Exhibit 10.52

 

GRAPHIC [g268711km01i001.gif]

 

FIXED $$ DISCOUNTED SHARE BUYBACK (“DSB”) COLLARED WITH INITIAL DELIVERY

 

To:

The Cheesecake Factory Incorporated (“Counterparty”)

 

26901 Malibu Hills Road

 

Calabasas Hills, California  91301

 

 

From:

Wells Fargo Bank, National Association (“Wells Fargo”)

 

The purpose of this communication (this “Confirmation”) is to confirm the terms
and conditions of the transaction entered into between Wells Fargo Bank,
National Association (“Wells Fargo”) and The Cheesecake Factory Incorporated
(“Counterparty”) on the Trade Date specified below (the “Transaction”).  This
Confirmation constitutes a “Confirmation” as referred to in the Agreement
specified below.

 

This Confirmation is subject to, and incorporates, the definitions and
provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives
Association, Inc. (“ISDA”).  In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation will prevail.

 

1.             This Confirmation evidences a complete and binding agreement
between Wells Fargo and Counterparty as to the terms of the Transaction to which
this Confirmation relates.  This Confirmation shall supplement, form a part of,
and be subject to an agreement in the form of the 2002 ISDA Master Agreement
(the “Agreement”) as if Wells Fargo and Counterparty had executed an agreement
in such form (but without any Schedule except for the election of (i) the law
(and not the law of conflicts) of the State of New York as the governing law and
(ii) United States dollars as the Termination Currency) 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.  This Transaction is a Share Forward Transaction
within the meaning set forth in the Equity Definitions.

 

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

 

General Terms:

 

Trade Date:

February 27, 2015

 

 

Seller:

Wells Fargo

 

 

Buyer:

Counterparty

 

 

Shares:

The common stock of Counterparty (the “Issuer”), par value USD 0.01 per share
(ticker symbol: “CAKE”)

 

 

Variable Obligation:

Applicable

 

 

Forward Floor Price:

As specified in Appendix A.

 

 

Forward Cap Price:

As specified in Appendix A.

 

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Initial Price:

As specified in Appendix A.

 

 

VWAP Price:

For any Averaging Date, the 10b-18 volume-weighted average price per Share at
which the Shares trade for the regular trading session (including any extensions
thereof) of the Exchange on such Averaging Date (without regard to pre-open or
after hours trading outside of such regular trading session), as reported by
Bloomberg at 4:15 p.m. New York City time (or 15 minutes following the end of
any extension of the regular trading session) on such Averaging Date, on
Bloomberg Page “CAKE<Equity> AQR_SEC” (or any successor thereto).  If such price
is not reported on such Averaging Date for any reason or is, in the Calculation
Agent’s good faith and commercially reasonable discretion, erroneous, such VWAP
Price shall be determined by the Calculation Agent in good faith and in a
commercially reasonable manner.

 

 

Exchange:

Nasdaq Global Select Market

 

 

Related Exchange(s):

All Exchanges

 

 

Prepayment:

Applicable

 

 

Prepayment Date:

One Currency Business Day after the Trade Date.

 

 

Prepayment Amount:

As specified in Appendix A.

 

 

Initial Shares:

As specified in Appendix A.

 

 

Initial Share Delivery Date:

The Prepayment Date. On the Initial Share Delivery Date, Seller shall deliver a
number of Shares equal to the Initial Shares to Buyer in accordance with
Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date
deemed to be a “Settlement Date” for purposes of such Section 9.4.

 

 

Minimum Share Delivery:

Seller shall deliver a number of Shares equal to the excess, if any, of the
Minimum Shares over the Initial Shares on the Minimum Share Delivery Date in
accordance with Section 9.4 of the Equity Definitions, with the Minimum Share
Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.

 

 

Minimum Share Delivery Date:

The date one Currency Business Day immediately following the Initial Period End
Date.

 

 

Minimum Shares:

As specified in Appendix A.

 

 

Maximum Shares:

As specified in Appendix A.

 

Valuation Terms:

 

Initial Period Averaging Dates:

Each of the consecutive Exchange Business Days commencing on March 4, 2015 and
ending on, and including, the Initial Period End Date. If, at any time during
the Initial Period Averaging Dates, the arithmetic average of the VWAP Prices
for each Initial Period Averaging Date equals or exceeds the Hedging Threshold
Price, (i) Wells Fargo shall have the right to accelerate the Initial Period End
Date as of such time and (ii) the Calculation Agent may make adjustments to the
Forward Cap Price, the Forward Floor Price and any other variable or term
relevant to the terms of the Transaction and, for the purposes of calculating
the Number of Shares to be Delivered, shall adjust the Prepayment Amount to
preserve the fair value of the Transaction to Wells Fargo and ensure that Wells
Fargo’s, or its affiliate’s, initial theoretical delta for the Transaction is
equal to the number of Shares purchased by Wells Fargo or such affiliate during
the Initial Period Averaging Dates for the Transaction at the time of such
termination.

 

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Hedging Threshold Price:  The price per Share equal to the quotient of (A) the
Prepayment Amount divided by (B) the product of the percentage contained in the
definition of the Forward Cap Price and the Initial Shares.

 

 

Initial Period End Date:

The Exchange Business Day on which Seller completes its initial hedge for the
transaction.  On the Initial Period End Date, Seller shall deliver to Buyer the
Hedge Completion Notice.

 

 

Valuation Date:

As specified in Appendix A.

 

 

Averaging:

Applicable

 

 

Averaging Dates:

As specified in Appendix A.

 

 

Averaging Period:

All Averaging Dates.

 

 

Settlement Price:

For the Valuation Date, the arithmetic average of the VWAP Price on each
Averaging Date for such Valuation Date minus Price Adjustment.

 

 

Price Adjustment:

As specified in Appendix A.

