Exhibit 10.1

(JP Morgan logo) [a133381001_v1.jpg]

EXECUTION VERSION

September 7, 2012

MTS Systems Corporation
14000 Technology Drive
Eden Prairie, MN 55344

Ladies and Gentlemen:

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

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

ARTICLE 1
Definitions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Exchange” means the NASDAQ Global Select Market

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

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

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

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

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

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

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

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

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

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

          “Initial Share Price” means $52.53.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “SEC” means the Securities and Exchange Commission.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 2
Purchase of the Stock

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

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

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

ARTICLE 3
Subsequent Payments or Share Deliveries

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

 

 

 

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

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

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

 

 

 

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

 

 

 

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

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

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

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

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

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

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

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

ARTICLE 4
Market Transactions

 

 

 

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

 

 

 

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

 

 

 

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

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

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

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

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

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

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

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ARTICLE 5
Representations, Warranties and Agreements

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

          (a)          Disclosure; Compliance with Laws. The reports and other
documents filed by the Purchaser with the SEC pursuant to the Exchange Act when
considered as a whole (with the more recent such reports and documents deemed to
amend inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact or any
omission of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading. The Purchaser is not in possession of any material
nonpublic information regarding the Purchaser or the Common Stock.

          (b)          Rule 10b5-1. The Purchaser acknowledges that (i) the
Purchaser does not have, and shall not attempt to exercise, any influence over
how, when or whether to effect purchases of Common Stock by the Seller (or its
agent or affiliate) in connection with this Confirmation and (ii) the Purchaser
is entering into the Agreement and this Confirmation in good faith and not as
part of a plan or scheme to evade compliance with federal securities laws
including, without limitation, Rule 10b-5 promulgated under the Exchange Act.
The Purchaser also acknowledges and agrees that any amendment, modification,
waiver or termination of this Confirmation must be effected in accordance with
the requirements for the amendment or termination of a “plan” as defined in Rule
10b5-1(c) under the Exchange Act. Without limiting the generality of the
foregoing, any such amendment, modification, waiver or termination shall be made
in good faith and not as part of a plan or scheme to evade the prohibitions of
Rule 10b-5 under the Exchange Act, and no amendment, modification or waiver
shall be made at any time at which the Purchaser or any officer or director of
the Purchaser is aware of any material nonpublic information regarding the
Purchaser or the Common Stock.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 6
Additional Covenants

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

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

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

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

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

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

ARTICLE 7
Termination

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

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

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

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

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

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

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

 

 

 

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

 

 

 

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

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

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

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

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

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

ARTICLE 8
Adjustments

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

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

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

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ARTICLE 9
Miscellaneous

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

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

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

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

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

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

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

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

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

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

 

 

 

 

(a)

If to the Purchaser:

 

 

 

 

 

MTS Systems Corporation

 

 

14000 Technology Drive

 

 

Eden Prairie, MN 55344

 

 

Attention: Tim Radermacher

 

 

Title: Treasurer and Director of Tax

 

 

Telephone No: (952) 937-4004

 

 

Facsimile No: (952) 937-4515

 

 

 

 

(b)

If to the Seller:

 

 

 

 

 

JPMorgan Chase Bank, National Association

 

 

c/o J.P. Morgan Securities LLC

 

 

EDG Marketing Support

 

 

Email: EDG_OTC_HEDGING_MS@jpmorgan.com

 

 

Fax: 1-866-886-4506

 

 

 

 

 

With a copy to:

 

 

 

 

 

Sudheer Tegulapalle

 

 

Executive Director

 

 

383 Madison Avenue, Floor 05

 

 

New York, NY, 10179, United States

 

 

Telephone No: (212) 622-2100

 

 

Facsimile No: (212) 622-0398

 

 

Email: sudheer.r.tegulapalle@jpmorgan.com

16

--------------------------------------------------------------------------------

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

 

 

 

 

 

 

 

 

Yours sincerely,

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

By: 

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

Confirmed as of the date first
above written:

 

 

 

 

 

 

 

MTS SYSTEMS CORPORATION

 

 

 

 

 

 

 

 

By: 

 

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

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

--------------------------------------------------------------------------------

(JP Morgan logo) [a133381001_v1.jpg]

ANNEX A

PRIVATE PLACEMENT PROCEDURES

          I.          Introduction

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

          II.           Procedures

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

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

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

 

 

 

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

 

 

 

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

 

 

 

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

A-1

--------------------------------------------------------------------------------

 

 

 

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

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

 

 

 

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

 

 

 

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

 

 

 

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

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

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

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

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

A-2

--------------------------------------------------------------------------------

(JP Morgan logo) [a133381001_v1.jpg]

ANNEX B

REGISTRATION PROCEDURES

          I.           Introduction

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

          II.          Procedures

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

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

         (b)          The Purchaser shall use commercially reasonable efforts to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Prospectus and, if any such order is issued, to obtain the lifting thereof as
soon thereafter as is reasonably possible. If the Registration Statement, the
Prospectus or any document incorporated therein by reference contains a
misstatement of a material fact or omits to state a material fact required to be
stated therein or necessary to make any statement therein not misleading, the
Purchaser shall as promptly as reasonably practicable file any required document
and prepare and furnish to the Seller a reasonable number of copies of such
supplement or amendment thereto as may be necessary so that the Prospectus, as
thereafter delivered to the purchasers in connection with sales of Registered
Shares thereunder, will not contain any misstatement of a material fact or omit
to state a material fact required to be stated therein or necessary to make any
statement therein not misleading.

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

B-1

--------------------------------------------------------------------------------

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

 

 

 

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

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

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

B-2

--------------------------------------------------------------------------------

(JP Morgan logo) [a133381001_v1.jpg]

ANNEX C

COMMUNICATIONS PROCEDURES

September 7, 2012

          I.           Introduction

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

          II.          Communications Rules

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

          III.          Termination

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

          IV.          Definitions

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

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

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

C-1

--------------------------------------------------------------------------------

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

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

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

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

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

C-2

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(JP Morgan logo) [a133381001_v1.jpg]

ANNEX D

PRICING SUPPLEMENT

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

 

 

 

 

1

Discount:

 

$0.58

 

 

 

 

2

Initial Delivery Percentage

 

 80%

 

 

 

 

3

Contract Fee:

 

$0.00

 

 

 

 

4

Floor Price:

 

$0.01

 

 

 

 

5

Registered Shares Fee:

 

$0.05

 

 

 

 

6

Valuation Completion Date:

 

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

 

 

 

 

7

Cash Settlement Fee:

 

$0.00

 

 

 

 

8

Cash Distribution Amount:

 

 

 

 

Cash Distribution Amount

Reference Period

 

 

$0.00 per share of Common Stock

Trade Date – December 16, 2012

 

 

$0.30 per share of Common Stock

December 17, 2012 – March 10, 2013

 

 

$0.30 per share of Common Stock

Any period after March 11, 2013

D-1

--------------------------------------------------------------------------------

EXHIBIT A

[Letterhead of Purchaser]

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

Re:          Accelerated Purchase of Equity Securities

Ladies and Gentlemen:

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

          Number of Shares: __________________

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

 

 

 

 

 

 

Very truly yours,

 

 

 

 

 

MTS SYSTEMS CORPORATION

 

 

 

 

 

 

By: 

 

 

 

 

Name:

 

 

 

Title:

Exh-A-1

--------------------------------------------------------------------------------

Protected by Federal Copyright-Not To Be Reproduced or Distributed Without
Permission of ISDA

ISDA®

International Swaps and Derivatives Association, Inc.

2002 MASTER AGREEMENT

dated as of______________________________________

____________________________________________ and
____________________________________________

have entered and/or anticipate entering into one or more transactions (each a
“Transaction”) that are or will be governed by this 2002 Master Agreement, which
includes the schedule (the “Schedule”), and the documents and other confirming
evidence (each a “Confirmation”) exchanged between the parties or otherwise
effective for the purpose of confirming or evidencing those Transactions. This
2002 Master Agreement and the Schedule are together referred to as this “Master
Agreement”.

Accordingly, the parties agree as follows:―

1.          Interpretation

(a)        Definitions. The terms defined in Section 14 and elsewhere in this
Master Agreement will have the meanings therein specified for the purpose of
this Master Agreement.

(b)         Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement, such Confirmation will
prevail for the purpose of the relevant Transaction.

(c)        Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this “Agreement”),
and the parties would not otherwise enter into any Transactions.

2.          Obligations

(a)        General Conditions.

 

 

 

(i)        Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.

Copyright © 2002 by International Swaps and Derivatives Association, Inc.

dms.us.52076424.02

--------------------------------------------------------------------------------

Protected by Federal Copyright-Not To Be Reproduced or Distributed Without
Permission of ISDA

 

 

 

(ii)          Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely transferable
funds and in the manner customary for payments in the required currency. Where
settlement is by delivery (that is, other than by payment), such delivery will
be made for receipt on the due date in the manner customary for the relevant
obligation unless otherwise specified in the relevant Confirmation or elsewhere
in this Agreement.

 

 

 

(iii)         Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2) the
condition precedent that no Early Termination Date in respect of the relevant
Transaction has occurred or been effectively designated and (3) each other
condition specified in this Agreement to be a condition precedent for the
purpose of this Section 2(a)(iii).

(b)        Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five Local
Business Days prior to the Scheduled Settlement Date for the payment or delivery
to which such change applies unless such other party gives timely notice of a
reasonable objection to such change.

