares, as determined by GS in its
reasonable discretion (i) occurs during a distribution for purposes of
Regulation M, and if GS would be subject to the restrictions of Rule 101 of
Regulation M in connection with such distribution, the Resale Period will be
postponed or tolled, as the case may be, until the Exchange Business Day
immediately following the end of any “restricted period” as such term is defined
in Regulation M with respect to such distribution under Regulation M or
(ii) conflict with any legal, regulatory or self-regulatory requirements or
related policies and procedures applicable to GS (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by GS), the Resale Period will be postponed or tolled, as the case may
be, until such conflict is no longer applicable. During the Resale Period, if
the realized net proceeds from the resale of the Settlement Shares exceed the
Forward Cash Settlement Amount, GS shall refund such excess in cash to
Counterparty by the close of business on the third Exchange Business Day
immediately following the last day of the Resale Period. If the Forward Cash
Settlement Amount exceeds the realized net proceeds from such resale,
Counterparty shall transfer to GS by the open of the regular trading session on
the Exchange on the third Scheduled Trading Day immediately following the last
day of the Resale Period the amount of such excess (the “Additional Amount”) in
cash or in the number of Shares (“Make-whole Shares”) in an amount that, based
on the Net Share Settlement Price on the last day of the Resale Period (as if
such day was the “Net Share Valuation Date” for purposes of computing such Net
Share Settlement Price), has a dollar value equal to the Additional Amount, as
determined by the Calculation Agent. The Resale Period shall continue to enable
the sale of the Make-whole Shares. If Counterparty elects to pay the Additional
Amount in Shares, the requirements and provisions set forth below shall apply.
This provision shall be applied successively until the Additional Amount is
equal to zero.
Net Share Settlement of a Transaction is subject to the following conditions:
Counterparty at its sole expense shall:
     (i) as promptly as practicable (but in no event more than fifteen
(15) Exchange Business Days immediately following the Settlement Method Election
Date or, in the case of an election of Net Share Settlement upon the occurrence
of an Extraordinary Event or an Early Termination Date, no more than one
Exchange Business Day immediately following either the Cancellation Date or the
Early Termination Date, as the case may be) file under the Securities Act and
use its reasonable efforts to make effective, as promptly as practicable, a
registration statement or supplement or amend an outstanding registration
statement, in any such case, in form and substance reasonably satisfactory to GS
(the “Registration Statement”) covering the offering and sale by GS of not less
than 150% of the Shares

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necessary to fulfill the Net Share Settlement delivery obligation by
Counterparty (determining the number of such Shares to be registered on the
basis of the average of the Settlement Prices on the fifteen (15) Exchange
Business Days prior to the date of such filing, amendment or supplement, as the
case may be);
     (ii) maintain the effectiveness of the Registration Statement until GS has
sold all shares to be delivered by Counterparty in satisfaction of its Net Share
Settlement obligations;
     (iii) have afforded GS and its counsel and other advisers a reasonable
opportunity to conduct a due diligence investigation of Counterparty customary
in scope for transactions in which GS acts as underwriter of equity securities,
and GS shall have been satisfied (with the approval of its Commitments Committee
in accordance with its customary review process) with the results of such
investigation;
     (iv) have negotiated and entered into an agreement with GS providing for
such covenants, conditions, representations and warranties, underwriting
discounts, commissions, indemnities and contribution rights as are customary for
GS equity underwriting agreements, together with customary certificates and
opinions of counsel and letters of independent auditors of Counterparty to be
delivered to GS covering the shares to be delivered by Counterparty in
satisfaction of its Net Share Settlement obligations;
     (v) have delivered to GS such number of prospectuses relating thereto as GS
shall have reasonably requested and shall promptly update and provide GS with
replacement prospectuses as necessary to ensure the prospectus does 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;
     (vi) have retained for GS nationally-recognized underwriting counsel
acceptable to GS (in its sole discretion) with broad experience in similar
registered securities offerings and such counsel shall have agreed to act as
such;
     (vii) have taken all steps necessary for the shares sold by GS to be listed
or quoted on the primary exchange or quotation system that the Shares are listed
or quoted on;
     (viii) have paid all reasonable and actual out-of-pocket costs and expenses
of GS and all reasonable and actual fees and expenses of GS’s outside counsel
and other independent experts in connection with the foregoing; and
     (ix) take such action as is required to ensure that GS’s sale of the Shares
does not violate, or result in a violation of, the federal or state securities
laws.
          In the event that the Registration Statement is not declared effective
by the Securities Exchange Commission (the “SEC”) or any of the conditions
specified in (ii) through (ix) above are not satisfied on or prior to the
Valuation Date (or, in the case of an election of Net Share Settlement upon the
occurrence of an Extraordinary Event or an Early Termination Date, on or prior
to the first Exchange Business Day following either the Cancellation Date or the
Early Termination Date, as the case may be), then Counterparty may deliver
Unregistered Shares (as defined below) to GS in accordance with the following
conditions. If GS and Counterparty can agree on acceptable pricing, procedures
and documentation relating to the sale of such Unregistered Shares (including,
without limitation, applicable requirements in (iii) through (ix) above and
insofar as pertaining to private offerings), then such Unregistered Shares shall
be deemed to be the “Settlement Shares” for the purposes of the related
Transaction and the settlement procedure specified in this Annex B shall be
followed except that in the event that the Forward Cash Settlement Amount
exceeds the proceeds from the sale of such Unregistered Shares then for the
purpose of calculating the number of Make-whole Shares to be delivered by
Counterparty, GS shall determine the discount to the Net Share Settlement Price
at which it can sell the Unregistered Shares. Notwithstanding the delivery of
the Unregistered Shares, Counterparty shall endeavor in good faith to have a
registration statement declared effective by the SEC as soon as practical. In
the event that GS has not sold sufficient Unregistered Shares

