Exhibit 10.3

 

f

[Dealer address]

 

To: Varex Imaging Corporation
1678 S. Pioneer Road
Salt Lake City, Utah 84104
Attention:  Matthew Lowell, Treasurer
Telephone No.:  (650) 460-8190
Email:  matthew.lowell@vareximaging.com     From: [Dealer]     Re: Additional
Call Option Transaction     Date: June 5, 2020

 

 

Dear Ladies and Gentlemen:

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the call option transaction entered into between
[Dealer] (“Dealer”) and Varex Imaging Corporation (“Counterparty”) as of the
Trade Date specified below (the “Transaction”). This letter agreement
constitutes a “Confirmation” as referred to in the Agreement (as defined below).
This Confirmation shall replace any previous agreements and serve as the final
documentation for the Transaction.

 

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. (“ISDA”) are incorporated into this
Confirmation. In the event of any inconsistency between the Equity Definitions
and this Confirmation, this Confirmation shall govern. Certain defined terms
used herein are based on terms that are defined in the Offering Memorandum dated
June 4, 2020 (the “Offering Memorandum”) relating to the 4.00% Convertible
Senior Notes due 2025 (as originally issued by Counterparty, the “Convertible
Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible
Note”) issued by Counterparty in an aggregate initial principal amount of USD
175,000,000 (as increased by an aggregate principal amount of USD 25,000,000
pursuant to the exercise by the Purchasers (as defined herein) of their option
to purchase additional Convertible Notes pursuant to the Purchase Agreement (as
defined herein)) pursuant to an Indenture to be dated June 9, 2020 between
Counterparty and Wells Fargo Bank, National Association, as trustee (the
“Indenture”). In the event of any inconsistency between the terms defined in the
Offering Memorandum, the Indenture and this Confirmation, this Confirmation
shall govern. The parties acknowledge that this Confirmation is entered into on
the date hereof with the understanding that (i) definitions set forth in the
Indenture which are also defined herein by reference to the Indenture and (ii)
sections of the Indenture that are referred to herein will conform to the
descriptions thereof in the Offering Memorandum. If any such definitions in the
Indenture or any such sections of the Indenture differ from the descriptions
thereof in the Offering Memorandum, the descriptions thereof in the Offering
Memorandum will govern for purposes of this Confirmation. The parties further
acknowledge that the Indenture section numbers used herein are based on the
draft of the Indenture last reviewed by Dealer as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as
executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties. Subject to the foregoing, references to the Indenture
herein are references to the Indenture as in effect on the date of its
execution, and if the Indenture is amended or supplemented following such date
(other than any amendment or supplement (x) pursuant to Section 8.01(I) of the
Indenture that, as determined by the Calculation Agent, conforms the Indenture
to the description of Convertible Notes in the Offering Memorandum or (y)
pursuant to Section 5.09 of the Indenture, subject, in the case of this clause
(y), to the second paragraph under “Method of Adjustment” in Section 3), any
such amendment or supplement will be disregarded for purposes of this
Confirmation (other than as provided in Section 9(j)(iii) below) unless the
parties agree otherwise in writing. For purposes of the Equity Definitions, the
Transaction shall be deemed a Share Option Transaction.

 

 

 

 

Each party is hereby advised, and each such party acknowledges, that the other
party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.

 

1.             This Confirmation evidences a complete and binding agreement
between Dealer and Counterparty 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 2002 ISDA Master Agreement (the
“Agreement”) as if Dealer and Counterparty had executed an agreement in such
form on the Trade Date (but without any Schedule except for (i) the election of
the laws of the State of New York as the governing law (without reference to
choice of law doctrine), (ii) in respect of Section 5(a)(vi) of the Agreement,
the election that the “Cross Default” provisions shall apply to Dealer with (a)
a “Threshold Amount” of three percent of the shareholders’ equity of [_____]
(“Dealer Parent”) as of the Trade Date, (b) the deletion of the phrase “, or
becoming capable at such time of being declared,” from clause (1) and (c) the
following language added to the end thereof: “Notwithstanding the foregoing, a
default under subsection (2) hereof shall not constitute an Event of Default if
(x) the default was caused solely by error or omission of an administrative or
operational nature; (y) funds were available to enable the party to make the
payment when due; and (z) the payment is made within two Local Business Days of
such party’s receipt of written notice of its failure to pay.”, (iii) the term
“Specified Indebtedness” shall have the meaning specified in Section 14 of the
Agreement, except that such term shall not include obligations in respect of
deposits received in the ordinary course of a party’s banking business, and (iv)
following the payment of the Premium, the condition precedent in Section
2(a)(iii) of the Agreement with respect to Events of Default or Potential Events
of Default (other than an Event of Default or Potential Event of Default arising
under Section 5(a)(ii), 5(a)(iv) or 5(a)(vii) of the Agreement) shall not apply
to a payment or delivery owing by Dealer to Counterparty). 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.

 

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

 

General Terms.

 

  Trade Date: June 5, 2020

 

  Effective Date: The second Scheduled Trading Day immediately prior to the
Premium Payment Date, subject to Section 9(x).

 

  Option Style: “Modified American”, as described under “Procedures for
Exercise” below.

 

  Option Type: Call

 

Buyer:Counterparty

 

Seller:Dealer

 

Shares:The common stock of Varex Imaging Corporation (“Issuer”), par value USD
0.01 per share (Exchange symbol “VREX”).

 

  Number of Options: 25,000. For the avoidance of doubt, the Number of Options
shall be reduced by any Options exercised by Counterparty. In no event will the
Number of Options be less than zero.

 

  Applicable Percentage: [_____]%

 

  Option Entitlement: A number equal to the product of the Applicable Percentage
and 48.0480.

 

  Strike Price: USD 20.8125

 

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Premium:USD [_____]

 

  Premium Payment Date: June 9, 2020

 

Exchange:NASDAQ Global Select Market

 

  Related Exchange(s): All Exchanges

 

  Excluded Provisions: Section 5.07 and Section 5.06 of the Indenture.

 

Procedures for Exercise.

 

  Conversion Date: With respect to any conversion of a Convertible Note (other
than any conversion of Convertible Notes in respect of which the holder of such
Convertible Note would be entitled to an increase in the Convertible Rate
pursuant to Section 5.07 of the Indenture (any such conversion, a “Make-Whole
Conversion”), to which the provisions of Section 9(j)(iv) of this Confirmation
shall apply), the date on which the Holder (as such term is defined in the
Indenture) of such Convertible Note satisfies all of the requirements for
conversion thereof as set forth in Section 5.02(A) of the Indenture; provided
that, subject to the “Notice of Exercise” provisions below, if Counterparty has
not delivered to Dealer a related Notice of Exercise, then in no event shall a
Conversion Date be deemed to occur hereunder (and no Option shall be exercised
or deemed to be exercised hereunder) with respect to any surrender of a
Convertible Note for conversion in respect of which Counterparty has elected to
designate a financial institution for exchange in lieu of conversion of such
Convertible Note pursuant to Section 5.08 of the Indenture.

 

  Free Convertibility Date: December 1, 2024

 

  Expiration Time: The Valuation Time

 

  Expiration Date: June 1, 2025, subject to earlier exercise.

 

  Multiple Exercise: Applicable, as described under “Automatic Exercise” below.

 

  Automatic Exercise: Notwithstanding Section 3.4 of the Equity Definitions, on
each Conversion Date occurring on or after the Free Convertibility Date in
respect of which a “Notice of Conversion” (as defined in the Indenture) that is
effective as to Counterparty has been delivered by the relevant converting
Holder, a number of Options equal to (i) the number of Convertible Notes in
denominations of USD 1,000 as to which such Conversion Date has occurred minus
(ii) the number of Options that are or are deemed to be automatically exercised
on such Conversion Date under the Base Call Option Transaction Confirmation
letter agreement dated June 4, 2020 between Dealer and Counterparty (the “Base
Call Option Confirmation”), shall be deemed to be automatically exercised;
provided that such Options shall be exercised or deemed exercised only if
Counterparty has provided a Notice of Exercise to Dealer in accordance with
“Notice of Exercise” below.

 

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Notwithstanding the foregoing, in no event shall the number of Options that are
exercised or deemed exercised hereunder exceed the Number of Options.

 

  Notice of Exercise: Notwithstanding anything to the contrary in the Equity
Definitions or under “Automatic Exercise” above, in order to exercise any
Options relating to Convertible Notes with a Conversion Date occurring on or
after the Free Convertibility Date, Counterparty must notify Dealer in writing
(which, for the avoidance of doubt, may be by email) before 5:00 p.m. (New York
City time) on the Scheduled Valid Day immediately preceding the Expiration Date
specifying the number of such Options; provided that, notwithstanding the
foregoing, such notice (and the related exercise of Options hereunder) shall be
effective if given after the applicable notice deadline specified above but
prior to 5:00 p.m. (New York City time) on the fifth Exchange Business Day
following such notice deadline, in which event the Calculation Agent shall have
the right to adjust Dealer’s delivery obligation hereunder in good faith and in
a commercially reasonable manner, with respect to the exercise of such Options,
as appropriate to reflect the additional commercially reasonable costs and
losses (limited to losses as a result of hedging mismatches and market losses)
and expenses incurred by Dealer or any of its affiliates in connection with its
hedging activities with such adjustments made assuming that Dealer maintains
commercially reasonable hedge positions (including the unwinding of any hedge
position) as a result of its not having received such notice prior to such
notice deadline (it being understood that the adjusted delivery obligation
described in the preceding proviso can never be less than zero and can never
require any payment by Counterparty); provided, further, that if the Relevant
Settlement Method for such Options is (x) Net Share Settlement and the Specified
Cash Amount (as defined below) is not USD 1,000, (y) Cash Settlement or (z)
Combination Settlement, Dealer shall have received a separate notice (the
“Notice of Final Settlement Method”) (which, for the avoidance of doubt, may be
by email) in respect of all such Convertible Notes before 5:00 p.m. (New York
City time) on the Free Convertibility Date specifying (1) the Relevant
Settlement Method for such Options, and (2) if the settlement method for the
related Convertible Notes is not Settlement in Shares or Settlement in Cash
(each as defined below), the fixed amount of cash per Convertible Note that
Counterparty has elected to deliver to Holders (as such term is defined in the
Indenture) of the related Convertible Notes (the “Specified Cash Amount”).
Counterparty acknowledges its responsibilities under applicable securities laws,
and in particular Section 9 and Section 10(b) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the rules and regulations thereunder,
in respect of any election of a settlement method with respect to the
Convertible Notes.