(c)        Netting of Payments. If on any date amounts would otherwise be
payable:―

 

 

 

 

(i)

in the same currency; and

 

 

 

 

(ii)

in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by which the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount
and payment obligation will be determined in respect of all amounts payable on
the same date in the same currency in respect of those Transactions, regardless
of whether such amounts are payable in respect of the same Transaction. The
election may be made in the Schedule or any Confirmation by specifying that
“Multiple Transaction Payment Netting” applies to the Transactions identified as
being subject to the election (in which case clause (ii) above will not apply to
such Transactions). If Multiple Transaction Payment Netting is applicable to
Transactions, it will apply to those Transactions with effect from the starting
date specified in the Schedule or such Confirmation, or, if a starting date is
not specified in the Schedule or such Confirmation, the starting date otherwise
agreed by the parties in writing. This election may be made separately for
different groups of Transactions and will apply separately to each pairing of
Offices through which the parties make and receive payments or deliveries.

(d)        Deduction or Withholding for Tax.

 

 

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(i)        Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction or
withholding is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, then in effect. If a party is so
required to deduct or withhold, then that party (“X”) will: ―

 

 

 

(1)          promptly notify the other party (“Y”) of such requirement;

 

 

 

(2)          pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted or
withheld from any additional amount paid by X to Y under this Section 2(d))
promptly upon the earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been assessed against Y;

 

 

 

(3)          promptly forward to Y an official receipt (or a certified copy), or
other documentation reasonably acceptable to Y, evidencing such payment to such
authorities; and

 

 

 

(4)          if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such additional
amount as is necessary to ensure that the net amount actually received by Y
(free and clear of Indemnifiable Taxes, whether assessed against X or Y) will
equal the full amount Y would have received had no such deduction or withholding
been required. However, X will not be required to pay any additional amount to Y
to the extent that it would not be required to be paid but for: ―

 

 

 

(A)          the failure by Y to comply with or perform any agreement contained
in Section 4(a)(i), 4(a)(iii) or 4(d); or

 

 

 

(B)          the failure of a representation made by Y pursuant to Section 3(f)
to be accurate and true unless such failure would not have occurred but for (I)
any action taken by a taxing authority, or brought in a court of competent
jurisdiction, after a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.

 

 

(ii)

Liability. If:―

 

 

 

(1)          X is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, to make any deduction or
withholding in respect of which X would not be required to pay an additional
amount to Y under Section 2(d)(i)(4);

 

 

 

(2)          X does not so deduct or withhold; and

 

 

 

(3)          a liability resulting from such Tax is assessed directly against X,

 

 

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then, except to the extent Y has satisfied or then satisfies the liability
resulting from such Tax, Y will promptly pay to X the amount of such liability
(including any related liability for interest, but including any related
liability for penalties only if Y has failed to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d)).

 

 

3.

Representations

 

 

Each party makes the representations contained in Sections 3(a), 3(b), 3(c),
3(d), 3(e) and 3(f) and, if specified in the Schedule as applying, 3(g) to the
other party (which representations will be deemed to be repeated by each party
on each date on which a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the termination of this
Agreement). If any “Additional Representation” is specified in the Schedule or
any Confirmation as applying, the party or parties specified for such Additional
Representation will make and, if applicable, be deemed to repeat such Additional
Representation at the time or times specified for such Additional
Representation.

 

 

(a)

Basic Representations.

 

 

 

(i)          Status. It is duly organised and validly existing under the laws of
the jurisdiction of its organisation or incorporation and, if relevant under
such laws, in good standing;

 

 

 

(ii)        Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to deliver this
Agreement and any other documentation relating to this Agreement that it is
required by this Agreement to deliver and to perform its obligations under this
Agreement and any obligations it has under any Credit Support Document to which
it is a party and has taken all necessary action to authorise such execution,
delivery and performance;

 

 

 

(iii)       No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets;

 

 

 

(iv)       Consents. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit Support
Document to which it is a party have been obtained and are in full force and
effect and all conditions of any such consents have been complied with; and

 

 

 

(v)        Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal, valid and
binding obligations, enforceable in accordance with their respective terms
(subject to applicable bankruptcy, reorganisation, insolvency, moratorium or
similar laws affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).

 

 

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(b)          Absence of Certain Events. No Event of Default or Potential Event
of Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.

 

(c)          Absence of Litigation. There is not pending or, to its knowledge,
threatened against it, any of its Credit Support Providers or any of its
applicable Specified Entities any action, suit or proceeding at law or in equity
or before any court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or any Credit Support Document to which it is a
party or its ability to perform its obligations under this Agreement or such
Credit Support Document.

 

(d)          Accuracy of Specified Information. All applicable information that
is furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material respect.

 

(e)          Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.

 

(f)          Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.

 

(g)        No Agency. It is entering into this Agreement, including each
Transaction, as principal and not as agent of any person or entity.

 

 

 

4.

 Agreements

 

 

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:―

 

(a)         Furnish Specified Information. It will deliver to the other party
or, in certain cases under clause (iii) below, to such government or taxing
authority as the other party reasonably directs:―

 

 

 

 

(i)         any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;

 

 

 

(ii)        any other documents specified in the Schedule or any Confirmation;
and

 

 

 

(iii)       upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow such
other party or its Credit Support Provider to make a payment under this
Agreement or any applicable Credit Support Document without any deduction or
withholding for or on account of any Tax or with such deduction or withholding
at a reduced rate (so long as the completion, execution or submission of such
form or document would not materially prejudice the legal or commercial position
of the party in receipt of such demand), with any such form or document to be
accurate and completed in a manner reasonably satisfactory to such other party
and to be executed and to be

 

 

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delivered with any reasonably required certification, in each case by the date
specified in the Schedule or such Confirmation or, if none is specified, as soon
as reasonably practicable.

 

 

(b)        Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this Agreement
or any Credit Support Document to which it is a party and will use all
reasonable efforts to obtain any that may become necessary in the future.

 

 

(c)        Comply With Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.

 

(d)        Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.

 

(e)        Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp
Tax levied or imposed upon it or in respect of its execution or performance of
this Agreement by a jurisdiction in which it is incorporated, organised, managed
and controlled or considered to have its seat, or where an Office through which
it is acting for the purpose of this Agreement is located (“Stamp Tax
Jurisdiction”), and will indemnify the other party against any Stamp Tax levied
or imposed upon the other party or in respect of the other party’s execution or
performance of this Agreement by any such Stamp Tax Jurisdiction which is not
also a Stamp Tax Jurisdiction with respect to the other party.

 

5.

Events of Default and Termination Events

 

 

(a)        Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes (subject to
Sections 5(c) and 6(e)(iv)) an event of default (an “Event of Default”) with
respect to such party:―

 

 

(i)        Failure to Pay or Deliver. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2)
or (4) required to be made by it if such failure is not remedied on or before
the first Local Business Day in the case of any such payment or the first Local
Delivery Day in the case of any such delivery after, in each case, notice of
such failure is given to the party;

 

 

 

(ii)      Breach of Agreement; Repudiation of Agreement.

 

 

 

 

 

(1) Failure by the party to comply with or perform any agreement or obligation
(other than an obligation to make any payment under this Agreement or delivery
under Section 2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination
Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d))
to be complied with or performed by the party in accordance with this Agreement
if such failure is not remedied within 30 days after notice of such failure is
given to the party; or

 

 

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(2)          the party disaffirms, disclaims, repudiates or rejects, in whole or
in part, or challenges the validity of, this Master Agreement, any Confirmation
executed and delivered by that party or any Transaction evidenced by such a
Confirmation (or such action is taken by any person or entity appointed or
empowered to operate it or act on its behalf);

 

 

 

 

(iii)

Credit Support Default.

 

 

 

 

 

(1)          Failure by the party or any Credit Support Provider of such party
to comply with or perform any agreement or obligation to be complied with or
performed by it in accordance with any Credit Support Document if such failure
is continuing after any applicable grace period has elapsed;

 

 

 

 

 

(2)           the expiration or termination of such Credit Support Document or
the failing or ceasing of such Credit Support Document, or any security interest
granted by such party or such Credit Support Provider to the other party
pursuant to any such Credit Support Document, to be in full force and effect for
the purpose of this Agreement (in each case other than in accordance with its
terms) prior to the satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without the written
consent of the other party; or

 

 

 

 

 

(3)          the party or such Credit Support Provider disaffirms, disclaims,
repudiates or rejects, in whole or in part, or challenges the validity of, such
Credit Support Document (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);

 

 

 

 

(iv)      Misrepresentation. A representation (other than a representation under
Section 3(e) or 3(f)) made or repeated or deemed to have been made or repeated
by the party or any Credit Support Provider of such party in this Agreement or
any Credit Support Document proves to have been incorrect or misleading in any
material respect when made or repeated or deemed to have been made or repeated;

 

 

 

 

(v)      Default Under Specified Transaction. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party:―

 

 

 

 

 

(1)          defaults (other than by failing to make a delivery) under a
Specified Transaction or any credit support arrangement relating to a Specified
Transaction and, after giving effect to any applicable notice requirement or
grace period, such default results in a liquidation of, an acceleration of
obligations under, or an early termination of, that Specified Transaction;

 

 

 

 

 

(2)          defaults, after giving effect to any applicable notice requirement
or grace period, in making any payment due on the last payment or exchange date
of, or any payment on early termination of, a Specified Transaction (or, if
there is no applicable notice requirement or grace period, such default
continues for at least one Local Business Day);

 

 

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(3)          defaults in making any delivery due under (including any delivery
due on the last delivery or exchange date of) a Specified Transaction or any
credit support arrangement relating to a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, such default
results in a liquidation of, an acceleration of obligations under, or an early
termination of, all transactions outstanding under the documentation applicable
to that Specified Transaction; or