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to satisfy Counterparty’s obligations to GS contained herein at the time that a
Registration Statement covering the offering and sale by GS of a number of
Shares equal in value to not less than 150% of the amount then owed to GS is
declared effective (based on the Net Share Settlement Price on the Exchange
Business Day (as if such Exchange Business Day were the “Net Share Valuation
Date” for purposes of computing such Net Share Settlement Price) that the
Registration Statement was declared effective), GS shall return all unsold
Unregistered Shares to Counterparty and Counterparty shall deliver such number
of Shares covered by the effective Registration Statement equal to 100% of the
amount then owed to GS based on such Net Share Settlement Price. Such delivered
shares shall be deemed to be the “Settlement Shares” for the purposes of the
related Transaction and the settlement procedure specified in this Master
Confirmation (including the obligation to deliver any Make-whole Shares, if
applicable) shall be followed. In all cases GS shall be entitled to take any and
all required actions in the course of its sales of the Settlement Shares,
including without limitation making sales of the Unregistered Shares only to
“Qualified Institutional Buyers” (as such term is defined under the Securities
Act), to ensure that the sales of the Unregistered Shares and the Settlement
Shares covered by the Registration Statement are not integrated resulting in a
violation of the securities laws and Counterparty agrees to take all actions
requested by GS in furtherance thereof.
          If GS and Counterparty cannot agree on acceptable pricing, procedures
and documentation relating to the sales of such Unregistered Shares then the
number of Unregistered Shares to be delivered to GS pursuant to the provisions
above shall not be based on the Net Share Settlement Price but rather GS shall
determine the value attributed to each Unregistered Share in a commercially
reasonable manner and based on such value Counterparty shall deliver a number of
Shares equal in value to the Forward Cash Settlement Amount. For the purposes
hereof “Unregistered Shares” means Shares that have not been registered pursuant
to an effective registration statement under the Securities Act or any state
securities laws (“Blue Sky Laws”) and that cannot be sold, transferred, pledged
or otherwise disposed of without registration under the Securities Act or under
applicable Blue Sky Laws unless such sale, transfer, pledge or other disposition
is made in a transaction exempt from registration thereunder.
          In the event that Counterparty delivers Shares pursuant to an election
of Net Share Settlement then Counterparty agrees to indemnify and hold harmless
GS, its affiliates and its assignees and their respective directors, officers,
employees, agents and controlling persons (GS and each such person being an
“Indemnified Party”) from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject, under the Securities Act or otherwise,
(i) relating to or arising out of any of the Transactions contemplated by this
Master Confirmation concerning the Shares or (ii) arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, prospectus, Registration Statement or other written
material relating to the Shares delivered to prospective purchasers, including
in each case any amendments or supplements thereto and including but not limited
to any documents deemed to be incorporated in any such document by reference
(the “Offering Materials”), or arising out of or based upon any omission or
alleged omission to state in the Offering Materials a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that, in the case of
this clause (ii), Counterparty will not be liable to the extent that any loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission or alleged untrue statement or omission in the Offering Materials
made in reliance upon and in conformity with written information furnished to
Counterparty by GS expressly for use in the Offering Materials, as expressly
identified in a letter to be delivered at the closing of the delivery of Shares
by Counterparty to GS. The foregoing indemnity shall exclude losses that GS
incurs solely by reason of the proceeds from the sale of the Capped Number of
Shares being less than the Forward Cash Settlement Amount. Counterparty will not
be liable under the foregoing indemnification provision to the extent that any
loss, claim, damage, liability or expense is found in a nonappealable judgment
by a court of competent jurisdiction to have resulted from GS’s willful
misconduct, gross negligence or bad faith in performing the services that are
subject of this Master Confirmation. If for any reason the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
harmless any Indemnified Party, then Counterparty shall contribute, to the
maximum extent permitted by law, to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or liability. In
addition, Counterparty will reimburse any Indemnified Party for all expenses
(including reasonable counsel fees and expenses) as they are incurred (after
notice to Counterparty) in connection with the investigation of, preparation for
or defense or settlement of any pending or threatened claim or any action, suit
or proceeding arising therefrom, whether or not such Indemnified Party is a
party thereto and whether or not such claim, action, suit or proceeding is
initiated or brought by or on behalf of Counterparty. Counterparty also agrees
that no Indemnified Party shall have any liability to Counterparty or any person
asserting

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claims on behalf of or in right of Counterparty in connection with or as a
result of any matter referred to in the Agreement or this Master Confirmation
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by Counterparty result from the gross negligence, willful misconduct or
bad faith of the Indemnified Party. This indemnity shall survive the completion
of any Transaction contemplated by this Master Confirmation and any assignment
and delegation of a Transaction made pursuant to this Master Confirmation or the
Agreement shall inure to the benefit of any permitted assignee of GS&Co.
          In no event shall the number of Settlement Shares (including, without
duplication, any Unregistered Shares) and any Make-whole Shares, be greater than
the Reserved Shares minus the amount of any Shares actually delivered under any
other Transaction(s) under this Master Confirmation (the result of such
calculation, the “Capped Number”). Counterparty represents and warrants (which
shall be deemed to be repeated on each day that a Transaction is outstanding)
that the Capped Number is equal to or less than the number of Shares determined
according to the following formula:
A – B

          Where
 
    A = the number of authorized but unissued shares of the Issuer that are not
reserved for future issuance on the date of the determination of the Capped
Number; and  
 
      B = the maximum number of Shares required to be delivered to third parties
if Counterparty elected Net Share Settlement of all transactions in the Shares
(other than Transactions in the Shares under this Master Confirmation) with all
third parties that are then currently outstanding and unexercised.

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