 

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  Valuation Time: At the close of trading of the regular trading session on the
Exchange; provided that if the principal trading session is extended, the
Calculation Agent shall determine the Valuation Time in good faith and in its
commercially reasonable discretion.

 

  Market Disruption Event: Section 6.3(a) of the Equity Definitions is hereby
replaced in its entirety by the following:

 

“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the
primary United States national or regional securities exchange or market on
which the Shares are listed or admitted for trading to open for trading during
its regular trading session or (ii) the occurrence or existence prior to 1:00
p.m. (New York City time) on any Scheduled Valid Day for the Shares for more
than one half-hour period in the aggregate during regular trading hours of any
suspension or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by the relevant stock exchange or otherwise) in the
Shares or in any options contracts or futures contracts relating to the Shares.”

 

Settlement Terms.

 

  Settlement Method: For any Option, Net Share Settlement; provided that if the
Relevant Settlement Method set forth below for such Option is not Net Share
Settlement, then the Settlement Method for such Option shall be such Relevant
Settlement Method, but only if Counterparty shall have notified Dealer of the
Relevant Settlement Method in the Notice of Exercise or the Notice of Final
Settlement Method, as applicable, for such Option.

 

  Relevant Settlement Method: In respect of any Option:

 

(i)       if Counterparty has elected, or is deemed to have elected, to settle
its conversion obligations in respect of the related Convertible Note (A)
entirely in Shares pursuant to Section 5.03(A)(x) of the Indenture (together
with cash in lieu of fractional Shares) (such settlement method, “Settlement in
Shares”), (B) in a combination of cash and Shares pursuant to Section 5.03(A)(z)
of the Indenture with a Specified Cash Amount less than USD 1,000 (such
settlement method, “Low Cash Combination Settlement”) or (C) in a combination of
cash and Shares pursuant to Section 5.03(A)(z) of the Indenture with a Specified
Cash Amount equal to USD 1,000, then, in each case, the Relevant Settlement
Method for such Option shall be Net Share Settlement;

 

(ii)       if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Note in a combination of cash and Shares
pursuant to Section 5.03(A)(z) of the Indenture with a Specified Cash Amount
greater than USD 1,000, then the Relevant Settlement Method for such Option
shall be Combination Settlement; and

 

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(iii)       if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Note entirely in cash pursuant to Section
5.03(A)(y) of the Indenture (such settlement method, “Settlement in Cash”), then
the Relevant Settlement Method for such Option shall be Cash Settlement.

 

  Net Share Settlement: If Net Share Settlement is applicable to any Option
exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on
the relevant Settlement Date for each such Option, a number of Shares (the “Net
Share Settlement Amount”) equal to the sum, for each Valid Day during the
Settlement Averaging Period for each such Option, of (i) (a) the Daily Option
Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day,
divided by (ii) the number of Valid Days in the Settlement Averaging Period;
provided that in no event shall the Net Share Settlement Amount for any Option
exceed a number of Shares equal to the Applicable Limit for such Option divided
by the Applicable Limit Price on the Settlement Date for such Option.

 

Dealer will pay cash in lieu of delivering any fractional Shares to be delivered
with respect to any Net Share Settlement Amount valued at the Relevant Price for
the last Valid Day of the Settlement Averaging Period.

 

  Combination Settlement: If Combination Settlement is applicable to any Option
exercised or deemed exercised hereunder, Dealer will pay or deliver, as the case
may be, to Counterparty, on the relevant Settlement Date for each such Option:

 

(i)cash (the “Combination Settlement Cash Amount”) equal to the sum, for each
Valid Day during the Settlement Averaging Period for such Option, of (A) an
amount (the “Daily Combination Settlement Cash Amount”) equal to the lesser of
(1) the product of (x) the Applicable Percentage and (y) the Specified Cash
Amount minus USD 1,000 and (2) the Daily Option Value, divided by (B) the number
of Valid Days in the Settlement Averaging Period; provided that if the
calculation in clause (A) above results in zero or a negative number for any
Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall
be deemed to be zero; and

 

(ii)Shares (the “Combination Settlement Share Amount”) equal to the sum, for
each Valid Day during the Settlement Averaging Period for such Option, of a
number of Shares for such Valid Day (the “Daily Combination Settlement Share
Amount”) equal to (A) (1) the Daily Option Value on such Valid Day minus the
Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the
Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the
Settlement Averaging Period; provided that if the calculation in sub-clause
(A)(1) above results in zero or a negative number for any Valid Day, the Daily
Combination Settlement Share Amount for such Valid Day shall be deemed to be
zero;

 

6

 

 

provided that in no event shall the sum of (x) the Combination Settlement Cash
Amount for any Option and (y) the Combination Settlement Share Amount for such
Option multiplied by the Applicable Limit Price on the Settlement Date for such
Option, exceed the Applicable Limit for such Option.

 

Dealer will pay cash in lieu of delivering any fractional Shares to be delivered
with respect to any Combination Settlement Share Amount valued at the Relevant
Price for the last Valid Day of the Settlement Averaging Period.

 

  Cash Settlement: If Cash Settlement is applicable to any Option exercised or
deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions,
Dealer will pay to Counterparty, on the relevant Settlement Date for each such
Option, an amount of cash equal to the sum, for each Valid Day during the
Settlement Averaging Period for such Option, of (i) the Daily Option Value for
such Valid Day, divided by (ii) the number of Valid Days in the Settlement
Averaging Period; provided that in no event shall the Cash Settlement Amount
exceed the Applicable Limit for such Option.

 

  Daily Option Value: For any Valid Day, an amount equal to (i) the Option
Entitlement on such Valid Day, multiplied by (ii) the Relevant Price on such
Valid Day less the Strike Price on such Valid Day; provided that if the
calculation contained in clause (ii) above results in a negative number, the
Daily Option Value for such Valid Day shall be deemed to be zero. In no event
will the Daily Option Value be less than zero.

 

  Applicable Limit: For any Option, an amount of cash equal to the Applicable
Percentage multiplied by the excess of (i) the aggregate of (A) the amount of
cash, if any, paid to the Holder of the related Convertible Note upon conversion
of such Convertible Note and (B) the number of Shares, if any, delivered to the
Holder of the related Convertible Note upon conversion of such Convertible Note
multiplied by the Applicable Limit Price on the Settlement Date for such Option,
over (ii) USD 1,000.

 

  Applicable Limit Price: On any day, the opening price as displayed under the
heading “Op” on Bloomberg page VREX <equity> (or any successor thereto).

 

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  Valid Day: A day on which (i) there is no Market Disruption Event and (ii)
trading in the Shares generally occurs on the Exchange or, if the Shares are not
then listed on the Exchange, on the principal other United States national or
regional securities exchange on which the Shares are then listed or, if the
Shares are not then listed on a United States national or regional securities
exchange, on the principal other market on which the Shares are then listed or
admitted for trading. If the Shares are not so listed or admitted for trading,
“Valid Day” means a Business Day.

 

  Scheduled Valid Day: A day that is scheduled to be a Valid Day on the
principal U.S. national or regional securities exchange or market on which the
Shares are listed or admitted for trading. If the Shares are not so listed or
admitted for trading, “Scheduled Valid Day” means a Business Day.

 

  Business Day: Any day other than a Saturday, a Sunday or a day on which the
Federal Reserve Bank of New York is authorized or required by law or executive
order to close or be closed.

 

  Relevant Price: On any Valid Day, the per Share volume-weighted average price
as displayed under the heading “Bloomberg VWAP” on Bloomberg page VREX <equity>
AQR (or its equivalent successor if such page is not available) in respect of
the period from the scheduled opening time of the Exchange to the Scheduled
Closing Time of the Exchange on such Valid Day (or if such volume-weighted
average price is unavailable at such time, the market value of one Share on such
Valid Day, as determined by the Calculation Agent in good faith and in a
commercially reasonable manner using, if practicable, a volume-weighted average
method). The Relevant Price will be determined without regard to after-hours
trading or any other trading outside of the regular trading session trading
hours.

 

  Settlement Averaging Period: For any Option, the 60 consecutive Valid Days
commencing on, and including, the 61st Scheduled Valid Day immediately prior to
the Expiration Date; provided that if the Notice of Final Settlement Method or
Notice of Exercise, as applicable, for such Option specifies that Settlement in
Shares or Low Cash Combination Settlement applies to the related Convertible
Note, the Settlement Averaging Period shall be the 120 consecutive Valid Days
commencing on, and including, the 121st Scheduled Valid Day immediately prior to
the Expiration Date

 

  Settlement Date: For any Option, the second Business Day immediately following
the final Valid Day of the Settlement Averaging Period for such Option.

 

  Settlement Currency: USD

 

  Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9 and
9.11 of the Equity Definitions will be applicable, except that all references in
such provisions to “Physically-settled” shall be read as references to “Share
Settled”. “Share Settled” in relation to any Option means that Net Share
Settlement or Combination Settlement is applicable to that Option.

 

8

 

 

  Representation and Agreement: Notwithstanding anything to the contrary in the
Equity Definitions (including, but not limited to, Section 9.11 thereof), the
parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon
delivery, subject to restrictions and limitations arising from Counterparty’s
status as issuer of the Shares under applicable securities laws, (ii) Dealer may
deliver any Shares required to be delivered hereunder in certificated form in
lieu of delivery through the Clearance System and (iii) any Shares delivered to
Counterparty may be “restricted securities” (as defined in Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”)).