 

 

 

 

 

(4)          disaffirms, disclaims, repudiates or rejects, in whole or in part,
or challenges the validity of, a Specified Transaction or any credit support
arrangement relating to a Specified Transaction that is, in either case,
confirmed or evidenced by a document or other confirming evidence executed and
delivered by that party, Credit Support Provider or Specified Entity (or such
action is taken by any person or entity appointed or empowered to operate it or
act on its behalf);

 

 

 

 

(vi)      Cross-Default. If “Cross-Default” is specified in the Schedule as
applying to the party, the occurrence or existence of:―

 

 

 

 

 

(1)          a default, event of default or other similar condition or event
(however described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of them
(individually or collectively) where the aggregate principal amount of such
agreements or instruments, either alone or together with the amount, if any,
referred to in clause (2) below, is not less than the applicable Threshold
Amount (as specified in the Schedule) which has resulted in such Specified
Indebtedness becoming, or becoming capable at such time of being declared, due
and payable under such agreements or instruments before it would otherwise have
been due and payable; or

 

 

 

 

 

(2)          a default by such party, such Credit Support Provider or such
Specified Entity (individually or collectively) in making one or more payments
under such agreements or instruments on the due date for payment (after giving
effect to any applicable notice requirement or grace period) in an aggregate
amount, either alone or together with the amount, if any, referred to in clause
(1) above, of not less than the applicable Threshold Amount;

 

 

 

 

(vii)    Bankruptcy. The party, any Credit Support Provider of such party or any
applicable Specified Entity of such party:―

 

 

 

 

 

(1)          is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as they become due;
(3) makes a general assignment, arrangement or composition with or for the
benefit of its creditors; (4)(A) institutes or has instituted against it, by a
regulator, supervisor or any similar official with primary insolvency,
rehabilitative or regulatory jurisdiction over it in the jurisdiction of its
incorporation or organisation or the jurisdiction of its head or home office, a
proceeding seeking a judgment of insolvency or bankruptcy or any

 

 

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other relief under any bankruptcy or insolvency law or other similar law
affecting creditors’ rights, or a petition is presented for its winding-up or
liquidation by it or such regulator, supervisor or similar official, or (B) has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors’ rights, or a petition is presented for its
winding-up or liquidation, and such proceeding or petition is instituted or
presented by a person or entity not described in clause (A) above and either (I)
results in a judgment of insolvency or bankruptcy or the entry of an order for
relief or the making of an order for its winding-up or liquidation or (II) is
not dismissed, discharged, stayed or restrained in each case within 15 days of
the institution or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment, sequestration or other
legal process levied, enforced or sued on or against all or substantially all
its assets and such secured party maintains possession, or any such process is
not dismissed, discharged, stayed or restrained, in each case within 15 days
thereafter; (8) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous effect to any of
the events specified in clauses (l) to (7) above (inclusive); or (9) takes any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or

 

 

 

 

(viii)    Merger Without Assumption. The party or any Credit Support Provider of
such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, or reorganises, reincorporates
or reconstitutes into or as, another entity and, at the time of such
consolidation, amalgamation, merger, transfer, reorganisation, reincorporation
or reconstitution: ―

 

 

 

 

 

(1)          the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support Document to which it or its predecessor was a
party; or

 

 

 

 

 

(2)          the benefits of any Credit Support Document fail to extend (without
the consent of the other party) to the performance by such resulting, surviving
or transferee entity of its obligations under this Agreement.

 

 

 

(b)        Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes (subject
to Section 5(c)) an Illegality if the event is specified in clause (i) below, a
Force Majeure Event if the event is specified in clause (ii) below, a Tax Event
if the event is specified in clause (iii) below, a Tax Event Upon Merger if the
event is specified in clause (iv) below, and, if specified to be applicable, a
Credit Event Upon Merger if the event is specified pursuant to

 

 

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clause (v) below or an Additional Termination Event if the event is specified
pursuant to clause (vi) below:―

 

 

 

 

(i)        Illegality. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, due to an event or circumstance
(other than any action taken by a party or, if applicable, any Credit Support
Provider of such party) occurring after a Transaction is entered into, it
becomes unlawful under any applicable law (including without limitation the laws
of any country in which payment, delivery or compliance is required by either
party or any Credit Support Provider, as the case may be), on any day, or it
would be unlawful if the relevant payment, delivery or compliance were required
on that day (in each case, other than as a result of a breach by the party of
Section 4(b)):―

 

 

 

 

 

(1)          for the Office through which such party (which will be the Affected
Party) makes and receives payments or deliveries with respect to such
Transaction to perform any absolute or contingent obligation to make a payment
or delivery in respect of such Transaction, to receive a payment or delivery in
respect of such Transaction or to comply with any other material provision of
this Agreement relating to such Transaction; or

 

 

 

 

 

(2)          for such party or any Credit Support Provider of such party (which
will be the Affected Party) to perform any absolute or contingent obligation to
make a payment or delivery which such party or Credit Support Provider has under
any Credit Support Document relating to such Transaction, to receive a payment
or delivery under such Credit Support Document or to comply with any other
material provision of such Credit Support Document;

 

 

 

 

(ii)       Force Majeure Event. After giving effect to any applicable provision,
disruption fallback or remedy specified in, or pursuant to, the relevant
Confirmation or elsewhere in this Agreement, by reason of force majeure or act
of state occurring after a Transaction is entered into, on any day: ―

 

 

 

 

 

(1)          the Office through which such party (which will be the Affected
Party) makes and receives payments or deliveries with respect to such
Transaction is prevented from performing any absolute or contingent obligation
to make a payment or delivery in respect of such Transaction, from receiving a
payment or delivery in respect of such Transaction or from complying with any
other material provision of this Agreement relating to such Transaction (or
would be so prevented if such payment, delivery or compliance were required on
that day), or it becomes impossible or impracticable for such Office so to
perform, receive or comply (or it would be impossible or impracticable for such
Office so to perform, receive or comply if such payment, delivery or compliance
were required on that day); or

 

 

 

 

 

(2)          such party or any Credit Support Provider of such party (which will
be the Affected Party) is prevented from performing any absolute or contingent
obligation to make a payment or delivery which such party or Credit Support
Provider has under

 

 

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any Credit Support Document relating to such Transaction, from receiving a
payment or delivery under such Credit Support Document or from complying with
any other material provision of such Credit Support Document (or would be so
prevented if such payment, delivery or compliance were required on that day), or
it becomes impossible or impracticable for such party or Credit Support Provider
so to perform, receive or comply (or it would be impossible or impracticable for
such party or Credit Support Provider so to perform, receive or comply if such
payment, delivery or compliance were required on that day),

 

 

 

so long as the force majeure or act of state is beyond the control of such
Office, such party or such Credit Support Provider, as appropriate, and such
Office, party or Credit Support Provider could not, after using all reasonable
efforts (which will not require such party or Credit Support Provider to incur a
loss, other than immaterial, incidental expenses), overcome such prevention,
impossibility or impracticability;

 

 

 

(iii)       Tax Event. Due to (1) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, after a Transaction is entered
into (regardless of whether such action is taken or brought with respect to a
party to this Agreement) or (2) a Change in Tax Law, the party (which will be
the Affected Party) will, or there is a substantial likelihood that it will, on
the next succeeding Scheduled Settlement Date (A) be required to pay to the
other party an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 9(h)) or (B)
receive a payment from which an amount is required to be deducted or withheld
for or on account of a Tax (except in respect of interest under Section 9(h))
and no additional amount is required to be paid in respect of such Tax under
Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));

 

 

 

(iv)        Tax Event Upon Merger. The party (the “Burdened Party”) on the next
succeeding Scheduled Settlement Date will either (1) be required to pay an
additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
(except in respect of interest under Section 9(h)) or (2) receive a payment from
which an amount has been deducted or withheld for or on account of any Tax in
respect of which the other party is not required to pay an additional amount
(other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a
result of a party consolidating or amalgamating with, or merging with or into,
or transferring all or substantially all its assets (or any substantial part of
the assets comprising the business conducted by it as of the date of this Master
Agreement) to, or reorganising, reincorporating or reconstituting into or as,
another entity (which will be the Affected Party) where such action does not
constitute a Merger Without Assumption;

 

 

 

(v)        Credit Event Upon Merger. If “Credit Event Upon Merger” is specified
in the Schedule as applying to the party, a Designated Event (as defined below)
occurs with respect to such party, any Credit Support Provider of such party or
any applicable Specified Entity of such party (in each case, “X”) and such
Designated Event does not constitute a Merger Without Assumption, and the
creditworthiness of X or, if applicable, the successor, surviving or transferee
entity of X, after taking into account any applicable Credit Support Document,
is materially weaker immediately after the occurrence of such Designated Event
than that of X immediately prior to the occurrence of such Designated Event
(and, in any such event, such

 

 

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party or its successor, surviving or transferee entity, as appropriate, will be
the Affected Party). A “Designated Event” with respect to X means that:―

 

 

 

 

 

(1)          X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets (or any substantial part of the
assets comprising the business conducted by X as of the date of this Master
Agreement) to, or reorganises, reincorporates or reconstitutes into or as,
another entity;

 

 

 

 

 

(2)          any person, related group of persons or entity acquires directly or
indirectly the beneficial ownership of (A) equity securities having the power to
elect a majority of the board of directors (or its equivalent) of X or (B) any
other ownership interest enabling it to exercise control of X; or

 

 

 

 

 

(3)          X effects any substantial change in its capital structure by means
of the issuance, incurrence or guarantee of debt or the issuance of (A)
preferred stock or other securities convertible into or exchangeable for debt or
preferred stock or (B) in the case of entities other than corporations, any
other form of ownership interest; or

 

 

 

 

(vi)      Additional Termination Event. If any “Additional Termination Event” is
specified in the Schedule or any Confirmation as applying, the occurrence of
such event (and, in such event, the Affected Party or Affected Parties will be
as specified for such Additional Termination Event in the Schedule or such
Confirmation).