 

 

Valuation Disruption: 

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

 

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

 

Notwithstanding anything to the contrary in the Equity Definitions, if any
Averaging Date in the Averaging Period is a Disrupted Day, the Calculation Agent
shall have the option in its commercially reasonable discretion either (i) to
elect to extend the Averaging Period by a number of Scheduled Trading Days equal
to the number of Disrupted Days during the Averaging Period and/or
(ii) determine that such Averaging Date is a Disrupted Day only in part, in
which case the Calculation Agent shall (x) determine the VWAP Price for such
Disrupted Day based on Rule 10b-18 eligible transactions in the Shares on such
Disrupted Day taking into account the nature and duration of such Market
Disruption Event and (y) determine the Settlement Price based on an
appropriately weighted average instead of the arithmetic average described under
“Settlement Price” below, with such adjustments based on, among other factors,
the duration of any Market Disruption Event and the volume, historical trading
patterns and price of the Shares and/or (iii) to suspend the Averaging Period,
as appropriate, until the circumstances giving rise to such suspension have
ceased. Any day on which the Exchange is scheduled to close prior to its normal
closing time shall be considered a Disrupted Day in whole. 

 

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Additional Market Disruption Events:

If Seller determines, in its good faith and commercially reasonable discretion,
on any Scheduled Trading Day during any Averaging Period or on any Initial
Period Averaging Dates that (i) its or its affiliates’ market activities in
connection with the Transaction may raise legal, regulatory or self-regulatory
risks for Seller (whether or not under related policies or procedures and
whether or not such legal, regulatory or self-regulatory requirements, policies
or procedures are imposed by law or have been voluntarily adopted by Seller) or
(ii) a Hedging Disruption (as defined in Section 12.9(a)(v) of the Equity
Definitions) has occurred, in each case, Seller shall notify Buyer and a Market
Disruption Event shall be deemed to have occurred.  In the event of a Hedging
Disruption, Section 12.9(b)(iii) of the Equity Definitions shall not apply.

 

If on any Averaging Date or Initial Period Averaging Date (i) the trading volume
or liquidity of trading in the Shares is materially reduced from levels
prevailing on the Trade Date, (ii) the Calculation Agent determines in its
commercially reasonable discretion that such reduction has had a materially
adverse effect on Seller’s ability to effect a commercially reasonable hedge of 
its obligations under this Transaction and (iii) the Calculation Agent
determines in its commercially reasonable discretion that as a result it would
be appropriate to treat such Averaging Date as a Disrupted Day, then Seller
shall notify Buyer and a Market Disruption Event shall be deemed to have
occurred.

 

 

Settlement Terms:

 

 

 

Settlement Currency:

USD

 

 

Settlement Method:

Physical Settlement; provided that Seller shall not make the representations set
forth in Section 9.11 of the Equity Definitions related to restrictions imposed
by applicable securities laws.

 

 

Settlement Method Election:

Not Applicable.

 

 

Settlement Date:

One Clearance System Business Day following the Valuation Date.

 

 

Number of Shares to be Delivered:

(i) if the Settlement Price is less than the Forward Floor Price, a number of
Shares equal to the Prepayment Amount divided by the Forward Floor Price;

 

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(ii) if the Settlement Price is greater than or equal to the Forward Floor Price
but less than the Forward Cap Price, a number of Shares equal to the Prepayment
Amount divided by the Settlement Price;

 

(iii) if the Settlement Price is greater than or equal to the Forward Cap Price,
a number of Shares equal to the Prepayment Amount divided by the Forward Cap
Price.

 

 

Delivery on Settlement Date:

Seller’s obligation to deliver Shares pursuant to Section 9.2(a)(iii) of the
Equity Definitions shall be reduced by a number of Shares equal to the Initial
Shares and any Shares delivered pursuant to the Minimum Share Delivery described
above.

 

 

Share Adjustments:

 

 

 

Potential Adjustment Event:

It shall constitute an additional Potential Adjustment Event if a Market
Disruption Event has been deemed to have occurred or if Seller otherwise
suspends trading in the Shares for all or any portion of a Scheduled Trading Day
within the Averaging Period or on any Initial Period Averaging Date, in which
case the Calculation Agent may, in its commercially reasonable discretion,
adjust any relevant terms of the Transaction as appropriate to account for the
economic effect on the Transaction of such Market Disruption Event.

 

 

Method of Adjustment:

Calculation Agent Adjustment

 

 

Excess Dividends:

For any fiscal quarter, any dividend or distribution on the Shares with an
ex-dividend date occurring during such fiscal quarter (other than any dividend
or distribution of the type described in Section 11.2(e)(i) or
Section 11.2(e)(ii)(A) of the Equity Definitions) (a “Dividend”) the amount or
value of which (as determined by the Calculation Agent), when aggregated with
the amount or value of any and all previous Dividends with ex-dividend dates
occurring in the same fiscal quarter, exceeds the Ordinary Dividend Amount. For
the avoidance of doubt, the Calculation Agent shall not make any adjustment for
an Ordinary Dividend Amount. “Extraordinary Dividend” means the per Share cash
dividend or distribution, or a portion thereof, declared by Counterparty on the
Shares that is classified by the board of directors of Counterparty as an
“extraordinary” dividend.  For the avoidance of doubt, an Extraordinary Dividend
shall not be deemed to be an Excess Dividend.

 

 

Ordinary Dividend Amount:

As specified in Appendix A

 

 

Early Ordinary Dividend Payment: 

If an ex-dividend date for any Dividend that is not (x) an Excess Dividend,
(y) a dividend or distribution of the type described in Section 11.2(e)(i) or
Section 11.2(e)(ii)(A) of the Equity Definitions and (z) an Extraordinary
Dividend, occurs during any fiscal quarter (in whole or in part) during the
Relevant Dividend Period and is prior to the Expected Ex-Dividend Date for the
relevant fiscal quarter (as determined by the Calculation Agent), the
Calculation Agent shall make such adjustment to the exercise, settlement,
payment or any other terms of the Transaction as the Calculation Agent
determines appropriate to account for the economic effect on the Transaction of
such event.