 

3.             Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

  Potential Adjustment Events: Notwithstanding Section 11.2(e) of the Equity
Definitions (which Section shall not apply for purposes of the Transaction), a
“Potential Adjustment Event” means an occurrence of any event or condition, as
set forth in any Dilution Adjustment Provision, that would result in an
adjustment under the Indenture to the “Conversion Rate” or the composition of a
“unit of Reference Property” or to any “Last Reported Sale Price”, “Daily VWAP,”
“Daily Conversion Value” or “Daily Settlement Amount” (each as defined in the
Indenture). For the avoidance of doubt, Dealer shall not have any delivery or
payment obligation hereunder, and no adjustment shall be made to the terms of
the Transaction, on account of (x) any distribution of cash, property or
securities by Counterparty to holders of the Convertible Notes (upon conversion
or otherwise) or (y) any other transaction in which holders of the Convertible
Notes are entitled to participate, in each case, in lieu of an adjustment under
the Indenture of the type referred to in the immediately preceding sentence
(including, without limitation, pursuant to the proviso in the first sentence of
Section 5.05(A)(iii)(1) of the Indenture or the proviso in the first sentence of
Section 5.05(A)(iv) of the Indenture).

 

  Method of Adjustment: Calculation Agent Adjustment, which means that,
notwithstanding Section 11.2(c) of the Equity Definitions (which Section shall
not apply for purposes of the Transaction), upon any Potential Adjustment Event,
the Calculation Agent, acting in good faith and in a commercially reasonable
manner, shall make a corresponding adjustment to any related adjustment required
to be made pursuant to the terms of the Indenture to any one or more of the
Strike Price, Number of Options, Option Entitlement and any other variable
relevant to the exercise, settlement or payment for the Transaction.

 

9

 

 

Notwithstanding the foregoing and “Consequences of Merger Events / Tender
Offers” below:

 

(i)if the Calculation Agent in good faith disagrees with any adjustment to the
Convertible Notes that involves an exercise of discretion by Counterparty or its
board of directors (including, without limitation, pursuant to Section 5.05(H)
of the Indenture, Section 5.09 of the Indenture or any supplemental indenture
entered into thereunder or in connection with any proportional adjustment or the
determination of the fair value of any securities, property, rights or other
assets), then in each such case, the Calculation Agent will determine in good
faith and in a commercially reasonable manner the adjustment to be made to any
one or more of the Strike Price, Number of Options, Option Entitlement and any
other variable relevant to the exercise, settlement or payment for the
Transaction in good faith and in a commercially reasonable manner taking into
account the relevant provisions of the Indenture; provided that, notwithstanding
the foregoing, if any Potential Adjustment Event occurs during the Settlement
Averaging Period but no adjustment was made to any Convertible Note under the
Indenture because the relevant Holder (as such term is defined in the Indenture)
was deemed to be a record owner of the underlying Shares on the related
Conversion Date, then the Calculation Agent shall make a commercially reasonable
adjustment, as determined by it, to the terms hereof in order to account for
such Potential Adjustment Event;

 

(ii)in connection with any Potential Adjustment Event as a result of an event or
condition set forth in Section 5.05(A)(ii) of the Indenture or Section
5.05(A)(iii) of the Indenture where, in either case, the period for determining
“Y” (as such term is used in Section 5.05(A)(ii) of the Indenture) or “SP” (as
such term is used in Section 5.05(A)(iii) of the Indenture), as the case may be,
begins before Counterparty has publicly announced the event or condition giving
rise to such Potential Adjustment Event, then the Calculation Agent shall have
the right to adjust any variable relevant to the exercise, settlement or payment
for the Transaction as appropriate to reflect the costs and expenses incurred
due solely to hedging mismatches and market losses in connection with
commercially reasonable hedging activities, as a result of such event or
condition not having been publicly announced prior to the beginning of such
period; and

 

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(iii)if any Potential Adjustment Event is declared and (a) the event or
condition giving rise to such Potential Adjustment Event is subsequently
amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined
in the Indenture) is otherwise not adjusted at the time or in the manner
contemplated by the relevant Dilution Adjustment Provision based on such
declaration or (c) the “Conversion Rate” (as defined in the Indenture) is
adjusted as a result of such Potential Adjustment Event and subsequently
re-adjusted (each of clauses (a), (b) and (c), a “Potential Adjustment Event
Change”) then, in each case, the Calculation Agent shall have the right to
adjust any variable relevant to the exercise, settlement or payment for the
Transaction as appropriate to reflect the costs and expenses incurred due solely
to hedging mismatches and market losses in connection with commercially
reasonable hedging activities, as a result of such Potential Adjustment Event
Change.

 

  Dilution Adjustment Provisions: Sections 5.05(A)(i), (ii), (iii), (iv), and
(v) and Section 5.05(H) of the Indenture.

 

Extraordinary Events applicable to the Transaction:

 

  Merger Events: Applicable; provided that notwithstanding Section 12.1(b) of
the Equity Definitions, a “Merger Event” means the occurrence of any event or
condition set forth in the definition of “Common Stock Change Event” in Section
5.09 of the Indenture.

 

  Tender Offers: 

Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in Section 5.05(A)(v) of the Indenture.

 

 

Consequences of Merger Events /

Tender Offers:

 

Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions (which
Section shall not apply for purposes of the Transaction), upon the occurrence of
a Merger Event or a Tender Offer, the Calculation Agent shall make a
corresponding adjustment in good faith and in a commercially reasonable manner
in respect of any adjustment under the Indenture to any one or more of the
nature of the Shares (in the case of a Merger Event), Strike Price, Number of
Options, Option Entitlement and any other variable relevant to the exercise,
settlement or payment for the Transaction, subject to the second paragraph under
“Method of Adjustment”; provided, however, that such adjustment shall be made
without regard to any adjustment to the Conversion Rate pursuant to any Excluded
Provision; provided further that if with respect to any Merger Event or any
Tender Offer, (A) the consideration for the Shares includes (or, at the option
of a holder of Shares, may include) shares of an entity or person that is not a
corporation or is not organized under the laws of the United States, any State
thereof or the District of Columbia or (B) the Counterparty to the Transaction
following such Merger Event or Tender Offer will not be a corporation organized
under the laws of the United States, any State thereof or the District of
Columbia, then, Cancellation and Payment (Calculation Agent Determination) may
apply at Dealer’s commercially reasonable election made in good faith.

 

11

 

 

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

 

Additional Disruption Events:

 

  Change in Law: Applicable; provided that Section 12.9(a)(ii) of the Equity
Definitions is hereby amended by (i) replacing the word “Shares” with the phrase
“Hedge Positions” in clause (X) thereof; (ii) inserting the parenthetical
“(including, for the avoidance of doubt and without limitation, adoption or
promulgation of new regulations authorized or mandated by existing statute)” at
the end of clause (A) thereof; (iii) replacing the phrase “the interpretation”
in the third line thereof with the phrase “or announcement of the formal or
informal interpretation”; (iv) immediately following the word “Transaction” in
clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging
Party on the Trade Date”; and (v) adding the words “provided that, in the case
of clause (Y) hereof where such determination is based on Dealer’s policies and
procedures, such policies and procedures have been adopted by Dealer in good
faith and are generally applicable in similar situations and applied in a
non-discriminatory manner” after the semicolon in the last line thereof. 

 

  Failure to Deliver: Applicable

 

  Hedging Disruption: Applicable; provided that:

 

(i)Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a)
inserting the following words at the end of clause (A) thereof: “in the manner
contemplated by the Hedging Party on the Trade Date” and (b) inserting the
following two phrases at the end of such Section: “for the avoidance of doubt,
the term “equity price risk” shall be deemed to include, but shall not be
limited to, stock price and volatility risk. And, for the further avoidance of
doubt, any such transactions or assets referred to in phrases (A) or (B) above
must be available on commercially reasonable pricing terms;”; and

 

12

 

 

(ii)Section 12.9(b)(iii) of the Equity Definitions is hereby amended by
inserting in the third line thereof, after the words “to terminate the
Transaction”, the words “or a portion of the Transaction affected by such
Hedging Disruption”.

 

  Increased Cost of Hedging: Applicable

 

  Hedging Party: For all applicable Additional Disruption Events, Dealer. For
the avoidance of doubt, whenever the Hedging Party is called upon to make any
adjustment or calculation pursuant to the terms of this Confirmation to take
into account the effect of an Additional Disruption Event, the Hedging Party
shall make such adjustment or calculation in a commercially reasonable manner
and assuming that the Dealer maintains a commercially reasonable hedge position.

 

  Determining Party: For all applicable Extraordinary Events, Dealer; provided
that when making any determination or calculation as “Determining Party,” Dealer
shall (i) be bound by the same obligations relating to required acts of the
Calculation Agent as set forth in Section 1.40 of the Equity Definitions and
this Confirmation as if Determining Party were the Calculation Agent and (ii)
make such determination or calculation assuming that the Dealer maintains a
commercially reasonable hedge position. Following any determination or
calculation by Determining Party hereunder, upon a written request by
Counterparty (which may be made by email), Determining Party will promptly (but
in any event within three Exchange Business Days) provide to Counterparty by
email to the email address provided by Counterparty in such written request a
report (in a commonly used file format for the storage and manipulation of
financial data) displaying in reasonable detail the basis for such determination
or calculation (including any assumptions used in making such determination or
calculation), it being understood that in no event will Determining Party be
obligated to share with Counterparty any proprietary or confidential data or
information or any proprietary or confidential models used by it in making such
determination or calculation or any information that is subject to an obligation
not to disclose such information.

 

  Non-Reliance: Applicable.