 

 

 

(c)

Hierarchy of Events.

 

 

 

 

(i)          An event or circumstance that constitutes or gives rise to an
Illegality or a Force Majeure Event will not, for so long as that is the case,
also constitute or give rise to an Event of Default under Section 5(a)(i),
5(a)(ii)(1) or 5(a)(iii)(1) insofar as such event or circumstance relates to the
failure to make any payment or delivery or a failure to comply with any other
material provision of this Agreement or a Credit Support Document, as the case
may be.

 

 

 

 

(ii)        Except in circumstances contemplated by clause (i) above, if an
event or circumstance which would otherwise constitute or give rise to an
Illegality or a Force Majeure Event also constitutes an Event of Default or any
other Termination Event, it will be treated as an Event of Default or such other
Termination Event, as the case may be, and will not constitute or give rise to
an Illegality or a Force Majeure Event.

 

 

 

 

(iii)       If an event or circumstance which would otherwise constitute or give
rise to a Force Majeure Event also constitutes an Illegality, it will be treated
as an Illegality, except as described in clause (ii) above, and not a Force
Majeure Event.

 

 

 

(d)        Deferral of Payments and Deliveries During Waiting Period. If an
Illegality or a Force Majeure Event has occurred and is continuing with respect
to a Transaction, each payment or delivery which would otherwise be required to
be made under that Transaction will be deferred to, and will not be due until: ―

 

 

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(i)          the first Local Business Day or, in the case of a delivery, the
first Local Delivery Day (or the first day that would have been a Local Business
Day or Local Delivery Day, as appropriate, but for the occurrence of the event
or circumstance constituting or giving rise to that Illegality or Force Majeure
Event) following the end of any applicable Waiting Period in respect of that
Illegality or Force Majeure Event, as the case may be; or

 

 

 

(ii)          if earlier, the date on which the event or circumstance
constituting or giving rise to that Illegality or Force Majeure Event ceases to
exist or, if such date is not a Local Business Day or, in the case of a
delivery, a Local Delivery Day, the first following day that is a Local Business
Day or Local Delivery Day, as appropriate.

(e)        Inability of Head or Home Office to Perform Obligations of Branch. If
(i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or
5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home
office, (ii) Section 10(a) applies, (iii) the other party seeks performance of
the relevant obligation or compliance with the relevant provision by the
Affected Party’s head or home office and (iv) the Affected Party’s head or home
office fails so to perform or comply due to the occurrence of an event or
circumstance which would, if that head or home office were the Office through
which the Affected Party makes and receives payments and deliveries with respect
to the relevant Transaction, constitute or give rise to an Illegality or a Force
Majeure Event, and such failure would otherwise constitute an Event of Default
under Section 5(a)(i) or 5(a)(iii)(1) with respect to such party, then, for so
long as the relevant event or circumstance continues to exist with respect to
both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case
may be, and the Affected Party’s head or home office, such failure will not
constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1).

6.         Early Termination; Close-Out Netting

(a)       Right to Terminate Following Event of Default. If at any time an Event
of Default with respect to a party (the “Defaulting Party”) has occurred and is
then continuing, the other party (the “Non-defaulting Party”) may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
“Automatic Early Termination” is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b)        Right to Terminate Following Termination Event.

 

 

 

(i)           Notice. If a Termination Event other than a Force Majeure Event
occurs, an Affected Party will, promptly upon becoming aware of it, notify the
other party, specifying the nature of that Termination Event and each Affected
Transaction, and will also give the other party such other information about
that Termination Event as the other party may reasonably require. If a Force
Majeure Event occurs, each party will, promptly upon becoming aware of it, use
all

 

 

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reasonable efforts to notify the other party, specifying the nature of that
Force Majeure Event, and will also give the other party such other information
about that Force Majeure Event as the other party may reasonably require.

 

 

 

(ii)         Transfer to Avoid Termination Event. If a Tax Event occurs and
there is only one Affected Party, or if a Tax Event Upon Merger occurs and the
Burdened Party is the Affected Party, the Affected Party will, as a condition to
its right to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss, other
than immaterial, incidental expenses) to transfer within 20 days after it gives
notice under Section 6(b)(i) all its rights and obligations under this Agreement
in respect of the Affected Transactions to another of its Offices or Affiliates
so that such Termination Event ceases to exist.

 

 

 

If the Affected Party is not able to make such a transfer it will give notice to
the other party to that effect within such 20 day period, whereupon the other
party may effect such a transfer within 30 days after the notice is given under
Section 6(b)(i).

 

 

 

Any such transfer by a party under this Section 6(b)(ii) will be subject to and
conditional upon the prior written consent of the other party, which consent
will not be withheld if such other party’s policies in effect at such time would
permit it to enter into transactions with the transferee on the terms proposed.

 

 

 

 

 

(iii)        Two Affected Parties. If a Tax Event occurs and there are two
Affected Parties, each party will use all reasonable efforts to reach agreement
within 30 days after notice of such occurrence is given under Section 6(b)(i) to
avoid that Termination Event.

 

 

 

 

 

(iv)        Right to Terminate.

 

 

 

 

 

 

(1)

If:―

 

 

 

 

 

 

 

(A)          a transfer under Section 6(b)(ii) or an agreement under Section
6(b)(iii), as the case may be, has not been effected with respect to all
Affected Transactions within 30 days after an Affected Party gives notice under
Section 6(b)(i); or

 

 

 

 

 

 

 

(B)          a Credit Event Upon Merger or an Additional Termination Event
occurs, or a Tax Event Upon Merger occurs and the Burdened Party is not the
Affected Party,

 

 

 

 

 

 

the Burdened Party in the case of a Tax Event Upon Merger, any Affected Party in
the case of a Tax Event or an Additional Termination Event if there are two
Affected Parties, or the Non- affected Party in the case of a Credit Event Upon
Merger or an Additional Termination Event if there is only one Affected Party
may, if the relevant Termination Event is then continuing, by not more than 20
days notice to the other party, designate a day not earlier than the day such
notice is effective as an

 

 

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Early Termination Date in respect of all Affected Transactions.

 

 

 

 

 

 

(2)        If at any time an Illegality or a Force Majeure Event has occurred
and is then continuing and any applicable Waiting Period has expired:―

 

 

 

 

 

 

(A)          Subject to clause (B) below, either party may, by not more than 20
days notice to the other party, designate (I) a day not earlier than the day on
which such notice becomes effective as an Early Termination Date in respect of
all Affected Transactions or (II) by specifying in that notice the Affected
Transactions in respect of which it is designating the relevant day as an Early
Termination Date, a day not earlier than two Local Business Days following the
day on which such notice becomes effective as an Early Termination Date in
respect of less than all Affected Transactions. Upon receipt of a notice
designating an Early Termination Date in respect of less than all Affected
Transactions, the other party may, by notice to the designating party, if such
notice is effective on or before the day so designated, designate that same day
as an Early Termination Date in respect of any or all other Affected
Transactions.

 

 

 

 

 

 

 

(B)          An Affected Party (if the Illegality or Force Majeure Event relates
to performance by such party or any Credit Support Provider of such party of an
obligation to make any payment or delivery under, or to compliance with any
other material provision of, the relevant Credit Support Document) will only
have the right to designate an Early Termination Date under Section
6(b)(iv)(2)(A) as a result of an Illegality under Section 5(b)(i)(2) or a Force
Majeure Event under Section 5(b)(ii)(2) following the prior designation by the
other party of an Early Termination Date, pursuant to Section 6(b)(iv)(2)(A), in
respect of less than all Affected Transactions.

 

 

 

 

(c)

Effect of Designation.

 

 

 

 

 

(i)          If notice designating an Early Termination Date is given under
Section 6(a) or 6(b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination Event is
then continuing.

 

 

 

 

 

(ii)        Upon the occurrence or effective designation of an Early Termination
Date, no further payments or deliveries under Section 2(a)(i) or 9(h)(i) in
respect of the Terminated Transactions will be required to be made, but without
prejudice to the other provisions of this Agreement. The amount, if any, payable
in respect of an Early Termination Date will be determined pursuant to Sections
6(e) and 9(h)(ii).

 

 

 

 

(d)

Calculations; Payment Date.

 

 

 

 

 

(i)          Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the calculations
on its part, if any, contemplated by Section 6(e) and will provide to the other
party a statement (l) showing, in reasonable detail,

 

 

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such calculations (including any quotations, market data or information from
internal sources used in making such calculations), (2) specifying (except where
there are two Affected Parties) any Early Termination Amount payable and (3)
giving details of the relevant account to which any amount payable to it is to
be paid. In the absence of written confirmation from the source of a quotation
or market data obtained in determining a Close-out Amount, the records of the
party obtaining such quotation or market data will be conclusive evidence of the
existence and accuracy of such quotation or market data.

 

 

 

(ii)        Payment Date. An Early Termination Amount due in respect of any
Early Termination Date will, together with any amount of interest payable
pursuant to Section 9(h)(ii)(2), be payable (1) on the day on which notice of
the amount payable is effective in the case of an Early Termination Date which
is designated or occurs as a result of an Event of Default and (2) on the day
which is two Local Business Days after the day on which notice of the amount
payable is effective (or, if there are two Affected Parties, after the day on
which the statement provided pursuant to clause (i) above by the second party to
provide such a statement is effective) in the case of an Early Termination Date
which is designated as a result of a Termination Event.