 

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Expected Ex-Dividend Dates:

As specified in Appendix A

 

 

Relevant Dividend Period:

The period from and including the Trade Date to and including the Relevant
Dividend Period End Date.

 

 

Relevant Dividend Period End Date:

The Termination Date.

 

 

Extraordinary Events:

Upon (x) the occurrence or effective designation of an Early Termination Date in
respect of the Transaction or (y) the occurrence of an Extraordinary Event that
results in the cancellation or termination of the Transaction pursuant to
Section 12.2, 12.3, 12.6 or 12.9 of the Equity Definitions (any such event as
described in clause (x) or (y) above, an “Early Termination Event”) (except, in
the case of clause (y), an Extraordinary Event that is a
Nationalization, Insolvency, a Merger Event or a Tender Offer, in each case, in
which the consideration or proceeds to be paid to holders of Shares consists
solely of cash), if one party would owe any amount to the other party pursuant
to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to
Section 12.2, 12.3, 12.6, 12.7, 12.8 or 12.9 of the Equity Definitions (any such
amount, a “Payment Amount”), then on the date on which any Payment Amount is
due, in lieu of any payment or delivery of such Payment Amount, Counterparty may
elect, by prior written notice to Wells Fargo as provided in the succeeding
paragraph, that the party owing such amount shall deliver to the other party a
number of Shares (or, in the case of a Merger Event, Tender Offer,
Nationalization or Insolvency, a number of units, each comprising the number or
amount of the securities or property that a hypothetical holder of one Share
would receive in such Extraordinary Event (each such unit, an “Alternative
Termination Delivery Unit” and, the securities or property comprising such unit,
“Alternative Termination Property”)) with a value equal to the Payment Amount,
as determined in a commercially reasonable manner by the Calculation Agent (and
the parties agree that, in making such determination of value, the Calculation
Agent may take into account a number of factors, including the market price of
the Shares or Alternative Termination Property as of the Early Termination Date
or the date as of which the Cancellation Amount is determined and, if such
delivery is made by Wells Fargo, the prices at which Wells Fargo purchases
Shares or Alternative Termination Property to fulfil its delivery obligations,
to the extent doing so provides a commercially reasonable result) over a number
of Scheduled Trading Days selected by Calculation Agent in good faith and in its
commercially reasonable discretion based on the number of Scheduled Trading Days
that would be appropriate to unwind a commercially reasonable hedge position; 
provided that in determining the composition of any Alternative Termination
Delivery Unit, if the relevant Extraordinary Event involves a choice of
consideration to be received by holders, such holder shall be deemed to have
elected to receive the maximum possible amount of cash.

 

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If Counterparty elects for Wells Fargo to settle any Payment Amount owed by
Wells Fargo to it in Shares or Alternative Termination Property, then on the
date such Payment Amount is due, a settlement balance (the “Settlement Balance”)
shall be established with an initial balance equal to the Payment Amount. On
such date, Wells Fargo shall commence purchasing Shares or Alternative
Termination Property over a commercially reasonable period for delivery to
Counterparty and in a commercially reasonable manner to unwind a commercially
reasonable hedge position.  At the end of each Scheduled Trading Day on which
Wells Fargo purchases Shares or Alternative Termination Property pursuant to
this paragraph, Wells Fargo shall reduce the Settlement Balance by the amount
paid by Wells Fargo to purchase the Shares  or Alternative Termination Property
purchased on such Scheduled Trading Day. Wells Fargo shall deliver any Shares or
Alternative Termination Property purchased on a Scheduled Trading Day to
Counterparty on the third Clearance System Business Day following the relevant
Scheduled Trading Day.  Wells Fargo shall continue purchasing Shares or
Alternative Termination Property over a commercially reasonable period until the
Settlement Balance has been reduced to zero. If delivery of Shares or
Alternative Termination Property is to be made by Wells Fargo pursuant to this
paragraph, the period during which Wells Fargo purchases Shares or Alternative
Termination Property to fulfill its delivery obligations under this paragraph
shall be referred to as the “Seller Termination Purchase Period.”

 

If Counterparty elects to settle any Payment Amount owed to Wells Fargo in
Shares or Alternative Termination Property it must do so in adherence to
Section 12 of this Confirmation and in a manner such that the value received by
Wells Fargo (net of all commercially reasonable fees, expenses or discounts to
compensate for any discount from the public market price of the Shares incurred
on the sale of such Shares in a private placement) is not less than the Payment
Amount. For the avoidance of doubt, notwithstanding anything to the contrary in
the Definitions or this Confirmation, the Payment Amount will not reflect the
value associated with any Excess Dividend or Extraordinary Dividend declared or
paid by Counterparty to holders of record of any Shares as of any date occurring
on or after the Trade Date and prior to the date on which the Payment Amount is
received.

 

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Announcement Date:

The definition of “Announcement Date” in Section 12.1(l) of the Equity
Definitions shall be amended by (i) replacing the words “a firm” with the word
“any” in the second and fourth lines thereof, (ii) replacing the word “leads to
the” in the third and the fifth lines thereof with the words “, if completed,
would lead to a”, (iii) replacing the words “voting shares” in the fifth line
thereof with the word “Shares”, (iv) inserting the words “by any entity” after
the word “announcement” in the second and the fourth lines thereof,
(v) inserting the words “or to explore the possibility of engaging in” after the
words “engage in” in the second line thereof, (vi) inserting the words “or to
explore the possibility of purchasing or otherwise obtaining” after the word
“obtain” in the fourth line thereto, (vii) deleting the parenthetical in the
fifth line thereof and (viii) adding immediately after the words “Tender Offer”
in the fifth line thereof “, and any publicly announced change or amendment to
such an announcement (including the announcement of an abandonment of such
intention)”. Sections 12.3(a) and 12.3(d) of the Equity Definitions shall each
be amended by replacing each occurrence of the words “Tender Offer Date” with
“Announcement Date.”