 

  Agreements and Acknowledgments
Regarding Hedging Activities: Applicable

 

 

13

 

 

  Additional Acknowledgments: Applicable

 

 

 

4.Calculation Agent.Dealer, whose judgments, determinations and calculations
shall be made in good faith and in a commercially reasonable manner; provided
that, following the occurrence and during the continuance of an Event of Default
of the type described in Section 5(a)(vii) of the Agreement with respect to
which Dealer is the Defaulting Party, Counterparty shall have the right to
designate a nationally recognized third-party dealer in over-the-counter
corporate equity derivatives to replace Dealer as Calculation Agent, whose fees
and expenses, if any, shall be borne by Dealer, and the parties shall work in
good faith to execute any appropriate documentation required by such replacement
Calculation Agent. Following any adjustment, determination or calculation by the
Calculation Agent hereunder, upon a request by Counterparty, the Calculation
Agent shall promptly (but in any event within three Exchange Business Days)
provide to Counterparty by e-mail to the e-mail address provided by Counterparty
in such 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 adjustment, determination or calculation (including any assumptions used in
making such adjustment, determination or calculation), it being understood that
the Calculation Agent shall not be obligated to disclose any proprietary or
confidential models used by it for such adjustment, determination or calculation
or any information that is proprietary or confidential or subject to an
obligation not to disclose such information. All calculations and determinations
by the Calculation Agent shall be made in good faith and in a commercially
reasonable manner.

 

5.             Account Details.

 

(a)Account for payments to Counterparty:

 

To be provided.

 

Account for delivery of Shares to Counterparty:

 

To be provided.

 

(b)Account for payments to Dealer:

 

[_____]

 

Account for delivery of Shares from Dealer:

 

[_____]

 

6.             Offices.

 

(a)The Office of Counterparty for the Transaction is: Inapplicable, Counterparty
is not a Multibranch Party.

 

(b)The Office of Dealer for the Transaction is: [_____]

 

14

 

 

7.             Notices.

 

(a)Address for notices or communications to Counterparty:

 

Varex Imaging Corporation
1678 S. Pioneer Road

Salt Lake City, Utah 84104
Attention:  Matthew Lowell, Treasurer
Telephone No.:  (650) 460-8190

Email:  matthew.lowell@vareximaging.com

 

(b)Address for notices or communications to Dealer:

 

[_____]

 

8.             Representations and Warranties of Counterparty.

 

Each of the representations and warranties of Counterparty set forth in Section
1 of the Purchase Agreement (the “Purchase Agreement”) dated as of June 4, 2020,
between Counterparty and Goldman Sachs & Co. LLC, BofA Securities, Inc. and
Wells Fargo Securities, LLC, as representatives of the Purchasers party thereto
(the “Purchasers”), are true and correct and are hereby deemed to be repeated to
Dealer as if set forth herein. Counterparty hereby represents and warrants to
Dealer on the date hereof and on and as of the Premium Payment Date that:

 

(a)(i) Counterparty has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of the Transaction; (ii) such
execution, delivery and performance have been duly authorized by all necessary
corporate action on Counterparty’s part; and (iii) this Confirmation has been
duly and validly executed and delivered by Counterparty and constitutes its
valid and binding obligation, enforceable against Counterparty in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities laws or
public policy relating thereto.

 

(b)In lieu of the representations set forth in Section 3(a)(iii) of the
Agreement, neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Counterparty hereunder will conflict
with or result in a breach of the certificate of incorporation or by-laws (or
any equivalent documents) of Counterparty, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or governmental authority
or agency, or any agreement or instrument filed as an Exhibit to Counterparty’s
Annual Report on Form 10-K for the year ended December 31, 2019 (other than
agreements or instruments filed as exhibits pursuant to Item 601(b)(10)(iii) of
Regulation S-K under the Securities Act), as updated by any subsequent filings,
in each case to which Counterparty or any of its subsidiaries is a party or by
which Counterparty or any of its subsidiaries is bound, or constitute a default
under, or result in the creation of any lien under, any such agreement or
instrument.

 

(c)No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the
execution, delivery or performance by Counterparty of this Confirmation, except
such as have been obtained or made and such as may be required under the
Securities Act or state securities laws.

 

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

 

15

 

 

(e)Counterparty is an “eligible contract participant” (as such term is defined
in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person
that is an eligible contract participant under Section 1a(18)(C) of the
Commodity Exchange Act).

 

(f)Counterparty is not, on the date hereof, in possession of any material
non-public information with respect to Counterparty or the Shares.

 

(g)[Reserved.]

 

(h)To Counterparty’s actual knowledge, no state or local (including any non-U.S.
jurisdiction’s) law, rule, regulation or regulatory order applicable to the
Shares would give rise to any reporting, consent, registration or other
requirement (including without limitation a requirement to obtain prior approval
from any person or entity) as a result of Dealer or its affiliates owning or
holding (however defined) Shares, in each case, other than U.S. federal
securities laws generally applicable to transactions relating to common equity
securities of U.S. domestic issuers listed on the Exchange; provided that
Counterparty makes no representation or warranty regarding any such requirement
that is applicable generally to the ownership of common equity securities of
U.S. domestic issuers listed on the Exchange by Dealer or any of its affiliates
solely as a result of it or any of such affiliates being a financial institution
or broker dealer.

 

(i)Counterparty (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 USD 50 million.

 

(j)Counterparty is not as of the Trade Date, and Counterparty shall not be after
giving effect to the transactions contemplated hereby, “insolvent” (as such term
is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the
United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to
purchase a number of Shares equal to the Number of Shares in compliance with the
laws of the jurisdiction of Counterparty’s incorporation or organization
(including without limitation the adequate surplus requirements of Section 160
of the General Corporation Law of the State of Delaware).

 

(k)Prior to the Trade Date, Counterparty represents that Counterparty’s board of
directors has authorized the Transaction.

 

(l)On the Trade Date, neither Issuer nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule
10b-18”)) of Issuer shall directly or indirectly (including, without limitation,
by means of any cash-settled or other 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 (or an 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 or
exercisable for Shares.

 

16

 

 

(m)Counterparty represents and warrants that it and any of its subsidiaries has
not applied, and shall not until after the first date on which no portion of the
Transaction remains outstanding following any final exercise and settlement,
cancellation or early termination of the Transaction, apply, for a loan, loan
guarantee, direct loan (as that term is defined in the Coronavirus Aid, Relief
and Economic Security Act (the “CARES Act”)) or other investment, or to receive
any financial assistance or relief under any program or facility (collectively
“Financial Assistance”) that (i) is established under applicable law (whether in
existence as of the Trade Date or subsequently enacted, adopted or amended),
including without limitation the CARES Act and the Federal Reserve Act, as
amended, and (ii) (A) requires under applicable law (or any regulation,
guidance, interpretation or other pronouncement of a governmental authority with
jurisdiction for such program or facility) as a condition of such Financial
Assistance, that Counterparty comply with any requirement not to, or otherwise
agree, attest, certify or warrant that it has not, as of the date specified in
such condition, repurchased, or will not repurchase, any equity security of
Counterparty, and that it has not, as of the date specified in the condition,
made a capital distribution or will make a capital distribution, or (B) where
the terms of the Transaction would cause Counterparty under any circumstances to
fail to satisfy any condition for application for or receipt or retention of the
Financial Assistance (collectively “Restricted Financial Assistance”); provided,
that Counterparty may apply for Restricted Financial Assistance if Counterparty
either (x) determines based on the advice of outside counsel of national
standing that the terms of the Transaction would not cause Counterparty to fail
to satisfy any condition for application for or receipt or retention of such
Financial Assistance based on the terms of the program or facility as of the
date of such advice or (y) delivers to Dealer evidence or other guidance from a
governmental authority with jurisdiction for such program or facility that the
Transaction is permitted under such program or facility (either by specific
reference to the Transaction or by general reference to transactions with the
attributes of the Transaction in all relevant respects). Counterparty further
represents and warrants that the Premium is not being paid, in whole or in part,
directly or indirectly, with funds received under or pursuant to any program or
facility, including the U.S. Small Business Administration’s “Paycheck
Protection Program”, that (a) is established under applicable law (whether in
existence as of the Trade Date or subsequently enacted, adopted or amended),
including without limitation the CARES Act and the Federal Reserve Act, as
amended, and (b) requires under such applicable law (or any regulation,
guidance, interpretation or other pronouncement of a governmental authority with
jurisdiction for such program or facility) that such funds be used for specified
or enumerated purposes that do not include the purchase of the Transaction
(either by specific reference to the Transaction or by general reference to
transactions with the attributes of the Transaction in all relevant respects).

 

9.             Other Provisions.

 

(a)Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated
as of the Premium Payment Date, with respect to the matters set forth in
Sections 8(a) through 8(d) of this Confirmation; provided that any such opinion
of counsel may contain customary limitations, exceptions and qualifications and
shall be limited to the federal laws of the United States, the laws of the State
of New York and the laws of the State of Delaware. Delivery of such opinion to
Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of
the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of
the Agreement.