 

 

(e)         Payments on Early Termination. If an Early Termination Date occurs,
the amount, if any, payable in respect of that Early Termination Date (the
“Early Termination Amount”) will be determined pursuant to this Section 6(e) and
will be subject to Section 6(f).

 

 

 

 

(i)          Events of Default. If the Early Termination Date results from an
Event of Default, the Early Termination Amount will be an amount equal to (1)
the sum of (A) the Termination Currency Equivalent of the Close-out Amount or
Close-out Amounts (whether positive or negative) determined by the Non-
defaulting Party for each Terminated Transaction or group of Terminated
Transactions, as the case may be, and (B) the Termination Currency Equivalent of
the Unpaid Amounts owing to the Non-defaulting Party less (2) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting Party. If the
Early Termination Amount is a positive number, the Defaulting Party will pay it
to the Non-defaulting Party; if it is a negative number, the Non-defaulting
Party will pay the absolute value of the Early Termination Amount to the
Defaulting Party.

 

 

 

 

(ii)        Termination Events. If the Early Termination Date results from a
Termination Event:―

 

 

 

 

 

(1)          One Affected Party. Subject to clause (3) below, if there is one
Affected Party, the Early Termination Amount will be determined in accordance
with Section 6(e)(i), except that references to the Defaulting Party and to the
Non-defaulting Party will be deemed to be references to the Affected Party and
to the Non-affected Party, respectively.

 

 

 

 

 

(2)          Two Affected Parties. Subject to clause (3) below, if there are two
Affected Parties, each party will determine an amount equal to the Termination
Currency Equivalent of the sum of the Close-out Amount or Close-out Amounts
(whether positive or negative) for each Terminated Transaction or group of
Terminated

 

 

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Transactions, as the case may be, and the Early Termination Amount will be an
amount equal to (A) the sum of (I) one-half of the difference between the higher
amount so determined (by party “X”) and the lower amount so determined (by party
“Y”) and (II) the Termination Currency Equivalent of the Unpaid Amounts owing to
X less (B) the Termination Currency Equivalent of the Unpaid Amounts owing to Y.
If the Early Termination Amount is a positive number, Y will pay it to X; if it
is a negative number, X will pay the absolute value of the Early Termination
Amount to Y.

 

 

 

 

 

 

(3)         Mid-Market Events. If that Termination Event is an Illegality or a
Force Majeure Event, then the Early Termination Amount will be determined in
accordance with clause (1) or (2) above, as appropriate, except that, for the
purpose of determining a Close-out Amount or Close-out Amounts, the Determining
Party will:―

 

 

 

 

 

 

 

(A)          if obtaining quotations from one or more third parties (or from any
of the Determining Party’s Affiliates), ask each third party or Affiliate (I)
not to take account of the current creditworthiness of the Determining Party or
any existing Credit Support Document and (II) to provide mid-market quotations;
and

 

 

 

 

 

 

 

(B)          in any other case, use mid-market values without regard to the
creditworthiness of the Determining Party.

 

 

 

 

 

(iii)       Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because Automatic Early Termination applies in respect
of a party, the Early Termination Amount will be subject to such adjustments as
are appropriate and permitted by applicable law to reflect any payments or
deliveries made by one party to the other under this Agreement (and retained by
such other party) during the period from the relevant Early Termination Date to
the date for payment determined under Section 6(d)(ii).

 

 

 

 

 

(iv)       Adjustment for Illegality or Force Majeure Event. The failure by a
party or any Credit Support Provider of such party to pay, when due, any Early
Termination Amount will not constitute an Event of Default under Section 5(a)(i)
or 5(a)(iii)(1) if such failure is due to the occurrence of an event or
circumstance which would, if it occurred with respect to payment, delivery or
compliance related to a Transaction, constitute or give rise to an Illegality or
a Force Majeure Event. Such amount will (1) accrue interest and otherwise be
treated as an Unpaid Amount owing to the other party if subsequently an Early
Termination Date results from an Event of Default, a Credit Event Upon Merger or
an Additional Termination Event in respect of which all outstanding Transactions
are Affected Transactions and (2) otherwise accrue interest in accordance with
Section 9(h)(ii)(2).

 

 

 

(v)       Pre-Estimate. The parties agree that an amount recoverable under this
Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount
is payable for the loss of bargain and the loss of protection against future
risks, and, except as otherwise provided in this Agreement, neither party will
be entitled to recover any additional damages as a consequence of the
termination of the Terminated Transactions.

 

 

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(f)          Set-Off. Any Early Termination Amount payable to one party (the
“Payee”) by the other party (the “Payer”), in circumstances where there is a
Defaulting Party or where there is one Affected Party in the case where either a
Credit Event Upon Merger has occurred or any other Termination Event in respect
of which all outstanding Transactions are Affected Transactions has occurred,
will, at the option of the Non-defaulting Party or the Non- affected Party, as
the case may be (“X”) (and without prior notice to the Defaulting Party or the
Affected Party, as the case may be), be reduced by its set-off against any other
amounts (“Other Amounts”) payable by the Payee to the Payer (whether or not
arising under this Agreement, matured or contingent and irrespective of the
currency, place of payment or place of booking of the obligation). To the extent
that any Other Amounts are so set off, those Other Amounts will be discharged
promptly and in all respects. X will give notice to the other party of any
set-off effected under this Section 6(f).

For this purpose, either the Early Termination Amount or the Other Amounts (or
the relevant portion of such amounts) may be converted by X into the currency in
which the other is denominated at the rate of exchange at which such party would
be able, in good faith and using commercially reasonable procedures, to purchase
the relevant amount of such currency.

If an obligation is unascertained, X may in good faith estimate that obligation
and set off in respect of the estimate, subject to the relevant party accounting
to the other when the obligation is ascertained.

Nothing in this Section 6(f) will be effective to create a charge or other
security interest. This Section 6(f) will be without prejudice and in addition
to any right of set-off, offset, combination of accounts, lien, right of
retention or withholding or similar right or requirement to which any party is
at any time otherwise entitled or subject (whether by operation of law, contract
or otherwise).

7.           Transfer

Subject to Section 6(b)(ii) and to the extent permitted by applicable law,
neither this Agreement nor any interest or obligation in or under this Agreement
may be transferred (whether by way of security or otherwise) by either party
without the prior written consent of the other party, except that:―

(a)          a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b)          a party may make such a transfer of all or any part of its interest
in any Early Termination Amount payable to it by a Defaulting Party, together
with any amounts payable on or with respect to that interest and any other
rights associated with that interest pursuant to Sections 8, 9(h) and 11.

Any purported transfer that is not in compliance with this Section 7 will be
void.

8.           Contractual Currency

(a)          Payment in the Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this Agreement for
that payment (the “Contractual Currency”). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the

 

 

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Contractual Currency will not be discharged or satisfied by any tender in any
currency other than the Contractual Currency, except to the extent such tender
results in the actual receipt by the party to which payment is owed, acting in
good faith and using commercially reasonable procedures in converting the
currency so tendered into the Contractual Currency, of the full amount in the
Contractual Currency of all amounts payable in respect of this Agreement. If for
any reason the amount in the Contractual Currency so received falls short of the
amount in the Contractual Currency payable in respect of this Agreement, the
party required to make the payment will, to the extent permitted by applicable
law, immediately pay such additional amount in the Contractual Currency as may
be necessary to compensate for the shortfall. If for any reason the amount in
the Contractual Currency so received exceeds the amount in the Contractual
Currency payable in respect of this Agreement, the party receiving the payment
will refund promptly the amount of such excess.

(b)          Judgments. To the extent permitted by applicable law, if any
judgment or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this Agreement,
(ii) for the payment of any amount relating to any early termination in respect
of this Agreement or (iii) in respect of a judgment or order of another court
for the payment of any amount described in clause (i) or (ii) above, the party
seeking recovery, after recovery in full of the aggregate amount to which such
party is entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purpose of such
judgment or order and the rate of exchange at which such party is able, acting
in good faith and using commercially reasonable procedures in converting the
currency received into the Contractual Currency, to purchase the Contractual
Currency with the amount of the currency of the judgment or order actually
received by such party.

(c)          Separate Indemnities. To the extent permitted by applicable law,
the indemnities in this Section 8 constitute separate and independent
obligations from the other obligations in this Agreement, will be enforceable as
separate and independent causes of action, will apply notwithstanding any
indulgence granted by the party to which any payment is owed and will not be
affected by judgment being obtained or claim or proof being made for any other
sums payable in respect of this Agreement.

(d)          Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

9.           Miscellaneous

(a)         Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties with respect to its subject matter. Each of the
parties acknowledges that in entering into this Agreement it has not relied on
any oral or written representation, warranty or other assurance (except as
provided for or referred to in this Agreement) and waives all rights and
remedies which might

 

 

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otherwise be available to it in respect thereof, except that nothing in this
Agreement will limit or exclude any liability of a party for fraud.

(b)         Amendments. An amendment, modification or waiver in respect of this
Agreement will only be effective if in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or by an exchange of electronic messages on an electronic
messaging system.

(c)         Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)         Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and privileges
provided by law.

(e)         Counterparts and Confirmations.

 

 

 

 

(i)           This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including by
facsimile transmission and by electronic messaging system), each of which will
be deemed an original.