 

For purposes of this Transaction, the definition of “Merger Date” in
Section 12.1(c) of the Equity Definitions shall be amended to read, “Merger Date
shall mean the Announcement Date.” For purposes of this Transaction, the
definition of “Tender Offer Date” in Section 12.1(e) Equity Definitions shall be
amended to read, “Tender Offer Date shall mean the Announcement Date.”

 

 

Consequences of Merger Events:

 

 

 

Share-for-Share:

Modified Calculation Agent Adjustment

 

 

Share-for-Other:

Cancellation and Payment (Calculation Agent Determination)

 

 

Share-for Combined:

Component Adjustment

 

 

New Shares:

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

 

 

Tender Offer:

Applicable

 

 

Consequences of Tender Offers:

 

 

 

Share-for-Share:

Modified Calculation Agent Adjustment or Cancellation and Payment Calculation
Agent Determination, at the commercially reasonable election of Wells Fargo.

 

 

Share-for-Other:

Modified Calculation Agent Adjustment or Cancellation and Payment Calculation
Agent Determination, at the commercially reasonable election of Wells Fargo.

 

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Share-for-Combined:

Modified Calculation Agent Adjustment or Cancellation and Payment Calculation
Agent Determination, at the commercially reasonable election of Wells Fargo.

 

 

Determining Party:

Wells Fargo

 

 

Composition of Combined Consideration:

Not Applicable; provided that notwithstanding Sections 12.1(f) and 12.5(b) of
the Equity Definitions, to the extent that the composition of the consideration
for the relevant Shares in connection with a Merger Event or Tender Offer could
be determined by a holder of the Shares, the Calculation Agent shall, in its
sole discretion, determine the composition of such consideration for purposes of
determining the consequences of such Merger Event or Tender Offer under the
Transaction.

 

 

Nationalization, Insolvency or Delisting:

Cancellation and Payment (Calculation Agent Determination)

 

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

 

 

Additional Disruption Events:

 

 

 

Change in Law:

Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the phrase “the interpretation” in the third
line thereof with the phrase “, or public announcement of, the formal or
informal interpretation”, (ii) by replacing the word “Shares” where it appears
in clause (X) thereof with the words “Shares or Hedge Positions” and (iii) by
immediately following the word “Transaction” in clause (X) thereof, adding the
phrase “in the manner contemplated by the Hedging Party on the Trade Date”;
provided further that Section 12.9(a)(ii) of the Equity Definitions is hereby
amended by replacing the parenthetical beginning after the word “regulation” in
the second line thereof the words “(including, for the avoidance of doubt and
without limitation, (x) any tax law or (y) adoption or promulgation of new
regulations authorized or mandated by existing statute)”.

 

 

Failure to Deliver:

Applicable

 

 

Insolvency Filing:

Applicable

 

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Hedging Disruption:

 

Hedging Party:

 

Increased Cost of Hedging:

 

Hedging Party:

 

Loss of Stock Borrow:

 

Maximum Stock Loan Rate:

 

Hedging Party:

 

Increased Cost of Stock Borrow:

 

Initial Stock Loan Rate:

 

Hedging Party:

Applicable

 

Wells Fargo

 

Applicable

 

Wells Fargo

 

Applicable

 

200 basis points per annum

 

Wells Fargo

 

Applicable

 

25 basis points per annum

 

Wells Fargo

 

 

Determining Party for all Extraordinary Events:

Wells Fargo

 

 

Miscellaneous:

 

 

 

Non-Reliance:

Applicable

 

 

Agreements and Acknowledgments Regarding Hedging Activities:

Applicable

 

 

Additional Acknowledgments:

Applicable

 

 

3.     Calculation Agent:

Wells Fargo

 

 

4.     Account Details:

 

 

 

Wells Fargo’s USD payment instructions:

 

 

 

 

 

Wells Fargo’s delivery instructions:

 

 

 

 

Counterparty’s payment and delivery instructions:

To be advised.

 

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5.                                      Offices:

 

(a)         The Office of Wells Fargo for the Transaction is:

 

Wells Fargo Bank, National Association

375 Park Avenue

New York, NY 10152

 

For notices with respect to the Transaction:

 

Notwithstanding anything to the contrary in the Agreement, all notices to Wells
Fargo in connection with the Transaction are effective only upon receipt of
email message to CorporateDerivativeNotifications@wellsfargo.com

 

(b)         The Office of Counterparty for the Transaction is:  None

 

For notices with respect to the Transaction:

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attention: Matt Clark, Senior Vice President, Strategy & Finance

Facsimile: (866) 788-8849

 

With a copy to:

 

The Cheesecake Factory Incorporated

26901 Malibu Hills Road

Calabasas Hills, California  91301

Attention: Debby Zurzolo, General Counsel

Facsimile: (818) 871-3110

 

6.                                      Additional Provisions.

 

(a)                                 Buyer Representations and Agreements.  Buyer
represents and warrants to, and agrees with, Seller as follows:

 

(i)                                     Public Reports.  As of the Trade Date,
Buyer is in compliance with its reporting obligations under the Exchange Act of
1934, as amended (the “Exchange Act”), and all reports and other documents filed
by Buyer with the Securities and Exchange Commission (“SEC”) pursuant to the
Exchange Act, when considered as a whole (with the most 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.  Without limiting the generality of the foregoing, as
of the Trade Date, Buyer and its officers and directors are not aware of any
material non-public information regarding Buyer or the Shares.

 

(ii)                                  Regulation M.  Buyer is not on the Trade
Date engaged in a “distribution,” as such term is used in Regulation M, that
would preclude purchases by Buyer of Shares.  In the event that Buyer reasonably
concludes that it or any of its affiliates or agents will take any action that
would cause Regulation M to be applicable to any purchases of Shares, or any
security for which the Shares is a “reference security” (as defined in
Regulation M), by Buyer or any of its “affiliated purchasers” (as defined in
Regulation M) on any day prior to the second Scheduled Trading Day immediately
following the later of the Valuation Date and the last day of the Seller
Termination Purchase Period, as applicable, Buyer shall provide Seller at least
five Scheduled Trading Days’ written notice of such fact prior to the beginning
of the restricted period applicable to such distribution under Regulation M. 
Buyer acknowledges that any such action could cause the occurrence of an
Additional Market Disruption Event (and, accordingly, a Potential Adjustment
Event).  Accordingly, Buyer acknowledges that its actions in relation to any
such notice must comply with the standards set forth in Section 6(b)(iii) below.