 

17

 

 

(b)Repurchase Notices. Counterparty shall, on or prior to the date that is one
Scheduled Trading Day following any date on which Counterparty obtains actual
knowledge that it has effected any repurchase of Shares, promptly give Dealer a
written notice (which, for the avoidance of doubt may be by email) of such
repurchase (a “Repurchase Notice”) on such day if following such repurchase, the
number of outstanding Shares as determined on such day is (i) less than 37.16
million (in the case of the first such notice) or (ii) thereafter more than 1.38
million less than the number of Shares included in the immediately preceding
Repurchase Notice; provided that, with respect to any repurchase of Shares
pursuant to a plan under Rule 10b5-1 under the Exchange Act, Counterparty may
elect to satisfy such requirement by promptly giving Dealer written notice of
entry into such plan, the maximum number of Shares that may be purchased
thereunder and the approximate dates or periods during which such repurchases
may occur (with such maximum deemed repurchased on the date of such notice for
purposes of this Section 9(b)). Counterparty agrees to indemnify and hold
harmless Dealer and its affiliates and their respective officers, directors,
employees, affiliates, advisors, agents and controlling persons (each, an
“Indemnified Person”) from and against any and all losses (including losses
relating to Dealer’s hedging activities as a consequence of becoming, or of the
risk of becoming, a Section 16 “insider”, including without limitation, any
forbearance from hedging activities or cessation of hedging activities and any
losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and reasonable and documented out-of-pocket
expenses (including reasonable attorney’s fees of one outside counsel in each
relevant jurisdiction), joint or several, which an Indemnified Person may become
subject to, in each case, as a result of Counterparty’s failure to provide
Dealer with a Repurchase Notice on the day and in the manner specified in this
paragraph, and to reimburse, within 30 days, upon written request, each of such
Indemnified Persons for any reasonable legal or other out-of-pocket expenses
incurred (and supported by invoices or other documentation setting forth in
reasonable detail such expenses) in connection with investigating, preparing
for, providing testimony or other evidence in connection with or defending any
of the foregoing. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
the Indemnified Person as a result of Counterparty’s failure to provide Dealer
with a Repurchase Notice in accordance with this paragraph, such Indemnified
Person shall promptly notify Counterparty in writing, and Counterparty, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the reasonable fees
and expenses of such counsel related to such proceeding. Counterparty shall not
be liable to the extent that the Indemnified Person fails to notify Counterparty
within a commercially reasonable period of time after any action is commenced
against it in respect of which indemnity may be sought hereunder (it being
understood that any such notice delivered within 30 calendar days of the
commencement of any such action shall be deemed to have been delivered within a
commercially reasonable period of time for such purpose). Counterparty shall not
be liable for any settlement of any such proceeding contemplated by this
paragraph that is effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, Counterparty agrees
to indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Counterparty shall not, without the prior
written consent of the Indemnified Person, effect any settlement of any such
proceeding that is pending or threatened in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding on terms reasonably satisfactory
to such Indemnified Person. Counterparty shall not be liable for any losses,
claims, damages or liabilities (or expenses relating thereto) of any Indemnified
Person that results from the bad faith, gross negligence, willful misconduct or
fraud of an Indemnified Person (in each case, as conclusively determined by a
court of competent jurisdiction in a final and non-appealable judgment). If the
indemnification provided for in this paragraph is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Counterparty hereunder, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph (b) are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Person at law or in equity. The indemnity and contribution
agreements contained in this paragraph shall remain operative and in full force
and effect regardless of the termination of the Transaction.

 

(c)Regulation M. Counterparty is not on the Trade Date engaged in a
distribution, as such term is used in Regulation M under the Exchange Act, of
any securities of Counterparty, other than a distribution meeting the
requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of
Regulation M. Counterparty shall not, until the second Scheduled Trading Day
immediately following the Effective Date, engage in any such distribution.

 

(d)No Manipulation. Counterparty is not entering into the Transaction to create
actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible into or
exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)Transfer or Assignment.

 

(i)Counterparty shall have the right to transfer and assign its rights and
obligations hereunder with respect to all, but not less than all, of the Options
hereunder (such Options, the “Transfer Options”); provided that such transfer or
assignment shall be subject to the following conditions:

 

(A)With respect to any Transfer Options, Counterparty or the Issuer, as
applicable, shall not be released from its notice and indemnification
obligations pursuant to Section 9(b) or any obligations under Section 9(o) or
9(u) of this Confirmation;

 

18

 

 

 

(B)Any Transfer Options shall only be transferred or assigned to a third party
that is a United States person (as defined in the Internal Revenue Code of 1986,
as amended (the “Code”));

 

(C)Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, an
undertaking with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Dealer, will not expose Dealer to
material risks under applicable securities laws) and execution of any
documentation and delivery of legal opinions with respect to securities laws and
other matters by such third party and Counterparty, as are reasonably requested
and reasonably satisfactory to Dealer;

 

(D)Under the applicable law effective on the date of such transfer or
assignment, Dealer will not, as a result of such transfer and assignment, be
required to pay the transferee or assignee on any payment date an amount or
number of Shares under Section 2(d)(i)(4) of the Agreement greater than an
amount or number of Shares that Dealer would have been required to pay to
Counterparty in the absence of such transfer and assignment;

 

(E)Dealer will not, as a result of any withholding or deduction made by the
transferee or assignee as a result of any Tax, receive from the transferee or
assignee on any payment date an amount or number of Shares (taking into account
any additional amounts paid under Section 2(d)(i)(4) of the Agreement) that is
less than the amount or the number of Shares the Dealer would have received from
Counterparty in the absence of such transfer or assignment;

 

(F)An Event of Default, Potential Event of Default or Termination Event will not
occur as a result of such transfer and assignment;

 

(G)Without limiting the generality of clause (B), Counterparty shall cause the
transferee to make such Payee Tax Representations and to provide such tax
documentation as may be reasonably requested by Dealer to permit Dealer to
determine that results described in clauses (D) and (E) will not occur upon or
after such transfer and assignment; and

 

(H)Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such
transfer or assignment.

 

19 

 

 

(ii)Dealer may, without Counterparty’s consent, transfer or assign all or any
part of its rights or obligations under the Transaction (A) to any affiliate of
Dealer whose obligations hereunder will be guaranteed, pursuant to the terms of
a customary guarantee in a form used by Dealer generally for similar
transactions, by Dealer or Dealer Parent, or (B) to any other wholly owned
direct or indirect subsidiary or branch of Dealer Parent with a long-term issuer
rating equal to or better than (1) the credit rating of Dealer at the time of
the transfer or (2) A- by S&P Global Ratings or its successor (“S&P”), or A3 by
Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases
to rate such debt, at least an equivalent rating or better by a substitute
rating agency mutually agreed by Counterparty and Dealer; provided that in the
case of any transfer or assignment described in clause (A) or (B) above, no
Event of Default, Potential Event of Default or Termination Event with respect
to which Dealer is the Defaulting Party or an Affected Party, as the case may
be, exists or will occur as a result of such transfer or assignment; provided,
further, that under the applicable law effective on the date of such transfer or
assignment, (1) at the time of such assignment or transfer Counterparty will
not, as a result of such transfer or assignment, either (I) be required to pay
(including a payment in kind) the transferee or assignee on any payment or
settlement date an amount under Section 2(d)(i)(4) of the Agreement greater than
the amount that Counterparty would have been required to pay to Dealer in the
absence of such transfer or assignment, or (II) receive (including a payment in
kind) from the transferee or assignee on any payment or settlement date an
amount under Section 2(d)(i)(4) of the Agreement that is less than the amount
that Counterparty would have received from Dealer in the absence of such
transfer or assignment; and (2) such transfer or assignment does not cause a
deemed exchange for Counterparty of the Transaction under Section 1001 of the
Code. Dealer shall cause the transferee or assignee to make such Payee Tax
Representations and to provide such tax documentation as may be reasonably
requested by Counterparty to permit Counterparty to determine that the events
described in the preceding proviso shall not occur upon or after such transfer
or assignment. If at any time at which (A) the Section 16 Percentage exceeds
8.0%, (B) the Option Equity Percentage exceeds 14.5% or (C) the Share Amount
exceeds the Applicable Share Limit (if any applies) (any such condition
described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is
unable after using its commercially reasonable efforts to effect a transfer or
assignment of Options to a third party on pricing terms reasonably acceptable to
Dealer and within a time period reasonably acceptable to Dealer such that no
Excess Ownership Position exists, then Dealer may designate any Exchange
Business Day as an Early Termination Date with respect to a portion of the
Transaction (the “Terminated Portion”), such that following such partial
termination no Excess Ownership Position exists. In the event that Dealer so
designates an Early Termination Date with respect to a portion of the
Transaction, a payment shall be made pursuant to Section 6 of the Agreement as
if (1) an Early Termination Date had been designated in respect of a Transaction
having terms identical to the Transaction and a Number of Options equal to the
number of Options underlying the Terminated Portion, (2) Counterparty were the
sole Affected Party with respect to such partial termination and (3) the
Terminated Portion were the sole Affected Transaction (and, for the avoidance of
doubt, the provisions of Section 9(m) shall apply to any amount that is payable
by Dealer to Counterparty pursuant to this sentence as if Counterparty was not
the Affected Party). The “Section 16 Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the number of Shares
that Dealer and any of its affiliates or any other person subject to aggregation
with Dealer for purposes of the “beneficial ownership” test under Section 13 of
the Exchange Act, or any “group” (within the meaning of Section 13 of the
Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns
(within the meaning of Section 13 of the Exchange Act), without duplication, on
such day (or, to the extent that for any reason the equivalent calculation under
Section 16 of the Exchange Act and the rules and regulations thereunder results
in a higher number, such higher number) and (B) the denominator of which is the
number of Shares outstanding on such day. The “Option Equity Percentage” as of
any day is the fraction, expressed as a percentage, (A) the numerator of which
is the sum of (1) the product of the Number of Options and the Option
Entitlement and (2) the aggregate number of Shares underlying any other call
option transaction sold by Dealer to Counterparty, and (B) the denominator of
which is the number of Shares outstanding. The “Share Amount” as of any day is
the number of Shares that Dealer and any person whose ownership position would
be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”)
under Section 203 of the Delaware General Corporation Law or any other law,
rule, regulation, regulatory order or organizational documents or contracts of
Counterparty that are, in each case, applicable to ownership of Shares
(“Applicable Restrictions”), owns, beneficially owns, constructively owns,
controls, holds the power to vote or otherwise meets a relevant definition of
ownership under any Applicable Restriction, as determined by Dealer in its good
faith, reasonable discretion. The “Applicable Share Limit” means a number of
Shares equal to (A) the minimum number of Shares that could give rise to
reporting or registration obligations (except for any filing requirements on
Form 13F, Schedule 13D or Schedule 13G under the Exchange Act, in each case, as
in effect on the Trade Date) or other requirements (including obtaining prior
approval from any person or entity) of a Dealer Person, or could result in an
adverse effect on a Dealer Person, under any Applicable Restriction, as
determined by Dealer in good faith and in its reasonable discretion, minus (B)
1% of the number of Shares outstanding.