 

 

 

(ii)          The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation will be entered into as soon as practicable and may
be executed and delivered in counterparts (including by facsimile transmission)
or be created by an exchange of telexes, by an exchange of electronic messages
on an electronic messaging system or by an exchange of e-mails, which in each
case will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another effective
means that any such counterpart, telex, electronic message or e-mail constitutes
a Confirmation.

 

 

(f)         No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed to operate
as a waiver, and a single or partial exercise of any right, power or privilege
will not be presumed to preclude any subsequent or further exercise, of that
right, power or privilege or the exercise of any other right, power or
privilege.

 

 

 

(g)         Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.

 

(h)         Interest and Compensation.

 

 

(i)          Prior to Early Termination. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction:―

 

 

 

 

 

(1)          Interest on Defaulted Payments. If a party defaults in the
performance of any payment obligation, it will, to the extent permitted by
applicable law and subject to Section 6(c), pay interest (before as well as
after judgment) on the overdue amount to the other party on demand in the same
currency as the overdue amount, for the period

 

 

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from (and including) the original due date for payment to (but excluding) the
date of actual payment (and excluding any period in respect of which interest or
compensation in respect of the overdue amount is due pursuant to clause (3)(B)
or (C) below), at the Default Rate.

 

 

 

 

 

(2)           Compensation for Defaulted Deliveries. If a party defaults in the
performance of any obligation required to be settled by delivery, it will on
demand (A) compensate the other party to the extent provided for in the relevant
Confirmation or elsewhere in this Agreement and (B) unless otherwise provided in
the relevant Confirmation or elsewhere in this Agreement, to the extent
permitted by applicable law and subject to Section 6(c), pay to the other party
interest (before as well as after judgment) on an amount equal to the fair
market value of that which was required to be delivered in the same currency as
that amount, for the period from (and including) the originally scheduled date
for delivery to (but excluding) the date of actual delivery (and excluding any
period in respect of which interest or compensation in respect of that amount is
due pursuant to clause (4) below), at the Default Rate. The fair market value of
any obligation referred to above will be determined as of the originally
scheduled date for delivery, in good faith and using commercially reasonable
procedures, by the party that was entitled to take delivery.

 

 

 

 

 

 

(3)           Interest on Deferred Payments. If:―

 

 

 

 

 

 

 

(A)          a party does not pay any amount that, but for Section 2(a)(iii),
would have been payable, it will, to the extent permitted by applicable law and
subject to Section 6(c) and clauses (B) and (C) below, pay interest (before as
well as after judgment) on that amount to the other party on demand (after such
amount becomes payable) in the same currency as that amount, for the period from
(and including) the date the amount would, but for Section 2(a)(iii), have been
payable to (but excluding) the date the amount actually becomes payable, at the
Applicable Deferral Rate;

 

 

 

 

 

 

 

(B)          a payment is deferred pursuant to Section 5(d), the party which
would otherwise have been required to make that payment will, to the extent
permitted by applicable law, subject to Section 6(c) and for so long as no Event
of Default or Potential Event of Default with respect to that party has occurred
and is continuing, pay interest (before as well as after judgment) on the amount
of the deferred payment to the other party on demand (after such amount becomes
payable) in the same currency as the deferred payment, for the period from (and
including) the date the amount would, but for Section 5(d), have been payable to
(but excluding) the earlier of the date the payment is no longer deferred
pursuant to Section 5(d) and the date during the deferral period upon which an
Event of Default or Potential Event of Default with respect to that party
occurs, at the Applicable Deferral Rate; or

 

 

 

 

 

 

 

(C)          a party fails to make any payment due to the occurrence of an
Illegality or a Force Majeure Event (after giving effect to any deferral period

 

 

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contemplated by clause (B) above), it will, to the extent permitted by
applicable law, subject to Section 6(c) and for so long as the event or
circumstance giving rise to that Illegality or Force Majeure Event continues and
no Event of Default or Potential Event of Default with respect to that party has
occurred and is continuing, pay interest (before as well as after judgment) on
the overdue amount to the other party on demand in the same currency as the
overdue amount, for the period from (and including) the date the party fails to
make the payment due to the occurrence of the relevant Illegality or Force
Majeure Event (or, if later, the date the payment is no longer deferred pursuant
to Section 5(d)) to (but excluding) the earlier of the date the event or
circumstance giving rise to that Illegality or Force Majeure Event ceases to
exist and the date during the period upon which an Event of Default or Potential
Event of Default with respect to that party occurs (and excluding any period in
respect of which interest or compensation in respect of the overdue amount is
due pursuant to clause (B) above), at the Applicable Deferral Rate.

 

 

 

 

 

 

(4)

Compensation for Deferred Deliveries. If:―

 

 

 

 

 

 

 

(A)          a party does not perform any obligation that, but for Section
2(a)(iii), would have been required to be settled by delivery;

 

 

 

 

 

 

 

(B)          a delivery is deferred pursuant to Section 5(d); or

 

 

 

 

 

 

 

(C)          a party fails to make a delivery due to the occurrence of an
Illegality or a Force Majeure Event at a time when any applicable Waiting Period
has expired,

 

 

 

 

 

 

the party required (or that would otherwise have been required) to make the
delivery will, to the extent permitted by applicable law and subject to Section
6(c), compensate and pay interest to the other party on demand (after, in the
case of clauses (A) and (B) above, such delivery is required) if and to the
extent provided for in the relevant Confirmation or elsewhere in this Agreement.

 

 

 

(ii)       Early Termination. Upon the occurrence or effective designation of an
Early Termination Date in respect of a Transaction:―

 

 

 

 

 

 

(1)         Unpaid Amounts. For the purpose of determining an Unpaid Amount in
respect of the relevant Transaction, and to the extent permitted by applicable
law, interest will accrue on the amount of any payment obligation or the amount
equal to the fair market value of any obligation required to be settled by
delivery included in such determination in the same currency as that amount, for
the period from (and including) the date the relevant obligation was (or would
have been but for Section 2(a)(iii) or 5(d)) required to have been performed to
(but excluding) the relevant Early Termination Date, at the Applicable Close-out
Rate.

 

 

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(2)        Interest on Early Termination Amounts. If an Early Termination Amount
is due in respect of such Early Termination Date, that amount will, to the
extent permitted by applicable law, be paid together with interest (before as
well as after judgment) on that amount in the Termination Currency, for the
period from (and including) such Early Termination Date to (but excluding) the
date the amount is paid, at the Applicable Close-out Rate.

 

 

 

 

(iii)       Interest Calculation. Any interest pursuant to this Section 9(h)
will be calculated on the basis of daily compounding and the actual number of
days elapsed.

10.        Offices; Multibranch Parties

(a)        If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to and agrees with the other party that, notwithstanding the
place of booking or its jurisdiction of incorporation or organisation, its
obligations are the same in terms of recourse against it as if it had entered
into the Transaction through its head or home office, except that a party will
not have recourse to the head or home office of the other party in respect of
any payment or delivery deferred pursuant to Section 5(d) for so long as the
payment or delivery is so deferred. This representation and agreement will be
deemed to be repeated by each party on each date on which the parties enter into
a Transaction.

(b)        If a party is specified as a Multibranch Party in the Schedule, such
party may, subject to clause (c) below, enter into a Transaction through, book a
Transaction in and make and receive payments and deliveries with respect to a
Transaction through any Office listed in respect of that party in the Schedule
(but not any other Office unless otherwise agreed by the parties in writing).

(c)        The Office through which a party enters into a Transaction will be
the Office specified for that party in the relevant Confirmation or as otherwise
agreed by the parties in writing, and, if an Office for that party is not
specified in the Confirmation or otherwise agreed by the parties in writing, its
head or home office. Unless the parties otherwise agree in writing, the Office
through which a party enters into a Transaction will also be the Office in which
it books the Transaction and the Office through which it makes and receives
payments and deliveries with respect to the Transaction. Subject to Section
6(b)(ii), neither party may change the Office in which it books the Transaction
or the Office through which it makes and receives payments or deliveries with
respect to a Transaction without the prior written consent of the other party.

11.        Expenses

A Defaulting Party will on demand indemnify and hold harmless the other party
for and against all reasonable out-of- pocket expenses, including legal fees,
execution fees and Stamp Tax, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of the
early termination of any Transaction, including, but not limited to, costs of
collection.

12.        Notices

 

 

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(a)        Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner described below (except that a notice or
other communication under Section 5 or 6 may not be given by electronic
messaging system or e-mail) to the address or number or in accordance with the
electronic messaging system or e-mail details provided (see the Schedule) and
will be deemed effective as indicated: ―

 

 

 

(i)          if in writing and delivered in person or by courier, on the date it
is delivered;

 

 

 

(ii)        if sent by telex, on the date the recipient’s answerback is
received;

 

 

 

 

(iii)       if sent by facsimile transmission, on the date it is received by a
responsible employee of the recipient in legible form (it being agreed that the
burden of proving receipt will be on the sender and will not be met by a
transmission report generated by the sender’s facsimile machine);

 

 

 

 

(iv)        if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date it is delivered or its
delivery is attempted;

 

 

 

 

(v)        if sent by electronic messaging system, on the date it is received;
or

 

 

 

 

(vi)       if sent by e-mail, on the date it is delivered,

 

 

 

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication will be deemed given and
effective on the first following day that is a Local Business Day.

 

 

 

(b)        Change of Details. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system or e-mail
details at which notices or other communications are to be given to it.

 

 

 

13.