 

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(iii)                               No Manipulation.  Buyer is not entering into
the Transaction to create actual or apparent trading activity in the Shares (or
any security convertible into or exchangeable for the Shares) or to raise or
depress or otherwise manipulate the price of the Shares (or any security
convertible into or exchangeable for the Shares) or otherwise in violation of
the Exchange Act and will not engage in any other securities or derivative
transaction to such ends.

 

(iv)                              No Distribution.  Buyer is not entering into
the Transaction to facilitate a distribution of the Shares (or any security that
may be converted into or exercised or exchanged for Shares, or whose value under
its terms may in whole or in significant part be determined by the value of the
Shares) or in connection with any future issuance of securities.

 

(v)                                 Solvency.  As of the Trade Date, the
Initial  Share Delivery Date, the Prepayment Date, the Minimum Share Delivery
Date and each Settlement Date, (a) the aggregate fair market value of Buyer’s
assets will exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (b) it has not engaged in and will not
engage in any business or transaction after which the property remaining with it
will be unreasonably small in relation to its business, (c) it has not incurred
and does not intend to incur debts beyond its ability to pay as they mature, and
(d) as a result of entering into and performing its obligations under the
Transaction, (x) it has not violated and will not violate any relevant state law
provision applicable to the acquisition or redemption by an issuer of its own
securities and (y) it would not be nor would it be rendered “insolvent” (as such
term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of
the United States Code) (the “Bankruptcy Code”)).

 

(vi)                              Eligible Contract Participant.  It is an
“eligible contract participant,” as defined under the Commodity Exchange Act (7
U.S.C. § 1a(18)) and CFTC regulations (17 CFR § 1.3) because it is a
corporation, partnership, organization, trust, or other entity (other than a
commodity pool or a proprietorship) that has total assets exceeding $10,000,000.

 

(vii)                           Tender Offers.  The purchase or writing of the
Transaction by Buyer will not violate Rule 13e-1 or Rule 13e-4 under the
Exchange Act.

 

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

 

(ix)                              Accounting Treatment.  Without limiting the
generality of Section 13.1 of the Equity Definitions, Buyer acknowledges that
Seller is not making any representations or warranties with respect to the
treatment of the Transaction under any accounting standards including FASB
Statements 128, 133, 149 (each as amended), or 150, EITF Issue No. 00-19, 01-6,
03-6 or 07-5 (or any successor issue statements) or under FASB’s Liabilities &
Equity Project.

 

(x)                                 Authorization and Disclosure.  Upon Seller’s
request, Buyer shall deliver to Seller a resolution of Buyer’s board of
directors authorizing the Transaction and such other certificate or certificates
as Seller shall reasonably request.  Buyer has publicly disclosed on Agreement
execution date its intention to institute a program for the acquisition of
Shares.

 

(xi)                              Buyer’s Actions.  Buyer will not take any
action or refrain from taking any action that would limit or in any way
adversely affect Seller’s rights under the Agreement or this Confirmation.

 

(xii)                           Rule 10b-18 purchases.  Buyer represents and
warrants to Seller that neither it nor any “affiliated purchaser” (as defined in
Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to
the proviso in Rule 10b-18(b)(4) under the Exchange Act during either (i) the
four full calendar weeks immediately preceding the Trade Date or (ii) during the
calendar week in which the Trade Date occurs.

 

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(b)                                Rule 10b5-1.

 

(i)                                     Buyer intends the Transaction to comply
with the requirements of Rule 10b5-1(c) under the Exchange Act.  Buyer
represents that it is entering into the Transaction in good faith and not as
part of a plan or scheme to evade the antifraud or anti-manipulation provisions
of the federal or applicable state securities laws and that it has not entered
into or altered any hedging transaction relating to the Shares corresponding to
or offsetting the Transaction.  Buyer represents and warrants that it has
consulted with its own advisors as to the legal aspects of its adoption and
implementation of the Transaction under Rule 10b5-1 under the Exchange Act.

 

(ii)                                 Buyer shall not, at any time during the
Averaging Period, the Seller Termination Purchase Period or on any Initial
Period Averaging Dates  communicate, directly or indirectly, any material
nonpublic information concerning itself or the Shares or purchases or sales of
Shares by Seller (or its agent or affiliate) to any Relevant Bank Personnel. 
“Relevant Bank Personnel” means any employees or agents of Seller or any
affiliate of Seller that Seller has notified Buyer in writing are “Relevant Bank
Personnel” ; provided that Wells Fargo may amend the list of Relevant Bank
Personnel at any time by delivering a revised list to Counterparty.  “Relevant
Bank Personnel” shall initially mean any personnel of the equity derivatives
trading group of Seller or its affiliates who are responsible for, or have the
ability to influence, the execution of this Transaction and of Wells Fargo’s
hedge in relation thereto.

 

(iii)                              Buyer agrees that Buyer shall not enter into
or alter any hedging transaction relating to the Shares corresponding to or
offsetting the Transaction.  Buyer 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, and no such amendment, modification,
waiver or termination shall be made at any time at which Buyer or any officer,
director, manager or similar person of Buyer is aware of any material non-public
information regarding Buyer or the Shares.

 

(iv)                               Buyer acknowledges and agrees that it does
not have, and shall not attempt to exercise, any influence over how, when or
whether Seller effects any purchases of Shares in connection with the
Transaction.

 

(c)                                  U.S. Private Placement and Other
Representations.