 

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(iii)Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or
other securities, or make or receive any payment in cash, to or from
Counterparty, Dealer may designate any of its affiliates to purchase, sell,
receive or deliver such Shares or other securities, or to make or receive such
payment in cash, and otherwise to perform Dealer’s obligations in respect of the
Transaction and any such designee may assume such obligations. Dealer shall be
discharged of its obligations to Counterparty solely to the extent of any such
performance.

 

(f)Staggered Settlement. If upon advice of counsel with respect to applicable
legal and regulatory requirements, including any requirements relating to
Dealer’s commercially reasonable hedging activities hereunder, Dealer reasonably
determines that it would not be practicable or advisable to deliver, or to
acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on
any Settlement Date for the Transaction, Dealer may, by notice to Counterparty
on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to
deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) as
follows:

 

(i)in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date) and the number of Shares that it will deliver on each Staggered Settlement
Date;

 

(ii)the aggregate number of Shares that Dealer will deliver to Counterparty
hereunder on all such Staggered Settlement Dates will equal the number of Shares
that Dealer would otherwise be required to deliver on such Nominal Settlement
Date; and

 

(iii)if the Net Share Settlement terms or the Combination Settlement terms set
forth above were to apply on the Nominal Settlement Date, then the Net Share
Settlement terms or the Combination Settlement terms, as the case may be, will
apply on each Staggered Settlement Date, except that the Shares otherwise
deliverable on such Nominal Settlement Date will be allocated among such
Staggered Settlement Dates as specified by Dealer in the notice referred to in
clause (i) above.

 

(g)[Reserved.]

 

(h)[Reserved.]

 

(i)[Reserved.]

 

(j)Additional Termination Events.

 

(i)Notwithstanding anything to the contrary in this Confirmation if an event of
default with respect to Counterparty occurs under the terms of the Convertible
Notes as set forth in Section 7.01 of the Indenture that results in the
Convertible Notes becoming or being declared due and payable pursuant to the
terms of the Indenture, then such event of default shall constitute an
Additional Termination Event applicable to the Transaction and, with respect to
such Additional Termination Event, (A) Counterparty shall be deemed to be the
sole Affected Party, (B) the Transaction shall be the sole Affected Transaction
and (C) Dealer shall be the party entitled to designate an Early Termination
Date pursuant to Section 6(b) of the Agreement.

 

21 

 

 

(ii)Promptly, but in any event within five Scheduled Trading Days, following any
Repayment Event (as defined below), Counterparty may notify Dealer of such
Repayment Event and the aggregate principal amount of Convertible Notes subject
to such Repayment Event (any such notice, a “Repayment Notice”); provided that
such Repayment Notice shall contain the representation and warranty that
Counterparty is not, on the date thereof, aware of any material non-public
information with respect to Counterparty or the Shares; provided, further, that,
any “Repayment Notice” delivered to Dealer pursuant to the Base Call Option
Confirmation shall deemed to be a Repayment Notice pursuant to this Confirmation
and the terms of such Repayment Notice shall apply, mutatis mutandis, to this
Confirmation. The receipt by Dealer from Counterparty of any Repayment Notice
shall constitute an Additional Termination Event as provided in this Section
9(j)(ii). Upon receipt of any such Repayment Notice, Dealer shall designate an
Exchange Business Day following receipt of such Repayment Notice as an Early
Termination Date with respect to the portion of the Transaction corresponding to
a number of Options (the “Repayment Options”) equal to the lesser of (A) (x) the
aggregate principal amount of such Convertible Notes specified in such Repayment
Notice, divided by USD 1,000, minus (y) the number of “Repayment Options” (as
defined in the Base Call Option Confirmation), if any, that relate to such
Convertible Notes (and for the purposes of determining whether any Options under
this Confirmation or under the Base Call Option Confirmation will be among the
Repayment Options hereunder or under, and as defined in, the Base Call Option
Confirmation, the Convertible Notes specified in such Repayment Notice shall be
allocated first to the Base Call Option Confirmation until all Options
thereunder are exercised or terminated), and (B) the Number of Options as of the
date Dealer designates such Early Termination Date and, as of such date, the
Number of Options shall be reduced by the number of Repayment Options. Any
payment hereunder with respect to such termination (the “Repayment Unwind
Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1)
an Early Termination Date had been designated in respect of a Transaction having
terms identical to the Transaction and a Number of Options equal to the number
of Repayment Options and (2) Counterparty were the sole Affected Party with
respect to such Additional Termination Event; provided that, in the event of a
Repayment Event pursuant to Section 4.02 of the Indenture or Section 4.03 of the
Indenture, the Repayment Unwind Payment shall not be greater than (x) the number
of Repayment Options multiplied by (y) the product of (A) the Applicable
Percentage and (B) the excess of (I) the amount paid by Counterparty per
Convertible Note pursuant to Section 4.02 of the Indenture or Section 4.03 of
the Indenture, as the case may be, over (II) USD 1,000 per Convertible Note.
“Repayment Event” means that (i) any Convertible Notes are repurchased (whether
pursuant to Section 4.02 of the Indenture, pursuant to Section 4.03 of the
Indenture or for any other reason) by Counterparty or any of its subsidiaries,
(ii) any Convertible Notes are delivered to Counterparty or any of its
subsidiaries in exchange for delivery of any property or assets of such party
(howsoever described), (iii) any principal of any of the Convertible Notes is
repaid prior to the final maturity date of the Convertible Notes (for any reason
other than as a result of an acceleration of the Convertible Notes that results
in an Additional Termination Event pursuant to the preceding Section 9(j)(i)),
or (iv) any Convertible Notes are exchanged by or for the benefit of the Holders
(as such term is defined in the Indenture) thereof for any other securities of
Counterparty or any of its subsidiaries (or any other property, or any
combination thereof) pursuant to any exchange offer or similar transaction. For
the avoidance of doubt, any conversion of Convertible Notes pursuant to the
terms of the Indenture shall not constitute a Repayment Event.

 

(iii)Notwithstanding anything to the contrary in this Confirmation, the
occurrence of an Amendment Event (as defined below) shall constitute an
Additional Termination Event applicable to the Transaction and, with respect to
such Additional Termination Event, (A) Counterparty shall be deemed to be the
sole Affected Party, (B) the Transaction shall be the sole Affected Transaction
and (C) Dealer shall be the party entitled to designate an Early Termination
Date pursuant to Section 6(b) of the Agreement. “Amendment Event” means that
Counterparty amends, modifies, supplements, waives or obtains a waiver in
respect of any term of the Indenture or the Convertible Notes governing the
principal amount, coupon, maturity, repurchase obligation of Counterparty,
redemption right of Counterparty, any term relating to conversion of the
Convertible Notes (including changes to the conversion rate, conversion rate
adjustment provisions, conversion settlement dates or conversion conditions), or
any term that would require consent of the holders of not less than 100% of the
principal amount of the Convertible Notes to amend (other than, in each case,
any amendment or supplement (x) pursuant to Section 8.01(I) of the Indenture
that, as determined by the Calculation Agent, conforms the Indenture to the
description of Convertible Notes in the Offering Memorandum or (y) pursuant to
Section 5.09 of the Indenture), in each case, without the consent of Dealer.

 

22 

 

 

(iv)Notwithstanding anything to the contrary in this Confirmation, upon any
Make-Whole Conversion in respect of which a Notice of Conversion (as such term
is defined in the Indenture) that is effective as to Counterparty has been
delivered by the relevant converting Holder (as such term is defined in the
Indenture):

 

(A)Promptly, but in any event within five Scheduled Trading Days, following the
Conversion Date for such Make-Whole Conversion, Counterparty shall provide
written notice (an “Make-Whole Conversion Notice”) to Dealer specifying the
number of Convertible Notes surrendered for conversion on such Conversion Date
(such Convertible Notes, the “Affected Convertible Notes”), and the giving of
such Make-Whole Conversion Notice shall constitute an Additional Termination
Event as provided in this clause (iv);

 

(B)Upon receipt of any such Make-Whole Conversion Notice, Dealer shall designate
an Exchange Business Day as an Early Termination Date (which Exchange Business
Day shall be no earlier than one Scheduled Trading Day following the Conversion
Date for such Make-Whole Conversion) with respect to the portion of the
Transaction corresponding to a number of Options (the “Affected Number of
Options”) equal to the lesser of (x) the number of Affected Convertible Notes
minus the “Affected Number of Options” (as defined in the Base Call Option
Confirmation), if any, that relate to such Affected Convertible Notes and (y)
the Number of Options as of the Conversion Date for such Make-Whole Conversion;
provided that settlement with respect to any such Early Termination Date shall
occur on or as promptly as commercially reasonably practicable after the date of
payment of the amount of cash (if any) and/or delivery of the number of Shares
(if any) upon settlement of the conversion of the relevant Affected Convertible
Notes;

 

(C)Any payment hereunder with respect to such termination shall be calculated
pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had
been designated in respect of a Transaction having terms identical to the
Transaction and a Number of Options equal to the Affected Number of Options, (y)
Counterparty were the sole Affected Party with respect to such Additional
Termination Event and (z) the terminated portion of the Transaction were the
sole Affected Transaction; provided that the amount payable with respect to such
termination shall not be greater than (1) the Applicable Percentage, multiplied
by (2) the Affected Number of Options, multiplied by (3) (x) the sum of (i) the
amount of cash paid (if any) to the Holder (as such term is defined in the
Indenture) of an Affected Convertible Note upon conversion of such Affected
Convertible Note and (ii) the number of Shares delivered (if any) to the Holder
(as such term is defined in the Indenture) of an Affected Convertible Note upon
conversion of such Affected Convertible Note multiplied by the Applicable Limit
Price, minus (y) USD 1,000;

 

(D)For the avoidance of doubt, in determining the amount payable in respect of
such Affected Transaction pursuant to Section 6 of the Agreement, the
Calculation Agent shall assume that (x) the relevant Make-Whole Conversion and
any conversions, adjustments, agreements, payments, deliveries or acquisitions
by or on behalf of Counterparty leading thereto had not occurred, (y) no
adjustments to the Conversion Rate (as such term is defined in the Indenture)
have occurred pursuant to any Excluded Provision and (z) the corresponding
Convertible Notes remain outstanding; and

 

23 

 

 

(E)The Transaction shall remain in full force and effect, except that, as of the
Conversion Date for such Make-Whole Conversion, the Number of Options shall be
reduced by the Affected Number of Options.