Governing Law and Jurisdiction

 

 

 

(a)        Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

 

 

 

(b)        Jurisdiction. With respect to any suit, action or proceedings
relating to any dispute arising out of or in connection with this Agreement
(“Proceedings”), each party irrevocably:―

 

 

 

 

(i)

submits:―

 

 

 

 

 

(1)          if this Agreement is expressed to be governed by English law, to
(A) the non-exclusive jurisdiction of the English courts if the Proceedings do
not involve a Convention Court and (B) the exclusive jurisdiction of the English
courts if the Proceedings do involve a Convention Court; or

 

 

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(2)          if this Agreement is expressed to be governed by the laws of the
State of New York, to the non-exclusive jurisdiction of the courts of the State
of New York and the United States District Court located in the Borough of
Manhattan in New York City;

 

 

 

 

(ii)        waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such court does not have
any jurisdiction over such party; and

 

 

 

 

(iii)        agrees, to the extent permitted by applicable law, that the
bringing of Proceedings in any one or more jurisdictions will not preclude the
bringing of Proceedings in any other jurisdiction.

 

 

 

(c)          Service of Process. Each party irrevocably appoints the Process
Agent, if any, specified opposite its name in the Schedule to receive, for it
and on its behalf, service of process in any Proceedings. If for any reason any
party’s Process Agent is unable to act as such, such party will promptly notify
the other party and within 30 days appoint a substitute process agent acceptable
to the other party. The parties irrevocably consent to service of process given
in the manner provided for notices in Section 12(a)(i), 12(a)(iii) or 12(a)(iv).
Nothing in this Agreement will affect the right of either party to serve process
in any other manner permitted by applicable law.

 

 

 

(d)          Waiver of Immunities. Each party irrevocably waives, to the extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction or order for specific performance or
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

 

 

 

14.         Definitions

As used in this Agreement:―

“Additional Representation” has the meaning specified in Section 3.

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event
consisting of an Illegality, Force Majeure Event, Tax Event or Tax Event Upon
Merger, all Transactions affected by the occurrence of such Termination Event
(which, in the case of an Illegality under Section 5(b)(i)(2) or a Force Majeure
Event under Section 5(b)(ii)(2), means all Transactions unless the relevant
Credit Support Document references only certain Transactions, in which case
those Transactions and, if the

 

 

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relevant Credit Support Document constitutes a Confirmation for a Transaction,
that Transaction) and (b) with respect to any other Termination Event, all
Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, “control” of
any entity or person means ownership of a majority of the voting power of the
entity or person.

“Agreement” has the meaning specified in Section 1(c).

“Applicable Close-out Rate” means:―

 

 

 

(a)

in respect of the determination of an Unpaid Amount:―

 

 

 

 

(i)         in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

 

 

 

 

(ii)        in respect of obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate;

 

 

 

 

(iii)       in respect of obligations deferred pursuant to Section 5(d), if
there is no Defaulting Party and for so long as the deferral period continues,
the Applicable Deferral Rate; and

 

 

 

 

(iv)       in all other cases following the occurrence of a Termination Event
(except where interest accrues pursuant to clause (iii) above), the Applicable
Deferral Rate; and

 

 

 

(b)

in respect of an Early Termination Amount:―

 

 

 

 

(i)        for the period from (and including) the relevant Early Termination
Date to (but excluding) the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable: ―

 

 

 

 

 

(1)          if the Early Termination Amount is payable by a Defaulting Party,
the Default Rate;

 

 

 

 

 

(2)          if the Early Termination Amount is payable by a Non-defaulting
Party, the Non-default Rate; and

 

 

 

 

 

(3)          in all other cases, the Applicable Deferral Rate; and

 

 

 

 

(ii)        for the period from (and including) the date (determined in
accordance with Section 6(d)(ii)) on which that amount is payable to (but
excluding) the date of actual payment:―

 

 

 

 

 

(1)          if a party fails to pay the Early Termination Amount due to the
occurrence of an event or circumstance which would, if it occurred with respect
to a payment or delivery under a Transaction, constitute or give rise to an
Illegality or a Force Majeure

 

 

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Event, and for so long as the Early Termination Amount remains unpaid due to the
continuing existence of such event or circumstance, the Applicable Deferral
Rate;

 

 

 

 

 

(2)          if the Early Termination Amount is payable by a Defaulting Party
(but excluding any period in respect of which clause (1) above applies), the
Default Rate;

 

 

 

 

 

(3)          if the Early Termination Amount is payable by a Non-defaulting
Party (but excluding any period in respect of which clause (1) above applies),
the Non-default Rate; and

 

 

 

 

 

(4)          in all other cases, the Termination Rate.

“Applicable Deferral Rate” means:―

(a)          for the purpose of Section 9(h)(i)(3)(A), the rate certified by the
relevant payer to be a rate offered to the payer by a major bank in a relevant
interbank market for overnight deposits in the applicable currency, such bank to
be selected in good faith by the payer for the purpose of obtaining a
representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market;

(b)          for purposes of Section 9(h)(i)(3)(B) and clause (a)(iii) of the
definition of Applicable Close-out Rate, the rate certified by the relevant
payer to be a rate offered to prime banks by a major bank in a relevant
interbank market for overnight deposits in the applicable currency, such bank to
be selected in good faith by the payer after consultation with the other party,
if practicable, for the purpose of obtaining a representative rate that will
reasonably reflect conditions prevailing at the time in that relevant market;
and

(c)          for purposes of Section 9(h)(i)(3)(C) and clauses (a)(iv),
(b)(i)(3) and (b)(ii)(1) of the definition of Applicable Close-out Rate, a rate
equal to the arithmetic mean of the rate determined pursuant to clause (a) above
and a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the relevant payee (as certified by it) if it were to fund or of
funding the relevant amount.

“Automatic Early Termination” has the meaning specified in Section 6(a).

“Burdened Party” has the meaning specified in Section 5(b)(iv).

“Change in Tax Law” means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation of any law) that occurs after the parties enter into the relevant
Transaction.

“Close-out Amount” means, with respect to each Terminated Transaction or each
group of Terminated Transactions and a Determining Party, the amount of the
losses or costs of the Determining Party that are or would be incurred under
then prevailing circumstances (expressed as a positive number) or gains of the
Determining Party that are or would be realised under then prevailing
circumstances (expressed as a negative number) in replacing, or in providing for
the Determining Party the economic equivalent of, (a) the material terms of that
Terminated Transaction or group of

 

 

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Terminated Transactions, including the payments and deliveries by the parties
under Section 2(a)(i) in respect of that Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant Early
Termination Date, have been required after that date (assuming satisfaction of
the conditions precedent in Section 2(a)(iii)) and (b) the option rights of the
parties in respect of that Terminated Transaction or group of Terminated
Transactions.

Any Close-out Amount will be determined by the Determining Party (or its agent),
which will act in good faith and use commercially reasonable procedures in order
to produce a commercially reasonable result. The Determining Party may determine
a Close-out Amount for any group of Terminated Transactions or any individual
Terminated Transaction but, in the aggregate, for not less than all Terminated
Transactions. Each Close-out Amount will be determined as of the Early
Termination Date or, if that would not be commercially reasonable, as of the
date or dates following the Early Termination Date as would be commercially
reasonable.

Unpaid Amounts in respect of a Terminated Transaction or group of Terminated
Transactions and legal fees and out- of-pocket expenses referred to in Section
11 are to be excluded in all determinations of Close-out Amounts.

In determining a Close-out Amount, the Determining Party may consider any
relevant information, including, without limitation, one or more of the
following types of information:―

 

 

 

(i)          quotations (either firm or indicative) for replacement transactions
supplied by one or more third parties that may take into account the
creditworthiness of the Determining Party at the time the quotation is provided
and the terms of any relevant documentation, including credit support
documentation, between the Determining Party and the third party providing the
quotation;

 

 

 

(ii)         information consisting of relevant market data in the relevant
market supplied by one or more third parties including, without limitation,
relevant rates, prices, yields, yield curves, volatilities, spreads,
correlations or other relevant market data in the relevant market; or

 

 

 

(iii)        information of the types described in clause (i) or (ii) above from
internal sources (including any of the Determining Party’s Affiliates) if that
information is of the same type used by the Determining Party in the regular
course of its business for the valuation of similar transactions.

The Determining Party will consider, taking into account the standards and
procedures described in this definition, quotations pursuant to clause (i) above
or relevant market data pursuant to clause (ii) above unless the Determining
Party reasonably believes in good faith that such quotations or relevant market
data are not readily available or would produce a result that would not satisfy
those standards. When considering information described in clause (i), (ii) or
(iii) above, the Determining Party may include costs of funding, to the extent
costs of funding are not and would not be a component of the other information
being utilised. Third parties supplying quotations pursuant to clause (i) above
or market data pursuant to clause (ii) above may include, without limitation,
dealers in the relevant markets, end-users of the relevant product, information
vendors, brokers and other sources of market information.

 

 

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Without duplication of amounts calculated based on information described in
clause (i), (ii) or (iii) above, or other relevant information, and when it is
commercially reasonable to do so, the Determining Party may in addition consider
in calculating a Close-out Amount any loss or cost incurred in connection with
its terminating, liquidating or re-establishing any hedge related to a
Terminated Transaction or group of Terminated Transactions (or any gain
resulting from any of them).

Commercially reasonable procedures used in determining a Close-out Amount may
include the following:―

 

 

 

 

 

(1)          application to relevant market data from third parties pursuant to
clause (ii) above or information from internal sources pursuant to clause (iii)
above of pricing or other valuation models that are, at the time of the
determination of the Close-out Amount, used by the Determining Party in the
regular course of its business in pricing or valuing transactions between the
Determining Party and unrelated third parties that are similar to the Terminated
Transaction or group of Terminated Transactions; and

 

 

 

 

 

(2)          application of different valuation methods to Terminated
Transactions or groups of Terminated Transactions depending on the type,
complexity, size or number of the Terminated Transactions or group of Terminated
Transactions.