 

Each party acknowledges that the offer and sale of the Transaction to it is
intended to be exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”). Accordingly, each party hereby represents and
warrants to the other party as of the date hereof that:

 

(i)                                     It is an “accredited investor” (as
defined in Regulation D under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the Transaction, and it is able to bear the economic risk of
the Transaction.

 

(ii)                                   It is entering into the Transaction for
its own account and not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a registration statement
declared effective under, or an exemption from the registration requirements of,
the Securities Act.

 

(iii)                                It is duly organized and validly existing
under the laws of the jurisdiction of its organization or incorporation and, if
relevant under such laws, in good standing.

 

(iv)                               It has the power to execute this Confirmation
and any other documentation relating to this Confirmation to which it is a
party, to deliver this Confirmation and any other documentation relating to this
Confirmation that it is required by this Confirmation to deliver and to perform
its obligations under this Confirmation and has taken all necessary action to
authorize such execution, delivery and performance.

 

(v)                                  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.

 

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(d)                                Securities Contract; Swap Agreement.   The
parties hereto agree and acknowledge that Seller is a “financial participant”
within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy
Code. The parties hereto further agree and acknowledge that this Transaction is
(i) a “securities contract” as such term is defined in Section 741(7) of the
Bankruptcy Code, in which case each payment and delivery made pursuant to this
Transaction is a “termination value,” “payment amount” or “other transfer
obligation” within the meaning of Section 362 of the Bankruptcy Code and a
“settlement payment,” within the meaning of Section 546 of the Bankruptcy Code
and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the
Bankruptcy Code, with respect to which each payment and delivery hereunder or in
connection herewith is a “termination value,” “payment amount” or “other
transfer obligation” within the meaning of Section 362 of the Bankruptcy Code
and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy
Code and a “payment or other transfer of property” within the meaning of
Sections 362 and 546 of the Bankruptcy Code, and that Seller is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17),
362(o), 546(e), 546(g), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)                                Bankruptcy Status.  Wells Fargo acknowledges
and agrees that this Confirmation is not intended to convey to it rights with
respect to the transactions contemplated hereby that are senior to the claims of
Counterparty’s common stockholders in the event of Counterparty’s bankruptcy;
provided, however, that nothing herein shall be deemed to limit Wells Fargo’s
right to pursue remedies in the event of a breach by Counterparty of its
obligations and agreements with respect to this Confirmation and the Agreement;
and provided, further, that nothing herein shall limit or shall be deemed to
limit Wells Fargo’s rights in respect of any transaction other than this
Transaction.

 

(f)                                 No Collateral or Setoff.  Notwithstanding
any provision of this Confirmation, the Agreement, or any other agreement
between the parties to the contrary, the obligations of Counterparty under this
Transaction are not secured by any collateral.  Wells Fargo agrees not to set
off or net amounts due from Counterparty with respect to this Transaction
against amounts due from Wells Fargo to Counterparty under obligations other
than Equity Contracts.  “Equity Contract” means any transaction relating to
Shares between the parties (or any of their affiliates) that qualifies as
‘equity’ under applicable accounting rules.

 

(g)                                 Additional Termination Event. 
Notwithstanding any other provision hereof, an “Additional Termination Event”
shall occur and Counterparty shall be the sole Affected Party pursuant to such
Additional Termination Event if: [(i) at any time on or prior to the Valuation
Date, the price per Share on the Exchange, as determined by the Calculation
Agent, is at or below the Threshold Price as specified in Appendix A; or (ii)]
(1)  Counterparty declares an Excess Dividend with an ex-dividend date which
occurs or is scheduled to occur during the Relevant Dividend Period.  For the
avoidance of doubt, such Excess Dividend shall not constitute a Potential
Adjustment Event.

 

(h)                                Maximum Number of Shares.  Notwithstanding
any provisions of this Confirmation, the Agreement or the Equity Definitions to
the contrary, in no event shall the aggregate number of Shares that Counterparty
shall be obligated to deliver in connection with this Transaction exceed [insert
2X the number of shares underlying the transaction] Shares, as such number may
be proportionately adjusted by the Calculation Agent to reflect stock splits or
similar events.

 

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(1) Include for capped structures, delete for collared structures

 

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(i)                                     Agreements to Deliver Documents.  Each
of Buyer and Seller will deliver to the other party, upon execution of this
Confirmation, evidence reasonably satisfactory to the other party as to the
names, true signatures and authority of the officers or officials signing this
Confirmation on its behalf.  Such documents shall be covered by the
representation set forth in Section 3(d) of the Agreement.  In addition, Buyer
agrees to complete (accurately and in a manner reasonably satisfactory to the
other party), execute, and deliver to Seller, United States Internal Revenue
Service Form W-8 or Form W-9, as applicable, or any successor of such form, (i)
upon execution of this Confirmation, (ii) promptly upon reasonable demand by
Seller, and (iii) promptly upon learning that any such form previously provided
by it has become obsolete or incorrect.

 

(j)                                    [Reserved.]

 

(k)                                 Counterparty Purchases. Without the prior
written consent of Wells Fargo, Counterparty 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) purchase, offer to purchase, place any bid or limit order that would
effect a purchase of, or commence any tender offer relating to, any Shares (or
an equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share) or any security convertible into or
exchangeable for Shares during the Averaging Period, Seller Termination Purchase
Period or on any Initial Period Averaging Date.  During such time, any purchases
of Shares (or any security convertible into or exchangeable for Shares) by
Counterparty shall be made through Wells Fargo Securities, LLC, which is an
affiliate of Wells Fargo. Nothing in this section 6(k) shall (i) limit the
Buyer’s ability, pursuant to its employee equity incentive plans, to re-acquire
shares in connection with the related equity transactions, (ii) limit Buyer’s
ability to withhold shares to cover tax liabilities associated with such equity
transactions or (iii) limit Buyer’s ability to grant stock and options to
“affiliated purchasers” (as defined in Rule 10b-18) or the ability of such
affiliated purchasers to acquire such stock or options, in connection with the
Buyer’s compensation policies for directors, officers and employees or any
agreements with respect to the compensation of directors, officers or employees
of any entities that are acquisition targets of Buyer.