 

(k)Amendments to Equity Definitions.

 

(i)Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1)
deleting from the fourth line thereof the word “or” after the word “official”
and inserting a comma therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words therefor “or (C) the
occurrence of any of the events specified in Section 5(a)(vii)(1) through (9) of
the 2002 ISDA Master Agreement with respect to Counterparty, provided that the
period for dismissal, discharge, stay or restraint therein shall be increased
from within 15 days to within 60 days.”

 

(ii)Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1)
replacing “either party may elect” with “Dealer may elect” and (2) replacing
“notice to the other party” with “notice to Counterparty” in the first sentence
of such section.

 

(l)No Netting or Set-off. The provisions of Section 2(c) of the Agreement shall
not apply to the Transaction. Each party waives any and all rights it may have
to set-off delivery or payment obligations it owes to the other party under the
Transaction against any delivery or payment obligations owed to it by the other
party under any other agreement between the parties hereto, by operation of law
or otherwise.

 

(m)Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If (a) an Early Termination Date (whether as a result of
an Event of Default or a Termination Event) occurs or is designated with respect
to the Transaction or (b) the Transaction is cancelled or terminated upon the
occurrence of an Extraordinary Event (except as a result of (i) a
Nationalization, Insolvency or Merger Event in which the consideration to be
paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender
Offer that is within Counterparty’s control, or (iii) an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a
Termination Event of the type described in Section 5(b) of the Agreement, in
each case that resulted from an event or events outside Counterparty’s control),
and if Dealer would owe any amount to Counterparty pursuant to Section 6(d)(ii)
of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity
Definitions (any such amount, a “Payment Obligation”), then Dealer shall satisfy
the Payment Obligation by the Share Termination Alternative (as defined below),
unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed
in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York
City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case
of a Nationalization, Insolvency or Delisting), Early Termination Date or date
of cancellation, as applicable, of its election that the Share Termination
Alternative shall not apply, (b) Counterparty remakes the representation set
forth in Section 8(f) as of the date of such election and (c) Dealer agrees, in
its sole discretion made in good faith, to such election, in which case the
provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the
provisions of Section 6(d)(ii) and Section 6(e) of the Agreement, as the case
may be, shall apply.

 

  Share Termination Alternative:   If applicable, Dealer shall deliver to
Counterparty the Share Termination Delivery Property on, or within a
commercially reasonable period of time after, the date when the relevant Payment
Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity
Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in
satisfaction of such Payment Obligation in the manner reasonably requested by
Counterparty free of payment.

 

24 

 

 

  Share Termination Delivery Property:   A number of Share Termination Delivery
Units, as calculated by the Calculation Agent, equal to the Payment Obligation
divided by the Share Termination Unit Price. The Calculation Agent shall adjust
the Share Termination Delivery Property by replacing any fractional portion of a
security therein with an amount of cash equal to the value of such fractional
security based on the values used to calculate the Share Termination Unit Price.

 

  Share Termination Unit Price:   The value of property contained in one Share
Termination Delivery Unit, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to Dealer at the time of notification of the Payment Obligation. For the
avoidance of doubt, the parties agree that in determining the Share Termination
Delivery Unit Price the Calculation Agent may consider the purchase price paid
in connection with the purchase of Share Termination Delivery Property.

 

  Share Termination Delivery Unit:   One Share or, if the Shares have changed
into cash or any other property or the right to receive cash or any other
property as the result of a Nationalization, Insolvency or Merger Event (any
such cash or other property, the “Exchange Property”), a unit consisting of the
type and amount of such Exchange Property received by a holder of one Share
(without consideration of any requirement to pay cash or other consideration in
lieu of fractional amounts of any securities) in such Nationalization,
Insolvency or Merger Event, as determined by the Calculation Agent. If such
Nationalization, Insolvency, or Merger Event involves a choice of Exchange
Property to be received by holders, such holder shall be deemed to have elected
to receive the maximum possible amount of cash.

 

  Failure to Deliver:   Applicable

 

  Other applicable provisions:   If Share Termination Alternative is applicable,
the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity
Definitions and the provisions set forth opposite the caption “Representation
and Agreement” in Section 2 will be applicable, except that all references in
such provisions to “Physically-settled” shall be read as references to “Share
Termination Settled” and all references to “Shares” shall be read as references
to “Share Termination Delivery Units”. “Share Termination Settled” in relation
to the Transaction means that the Share Termination Alternative is applicable to
the Transaction.

 

(n)Waiver of Jury Trial. Each party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any suit,
action or proceeding relating to the Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to enter into the
Transaction, as applicable, by, among other things, the mutual waivers and
certifications provided herein.

 

25 

 

 

(o)Registration. Counterparty hereby agrees that if, in the good faith,
reasonable judgment of Dealer, based on advice of counsel, the Shares (“Hedge
Shares”) acquired by Dealer for the purpose of effecting a commercially
reasonable hedge of its obligations pursuant to the Transaction cannot be sold
in the public market by Dealer without registration under the Securities Act,
Counterparty shall, at its election, either (i) in order to allow Dealer to sell
the Hedge Shares in a registered offering, make available to Dealer an effective
registration statement under the Securities Act for so long as Hedge Shares
cannot be sold by Dealer in the public market without registration (as
determined by Dealer in its good faith reasonable judgment based on advice of
counsel) and enter into an agreement, in form and substance reasonably
satisfactory to Dealer, substantially in the form of an underwriting agreement
customary for a registered secondary offering of a similar size and industry;
provided, however, that if Dealer, in its sole discretion and in good faith, is
not satisfied with access to due diligence materials, the results of its due
diligence investigation, or the procedures and documentation for the registered
offering referred to above, then clause (ii) or clause (iii) of this paragraph
shall apply at the election of Counterparty, (ii) in order to allow Dealer to
sell the Hedge Shares in a private placement, use commercially reasonable best
efforts to enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity
securities of a similar size and industry, in form and substance reasonably
satisfactory to Dealer (in which case, the Calculation Agent shall make any
adjustments to the terms of the Transaction that are necessary, in its
commercially reasonable judgment made in good faith, to compensate Dealer for
any commercially reasonable discount from the public market price of the Shares
incurred on the sale of Hedge Shares in a private placement of similar size), or
(iii) purchase the Hedge Shares from Dealer at the then-current market price on
such Exchange Business Days, and in the amounts and at such time(s), reasonably
requested by Dealer.

 

(p)Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to Counterparty relating to such tax treatment and tax structure.

 

(q)Right to Extend. The Calculation Agent may postpone or add, in whole or in
part, any Valid Day or Valid Days during the Settlement Averaging Period or any
other date of valuation, payment or delivery by Dealer, with respect to some or
all of the Options hereunder, if Dealer reasonably determines, in the case of
clause (i) below, in its commercially reasonable judgment or discretion made in
good faith, and in the case of clause (ii) below, based on advice of counsel,
that such action is reasonably necessary or appropriate (i) to preserve Dealer’s
commercially reasonable hedging or hedge unwind activity hereunder in light of
existing liquidity conditions in the stock loan market or other relevant market
or (ii) to enable Dealer to effect transactions with respect to Shares in
connection with its commercially reasonable hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Dealer were Counterparty or an
affiliated purchaser of Counterparty, be in compliance with applicable legal,
regulatory or self-regulatory requirements, or with related policies and
procedures applicable to Dealer; provided that such policies and procedures have
been adopted by Dealer in good faith and are generally applicable in similar
situations and applied in a non-discriminatory manner; provided further that no
such Valid Day or other date of valuation, payment or delivery may be postponed
or added more than 120 Valid Days after the original Valid Day or other date of
valuation, payment or delivery, as the case may be.

 

(r)Designation by Dealer. Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities to or from Counterparty,
Dealer may designate any of its affiliates to purchase, sell, receive or deliver
such shares or other securities and otherwise to perform Dealer’s obligations in
respect of the Transaction and any such designee may assume such obligations,
provided that under the applicable law effective on the date of designation, (1)
at the time of such designation Counterparty will not, as a result of such
designation, either (I) be required to pay (including a payment in kind) the
designee on any payment or settlement date an amount under Section 2(d)(i)(4) of
the Agreement greater than the amount that Counterparty would have been required
to pay to Dealer in the absence of such designation, or (II) receive (including
a payment in kind) from the designee on any payment or settlement date an amount
under Section 2(d)(i)(4) of the Agreement that is less than the amount that
Counterparty would have received from Dealer in the absence of such designation;
and (2) such designation does not cause a deemed exchange for Counterparty of
the Transaction under Section 1001 of the Code. Dealer shall be discharged of
its obligations to Counterparty to the extent of any such performance.

 

26 

 

 

 

(s)Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this
Confirmation is not intended to convey to Dealer rights against Counterparty
with respect to the Transaction that are senior to the claims of common
stockholders of Counterparty in any United States bankruptcy proceedings of
Counterparty; provided that nothing herein shall limit or shall be deemed to
limit Dealer’s right to pursue remedies in the event of a breach by Counterparty
of its obligations and agreements with respect to the Transaction; provided,
further, that nothing herein shall limit or shall be deemed to limit Dealer’s
rights in respect of any transactions other than the Transaction.

 

(t)Securities Contract; Swap Agreement. The parties hereto intend for (i) the
Transaction to be a “securities contract” and a “swap agreement” as defined in
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), 546(e),
546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate
the Transaction and to exercise any other remedies upon the occurrence of any
Event of Default under the Agreement with respect to the other party to
constitute a “contractual right” as described in the Bankruptcy Code, and (iii)
each payment and delivery of cash, securities or other property hereunder to
constitute a “margin payment” or “settlement payment” and a “transfer” as
defined in the Bankruptcy Code.