“Confirmation” has the meaning specified in the preamble.

“consent” includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.

“Contractual Currency” has the meaning specified in Section 8(a).

“Convention Court” means any court which is bound to apply to the Proceedings
either Article 17 of the 1968 Brussels Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters or Article 17 of the
1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil
and Commercial Matters.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as
such in this Agreement.

“Credit Support Provider” has the meaning specified in the Schedule.

“Cross-Default” means the event specified in Section 5(a)(vi).

“Default Rate” means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

“Defaulting Party” has the meaning specified in Section 6(a).

 

 

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“Designated Event” has the meaning specified in Section 5(b)(v).

“Determining Party” means the party determining a Close-out Amount.

“Early Termination Amount” has the meaning specified in Section 6(e).

“Early Termination Date” means the date determined in accordance with Section
6(a) or 6(b)(iv).

“electronic messages” does not include e-mails but does include documents
expressed in markup languages, and

“electronic messaging system” will be construed accordingly.

“English law” means the law of England and Wales, and “English” will be
construed accordingly.

“Event of Default” has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

“Force Majeure Event” has the meaning specified in Section 5(b).

“General Business Day” means a day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits).

“Illegality” has the meaning specified in Section 5(b).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).

“law” includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority),
and “unlawful” will be construed accordingly.

“Local Business Day” means (a) in relation to any obligation under Section
2(a)(i), a General Business Day in the place or places specified in the relevant
Confirmation and a day on which a relevant settlement system is open or
operating as specified in the relevant Confirmation or, if a place or a
settlement system is not so specified, as otherwise agreed by the parties in
writing or determined pursuant to provisions contained, or incorporated by
reference, in this Agreement, (b) for the purpose of determining when a Waiting
Period expires, a General Business Day in the place where the event or
circumstance that constitutes or gives rise to the Illegality or Force Majeure
Event, as the case may be, occurs, (c) in relation to any other payment, a
General Business Day in the place where the relevant account is located and, if
different, in the principal financial centre, if any, of the currency of

 

 

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such payment and, if that currency does not have a single recognised principal
financial centre, a day on which the settlement system necessary to accomplish
such payment is open, (d) in relation to any notice or other communication,
including notice contemplated under Section 5(a)(i), a General Business Day (or
a day that would have been a General Business Day but for the occurrence of an
event or circumstance which would, if it occurred with respect to payment,
delivery or compliance related to a Transaction, constitute or give rise to an
Illegality or a Force Majeure Event) in the place specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(e) in relation to Section 5(a)(v)(2), a General Business Day in the relevant
locations for performance with respect to such Specified Transaction.

“Local Delivery Day” means, for purposes of Sections 5(a)(i) and 5(d), a day on
which settlement systems necessary to accomplish the relevant delivery are
generally open for business so that the delivery is capable of being
accomplished in accordance with customary market practice, in the place
specified in the relevant Confirmation or, if not so specified, in a location as
determined in accordance with customary market practice for the relevant
delivery.

“Master Agreement” has the meaning specified in the preamble.

“Merger Without Assumption” means the event specified in Section 5(a)(viii).

“Multiple Transaction Payment Netting” has the meaning specified in Section
2(c).

“Non-affected Party” means, so long as there is only one Affected Party, the
other party.

“Non-default Rate” means the rate certified by the Non-defaulting Party to be a
rate offered to the Non-defaulting Party by a major bank in a relevant interbank
market for overnight deposits in the applicable currency, such bank to be
selected in good faith by the Non-defaulting Party for the purpose of obtaining
a representative rate that will reasonably reflect conditions prevailing at the
time in that relevant market.

“Non-defaulting Party” has the meaning specified in Section 6(a).

“Office” means a branch or office of a party, which may be such party’s head or
home office.

“Other Amounts” has the meaning specified in Section 6(f).

“Payee” has the meaning specified in Section 6(f).

“Payer” has the meaning specified in Section 6(f).

“Potential Event of Default” means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

“Proceedings” has the meaning specified in Section 13(b).

“Process Agent” has the meaning specified in the Schedule.

 

 

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“rate of exchange” includes, without limitation, any premiums and costs of
exchange payable in connection with the purchase of or conversion into the
Contractual Currency.

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

“Schedule” has the meaning specified in the preamble.

“Scheduled Settlement Date” means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

“Specified Entity” has the meaning specified in the Schedule.

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

“Specified Transaction” means, subject to the Schedule, (a) any transaction
(including an agreement with respect to any such transaction) now existing or
hereafter entered into between one party to this Agreement (or any Credit
Support Provider of such party or any applicable Specified Entity of such party)
and the other party to this Agreement (or any Credit Support Provider of such
other party or any applicable Specified Entity of such other party) which is not
a Transaction under this Agreement but (i) which is a rate swap transaction,
swap option, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option, credit protection transaction, credit swap,
credit default swap, credit default option, total return swap, credit spread
transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, weather index
transaction or forward purchase or sale of a security, commodity or other
financial instrument or interest (including any option with respect to any of
these transactions) or (ii) which is a type of transaction that is similar to
any transaction referred to in clause (i) above that is currently, or in the
future becomes, recurrently entered into in the financial markets (including
terms and conditions incorporated by reference in such agreement) and which is a
forward, swap, future, option or other derivative on one or more rates,
currencies, commodities, equity securities or other equity instruments, debt
securities or other debt instruments, economic indices or measures of economic
risk or value, or other benchmarks against which payments or deliveries are to
be made, (b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Stamp Tax Jurisdiction” has the meaning specified in Section 4(e).

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature

 

 

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(including interest, penalties and additions thereto) that is imposed by any
government or other taxing authority in respect of any payment under this
Agreement other than a stamp, registration, documentation or similar tax.

“Tax Event” has the meaning specified in Section 5(b).

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

“Terminated Transactions” means, with respect to any Early Termination Date, (a)
if resulting from an Illegality or a Force Majeure Event, all Affected
Transactions specified in the notice given pursuant to Section 6(b)(iv), (b) if
resulting from any other Termination Event, all Affected Transactions and (c) if
resulting from an Event of Default, all Transactions in effect either
immediately before the effectiveness of the notice designating that Early
Termination Date or, if Automatic Early Termination applies, immediately before
that Early Termination Date.

“Termination Currency” means (a) if a Termination Currency is specified in the
Schedule and that currency is freely available, that currency, and (b)
otherwise, euro if this Agreement is expressed to be governed by English law or
United States Dollars if this Agreement is expressed to be governed by the laws
of the State of New York.

“Termination Currency Equivalent” means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in a currency other than the Termination Currency (the
“Other Currency”), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Close-out Amount is determined as of a later date, that later date,
with the Termination Currency at the rate equal to the spot exchange rate of the
foreign exchange agent (selected as provided below) for the purchase of such
Other Currency with the Termination Currency at or about 11:00 a.m. (in the city
in which such foreign exchange agent is located) on such date as would be
customary for the determination of such a rate for the purchase of such Other
Currency for value on the relevant Early Termination Date or that later date.
The foreign exchange agent will, if only one party is obliged to make a
determination under Section 6(e), be selected in good faith by that party and
otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Force Majeure Event, a Tax Event, a
Tax Event Upon Merger or, if specified to be applicable, a Credit Event Upon
Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

“Threshold Amount” means the amount, if any, specified as such in the Schedule.

“Transaction” has the meaning specified in the preamble.

 

 

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“Unpaid Amounts” owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii) or due but for Section 5(d)) to such party under Section 2(a)(i) or
2(d)(i)(4) on or prior to such Early Termination Date and which remain unpaid as
at such Early Termination Date, (b) in respect of each Terminated Transaction,
for each obligation under Section 2(a)(i) which was (or would have been but for
Section 2(a)(iii) or 5(d)) required to be settled by delivery to such party on
or prior to such Early Termination Date and which has not been so settled as at
such Early Termination Date, an amount equal to the fair market value of that
which was (or would have been) required to be delivered and (c) if the Early
Termination Date results from an Event of Default, a Credit Event Upon Merger or
an Additional Termination Event in respect of which all outstanding Transactions
are Affected Transactions, any Early Termination Amount due prior to such Early
Termination Date and which remains unpaid as of such Early Termination Date, in
each case together with any amount of interest accrued or other compensation in
respect of that obligation or deferred obligation, as the case may be, pursuant
to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any
obligation referred to in clause (b) above will be determined as of the
originally scheduled date for delivery, in good faith and using commercially
reasonable procedures, by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it will be the average of the
Termination Currency Equivalents of the fair market values so determined by both
parties.

“Waiting Period” means:―

(a)          in respect of an event or circumstance under Section 5(b)(i), other
than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or
compliance is actually required on the relevant day (in which case no Waiting
Period will apply), a period of three Local Business Days (or days that would
have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance; and

(b)          in respect of an event or circumstance under Section 5(b)(ii),
other than in the case of Section 5(b)(ii)(2) where the relevant payment,
delivery or compliance is actually required on the relevant day (in which case
no Waiting Period will apply), a period of eight Local Business Days (or days
that would have been Local Business Days but for the occurrence of that event or
circumstance) following the occurrence of that event or circumstance.

 

 

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IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

 

 

 

 

 

 

 

 

(Name of Party)

 

(Name of Party)

 

 

 

By: 

 

 

By: 

 

 

 

 

 

Name:

 

 

Name:

 

 

 

 

Title:

 

 

Title:

 

 

 

 

Date:

 

 

Date:

 

 

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