 

(l)                                     Merger-related Transactions.  During the
Averaging Period, Seller Termination Purchase Period or on any Initial Period
Averaging Date, Counterparty shall (i) notify Wells Fargo prior to the opening
of trading in the Shares on any day on which Counterparty makes, or expects to
be 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 Counterparty (other than any such transaction in
which the consideration consists solely of cash and there is no valuation
period), (ii) promptly notify Wells Fargo following any such announcement that
such announcement has been made, and (iii) promptly deliver to Wells Fargo
following the making of any such announcement a certificate indicating (A)
Counterparty’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18)
during the three full calendar months preceding the date of the announcement of
such transaction and (B) Counterparty’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 the announcement of such
transaction.  In addition, Counterparty shall promptly notify Wells Fargo of the
earlier to occur of the completion of such transaction and the completion of the
vote by target shareholders.  Counterparty acknowledges that any such public
announcement may cause the terms of the Transaction to be adjusted or
terminated. Accordingly, Counterparty acknowledges that its actions in relation
to any such announcement or transaction must comply with the standards set forth
in Section 6(b) above.  Wells Fargo in a commercially reasonable manner  may (i)
make adjustments to the terms of the Transaction, including, without limitation,
the Price Adjustment and/or suspend the Averaging  Period to preserve the
economics of the transaction or (ii) treat the occurrence of such public
announcement as an Additional Termination Event with Counterparty as the sole
Affected Party and the Transaction hereunder as the Affected Transaction and
with the amount under Section 6(e) of the Agreement determined taking into
account the fact that the Averaging Period, as the case may be, had fewer
Scheduled Trading Days than originally anticipated.

 

(m)                             Acknowledgments and Agreements Regarding
Hedging.  Counterparty acknowledges and agrees that (i) during the Averaging
Period and on any Initial Period Averaging Date, Wells Fargo and its affiliates
may (x) buy or sell Shares or other securities or buy or sell options or futures
contracts or enter into swaps or other derivative securities in order to adjust
its hedge position with respect to the Transaction and (y) be active in the
market for Shares other than in connection with hedging activities in relation
to the Transaction, (ii) Wells Fargo shall make its own determination as to
whether, when or in what manner any hedging or market activities in
Counterparty’s securities shall be conducted and shall do so in a manner that it
deems appropriate to hedge its price and market risk with respect to the
Settlement Price and/or the VWAP Price and (iii) any market activities of Wells
Fargo and its affiliates with respect to Shares may affect the market price and
volatility of Shares, as well as the Settlement Price and/or the VWAP Price,
each in a manner that may be adverse to Counterparty.

 

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7.                                      Seller Adjustments.

 

In the event that Seller reasonably determines, in good faith and based on the
advice of counsel,   that it is appropriate with regard to any legal, regulatory
or self-regulatory requirements or related policies and procedures (whether or
not such requirements, policies or procedures are imposed by law or have been
voluntarily adopted by Seller, and including, without limitation, Rule 10b-18,
Rule 10b-5, Regulation 13D-G and Regulation 14E, “Requirements”), to refrain
from purchasing Shares or to purchase fewer than the number of Shares than would
otherwise be expected to be purchased in a commercially reasonable manner on any
Trading Day during the duration of this Transaction, then Seller may, in its
commercially reasonable discretion, elect that Averaging Period be suspended
and, if appropriate, extended with regard to any Requirements. Seller shall
notify the Issuer upon the exercise of Seller’s rights pursuant to this
Section 7 and shall subsequently notify the Issuer on the day Seller believes
that the circumstances giving rise to such exercise have changed.  If the
Averaging Period is suspended pursuant to this Section 7, at the end of such
suspension Seller shall determine the number of Scheduled Trading Days remaining
in the Averaging Period, as appropriate, and the terms of this Transaction shall
be adjusted by the Calculation Agent.  All determinations by Seller shall be
made in good faith and a commercially reasonable manner and assuming the Seller
maintains a commercially reasonable hedge position.

 

8.                                      Special Provisions regarding Acquisition
Transaction Announcements.

 

(a)                                 If an Acquisition Transaction Announcement
occurs on or prior to the Settlement Date, then the Calculation Agent shall make
such adjustments to the exercise, settlement, payment or any other terms of the
Transaction (including, without limitation, the Minimum Number of Shares,  the
Number of Shares to be Delivered and the Price Adjustment) as the Calculation
Agent determines appropriate, at such time or at multiple times as the
Calculation Agent determines appropriate, to account for the economic effect on
such Transaction of such Acquisition Transaction Announcement (provided that
adjustments will be made to account solely for changes in price, volatility,
stock loan rate and liquidity relevant to the Shares, to the Transaction or to
commercially reasonable hedge positions in respect of the Transaction).  If an
Acquisition Transaction Announcement occurs after the Trade Date, but prior to
the Scheduled Earliest Acceleration Date, the Scheduled Earliest Acceleration
Date shall be the date of such Acquisition Transaction Announcement.

 

(b)                                 “Acquisition Transaction Announcement” means
(i) the announcement of an Acquisition Transaction or an event that, if
consummated, would result in an Acquisition Transaction, (ii) an announcement
that Buyer or any of its subsidiaries has entered into an agreement, a letter of
intent or an understanding designed to result in an Acquisition Transaction,
(iii) the announcement of the intention to solicit or enter into, or to explore
strategic alternatives or other similar undertaking that may include, an
Acquisition Transaction, (iv) any other announcement that in the reasonable
judgment of the Calculation Agent may result in an Acquisition Transaction or
(v) any announcement of any change or amendment to any previous Acquisition
Transaction Announcement (including any announcement of the abandonment of any
such previously announced Acquisition Transaction, agreement, letter of intent,
understanding or intention). For the avoidance of doubt, announcements as used
in the definition of Acquisition Transaction Announcement refer to any public
announcement whether made by the Buyer or a third party.