 

(u)Notice of Certain Other Events. Counterparty covenants and agrees that:

 

(i)promptly following the public announcement of the results of any election by
the holders of Shares with respect to the consideration due upon consummation of
any Merger Event, Counterparty shall give Dealer written notice of (x) the
weighted average of the types and amounts of consideration that holders of
Shares have elected to receive upon consummation of such Merger Event or (y) if
no holders of Shares affirmatively make such election, the types and amounts of
consideration actually received by holders of Shares (the date of such
notification, the “Consideration Notification Date”); provided that in no event
shall the Consideration Notification Date be later than the date on which such
Merger Event is consummated; and

 

(ii)(A) Counterparty shall give Dealer commercially reasonable advance (but in
any event at least one Exchange Business Day prior to the relevant Adjustment
Notice Deadline) written notice of the section or sections of the Indenture and,
if applicable, the formula therein, pursuant to which any adjustment will be
made to the Convertible Notes in connection with any Potential Adjustment Event
(other than a Potential Adjustment Event in respect of the Dilution Adjustment
Provision set forth in 5.05(A)(ii) or 5.05(A)(iv) of the Indenture) or Merger
Event and (B) promptly following any such adjustment, Counterparty shall give
Dealer written notice of the details of such adjustment. The “Adjustment Notice
Deadline” means (i) for any Potential Adjustment Event in respect of the
Dilution Adjustment Provision set forth in Section 5.05(A)(i) of the Indenture,
the relevant “Ex-Dividend Date” (as such term is defined in the Indenture) or
“effective date” (as such term is used in Section 5.05(A)(i) of the Indenture),
as the case may be, (ii) for any Potential Adjustment Event in respect of the
Dilution Adjustment Provision set forth in Section 5.05(A)(iii)(1) of the
Indenture, the first “Trading Day” (as such term is defined in the Indenture) of
the period referred to in the definition of “SP” in such formula, (iii) for any
Potential Adjustment Event in respect of the Dilution Adjustment Provision set
forth in Section 5.05(A)(iii)(2) of the Indenture, the first “Trading Day” (as
such term is defined in the Indenture) of the “Spin-Off Valuation Period” (as
such term is defined in the Indenture), (iv) for any Potential Adjustment Event
in respect of the Dilution Adjustment Provision set forth in Section 5.05(A)(v)
of the Indenture, the first “Trading Day” (as such term is defined in the
Indenture) of the period referred to in the definition of “SP’” in the formula
in such Section, and (v) for any Merger Event, the effective date of such Merger
Event (or, if earlier, the first day of any valuation or similar period in
respect of such Merger Event).

 

27

 

 

(v)Wall Street Transparency and Accountability Act. In connection with Section
739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”),
the parties hereby agree that neither the enactment of WSTAA or any regulation
under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA,
shall limit or otherwise impair either party’s otherwise applicable rights to
terminate, renegotiate, modify, amend or supplement this Confirmation or the
Agreement, as applicable, arising from a termination event, force majeure,
illegality, increased costs, regulatory change or similar event under this
Confirmation, the Equity Definitions incorporated herein, or the Agreement
(including, but not limited to, rights arising from Change in Law, Hedging
Disruption, an Excess Ownership Position, or Illegality (as defined in the
Agreement)).

 

(w)Agreements and Acknowledgements Regarding Hedging. Counterparty understands,
acknowledges and agrees that: (A) at any time on and prior to the Expiration
Date, Dealer and its affiliates may buy or sell Shares or other securities or
buy or sell options or futures contracts or enter into swaps or other derivative
securities in order to adjust its hedge position with respect to the
Transaction; (B) Dealer and its affiliates also may be active in the market for
Shares other than in connection with hedging activities in relation to the
Transaction; (C) Dealer shall make its own determination as to whether, when or
in what manner any hedging or market activities in securities of Issuer shall be
conducted and shall do so in a manner that it deems appropriate to hedge its
price and market risk with respect to the Relevant Prices; and (D) any market
activities of Dealer and its affiliates with respect to Shares may affect the
market price and volatility of Shares, as well as the Relevant Prices, each in a
manner that may be adverse to Counterparty.

 

(x)Early Unwind. In the event the sale of the “Optional Securities” (as defined
in the Purchase Agreement is not consummated with the Purchasers for any reason,
or Counterparty fails to deliver to Dealer opinions of counsel as required
pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the
Premium Payment Date, or such later date as agreed upon by the parties (the
Premium Payment Date or such later date, the “Early Unwind Date”), the
Transaction shall automatically terminate (the “Early Unwind”) on the Early
Unwind Date, and the Transaction and all of the respective rights and
obligations of Dealer and Counterparty under the Transaction shall be cancelled
and terminated. Following such termination, cancellation and payment, each party
shall be released and discharged by the other party from and agrees not to make
any claim against the other party with respect to any obligations or liabilities
of the other party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date. Each of Dealer and
Counterparty represents and acknowledges to the other that, upon an Early
Unwind, all obligations with respect to the Transaction shall be deemed fully
and finally discharged.

 

(y)Payment by Counterparty. In the event that, following payment of the Premium,
(i) an Early Termination Date occurs or is designated with respect to the
Transaction as a result of a Termination Event or an Event of Default (other
than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the
Agreement) and, as a result, Counterparty owes to Dealer an amount calculated
under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer,
pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount
calculated under Section 12.8 of the Equity Definitions, such amount shall be
deemed to be zero.

 

(z)Adjustments. For the avoidance of doubt, whenever the Calculation Agent or
Determining Party is called upon to make an adjustment pursuant to the terms of
this Confirmation or the Equity Definitions to take into account the effect of
an event (other than an adjustment to be made by reference to the Indenture),
the Calculation Agent or Determining Party shall make such adjustment in good
faith and in a commercially reasonable manner and by reference to the effect of
such event on a dealer, assuming that such dealer maintains a commercially
reasonable hedge position.

 

28

 

 

(aa)FATCA. The term “Indemnifiable Tax” as defined in Section 14 of the
Agreement shall not include any tax imposed or collected pursuant to Sections
1471 through 1474 of the Code, any current or future regulations or official
interpretations thereof, any agreement entered into pursuant to Section 1471(b)
of the Code, or any fiscal or regulatory legislation, rules or practices adopted
pursuant to any intergovernmental agreement entered into in connection with the
implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the
avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or
withholding of which is required by applicable law for the purposes of Section
2(d) of the Agreement.

 

(bb)871(m) Provision. To the extent that either party to the Agreement with
respect to this Transaction is not an adhering party to the ISDA 2015 Section
871(m) Protocol published by ISDA on November 2, 2015 and available at
www.isda.org, as may be amended, supplemented, replaced or superseded from time
to time (the “871(m) Protocol”), the parties agree that the provisions and
amendments contained in the Attachment to the 871(m) Protocol are incorporated
into and apply to the Agreement with respect to this Transaction as if set forth
in full herein. The parties further agree that, solely for purposes of applying
such provisions and amendments to the Agreement with respect to this
Transaction, references to “each Covered Master Agreement” in the 871(m)
Protocol will be deemed to be references to the Agreement with respect to this
Transaction, and references to the “Implementation Date” in the 871(m) Protocol
will be deemed to be references to the Trade Date of this Transaction.

 

(cc)Payee Tax Representations.

 

(i)For the purpose of Section 3(f) of the Agreement, Counterparty makes the
following representation to Dealer:

 

Counterparty is a corporation established under the laws of the State of
Delaware and is a “United States person” (as that term is defined in Section
7701(a)(30) of the Code). Counterparty is a “U.S. person” (as that term is used
in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S.
federal income tax purposes and an exempt recipient under Treasury Regulation
Sections 1.6041-3(p) and 1.6049-4(c)(1)(ii) that is exempt from information
reporting on IRS Form 1099 and backup withholding.

 

(ii)For the purpose of Section 3(f) of the Agreement, Dealer makes the following
representation to Counterparty:

 

[_____]

 

(dd)Tax Forms. For the purpose of Sections 4(a)(i) and (ii) of the Agreement,
Counterparty agrees to deliver to Dealer a complete and duly executed United
States Internal Revenue Service Form W-9 (or successor thereto) and Dealer
agrees to deliver to Counterparty a complete and duly executed United States
Internal Revenue Service Form W-9 (or successor thereto). Such forms or
documents shall be delivered upon (i) execution and delivery of this
Confirmation, (ii) promptly upon reasonable request of the other party, and
(iii) promptly upon learning that any such form or document previously provided
by the other party has become obsolete or incorrect.

 

(ee)Counterparts. Counterparts may be delivered via facsimile, electronic mail
(including any electronic signature covered by the U.S. federal ESIGN Act of
2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records
Act or other applicable law, e.g., DocuSign and AdobeSign (any such signature,
an “Electronic Signature”)) or other transmission method and any counterpart so
delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes. The words “execution,” “signed,” “signature” and
words of like import in this Confirmation or in any other certificate, agreement
or document related to this Confirmation shall include any Electronic Signature,
except to the extent electronic notices are expressly prohibited under this
Confirmation or the Agreement.

 

(ff)U.S. QFC Mandatory Contractual Requirements. The terms of the ISDA 2018 U.S.
Resolution Stay Protocol (“ISDA U.S. Stay Protocol”) are incorporated into and
form a part of this Agreement, and this Agreement shall be deemed a Protocol
Covered Agreement for purposes thereof. For purposes of incorporating the ISDA
U.S. Stay Protocol, Dealer shall be deemed to be a Regulated Entity and
Counterparty shall be deemed to be an Adhering Party. In the event of any
inconsistences between this Agreement and the ISDA U.S. Stay Protocol, the ISDA
U.S. Stay Protocol will prevail.

 

[Signature pages follow]

 

29

 

 

Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by executing this
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 Dealer.

  

  Very truly yours,       [_____]       By:       Name:     Title:

 

[Signature Page to Additional Bond Hedge]

 

 

 

 

Accepted and confirmed
as of the Trade Date:

 

Varex Imaging Corporation   By:     Name: Title:

 

[Signature Page to Additional Bond Hedge]