 

(c)                                  “Acquisition Transaction” means (i) any
Merger Event (for purposes of this definition the definition of Merger Event
shall be read with the references therein to “100%” being replaced by “15%” and
to “50%” by “75%” and without reference to the clause beginning immediately
following the definition of Reverse Merger therein to the end of such
definition), Tender Offer or Merger Transaction or any other transaction
involving the merger of Buyer with or into any third party, (ii) the sale or
transfer of all or substantially all of the assets of Buyer, (iii) a
recapitalization, reclassification, binding share exchange or other similar
transaction with respect to Buyer, (iv) any acquisition by Counterparty or any
of its subsidiaries where the aggregate consideration transferable by
Counterparty or its subsidiaries exceeds 50% of the market capitalization of
Counterparty, (v) any acquisition, lease, exchange, transfer, disposition
(including by way of spin-off or distribution) of assets (including any capital
stock or other ownership interests in subsidiaries) or other similar event by
Buyer or any of its subsidiaries where the aggregate consideration transferable
or receivable by or to Buyer or its subsidiaries exceeds 15% of the market
capitalization of Buyer and (vi) any transaction in which Buyer or its board of
directors has a legal obligation to make a recommendation to its shareholders in
respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange
Act or otherwise).

 

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9.                                      Staggered Settlement.

 

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

 

10.                               Transfer and Assignment.

 

Notwithstanding anything to the contrary in the Agreement, Wells Fargo may
assign, transfer and set over all its rights, title and interest, powers,
privileges and remedies under any Transaction, in whole or in part, to an
affiliate of Wells Fargo, without the consent of Counterparty.

 

At any time at which the Equity Percentage exceeds [7.5]% (an “Excess Ownership
Position”) or a Hedging Disruption has occurred and is continuing, if Wells
Fargo, in its discretion, is unable to effect a transfer or assignment to a
third party after using its commercially reasonable efforts on pricing terms and
within a time period reasonably acceptable to Wells Fargo such that an Excess
Ownership Position or a Hedging Disruption, as the case may be, no longer
exists, Wells Fargo may designate any Scheduled Trading Day as an Early
Termination Date with respect to a portion (the “Terminated Portion”) of the
Transaction, such that such Excess Ownership Position or Hedging Disruption, as
the case may be, no longer exists. In the event that Wells Fargo so designates
an Early Termination Date with respect to a portion of the Transaction, a
payment or delivery shall be made pursuant to Section 6 of the Agreement and
Section 2 of this Confirmation as if (i) an Early Termination Date had been
designated in respect of a Transaction having terms identical to the Terminated
Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party
with respect to such partial termination and (iii) such portion of the
Transaction shall be the only Terminated Transaction. The “Equity Percentage” as
of any day is the fraction, expressed as a percentage, (A) the numerator of
which is the number of Shares that Wells Fargo and any of its affiliates or any
other person subject to aggregation with Wells Fargo, for purposes of the
“beneficial ownership” test under Section 13 of the Exchange Act or any “group”
(within the meaning of Section 13 of the Exchange Act) of which Wells Fargo is
or may be deemed to be a part, beneficially owns (within the meaning of Section
13 of the Exchange Act) on such day and (B) the denominator of which is the
number of Shares outstanding on such day.

 

11.                               Registration Provisions.

 

Counterparty hereby agrees that if, in the good faith and commercially
reasonable judgment of Wells Fargo, any Shares acquired by Wells Fargo for the
purpose of hedging its obligations pursuant to the Transaction or otherwise
delivered by the Counterparty to Wells Fargo for any reason hereunder cannot be
sold in the public market by Wells Fargo without registration under the
Securities Act, Counterparty shall, at its election: (i) in order to allow Wells
Fargo to sell such Shares in a registered offering, make available to Wells
Fargo an effective registration statement under the Securities Act to cover the
resale of such Shares and (A) enter into an agreement, in form and substance
satisfactory to Wells Fargo, substantially in the form of an underwriting
agreement for a registered offering of similar size, (B) provide accountant’s
“comfort” letters in customary form for registered offerings of equity
securities of similar size, (C) provide disclosure opinions of nationally
recognized outside counsel to Counterparty reasonably acceptable to Wells Fargo,
(D) provide other customary opinions, certificates and closing documents
customary in form for registered offerings of equity securities of similar size
and (E) afford Wells Fargo a reasonable opportunity to conduct a “due diligence”
investigation with respect to Counterparty customary in scope for underwritten
offerings of equity securities of similar size; provided that if Wells Fargo, in
its commercially reasonable discretion, is not satisfied with access to due
diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above, then
clause (ii) or clause (iii) of this Section 12 shall apply at the election of
Counterparty; (ii) in order to allow Wells Fargo to sell such Shares in a
private placement, enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private
placements of equity securities of similar size, in form and substance
satisfactory to Wells Fargo, including customary representations, covenants,
blue sky and other governmental filings and/or registrations, indemnities to
Wells Fargo, due diligence rights (for Wells Fargo or any designated buyer or
buyers of the Shares from Wells Fargo), opinions and certificates and such other
documentation as is customary for private placements agreements, all
commercially reasonably acceptable to Wells Fargo (in which case, the
Calculation Agent shall make any adjustments to the terms of the Transaction
that are necessary, using commercially reasonable judgment, to compensate Wells
Fargo for any discount from the public market price of the Shares incurred on
the sale of such Shares in a private placement); or (iii) purchase the Shares
from Wells Fargo at the Volume Weighted Average Price on such Exchange Business
Days, and in the amounts, requested by Wells Fargo.  “Volume Weighted Average
Price” means, on any Exchange Business Day, the per Share volume-weighted
average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page
CAKE <equity> VAP (or any successor thereto) in respect of the period from 9:30
a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such
volume-weighted average price is unavailable, the market value of one Share on
such Exchange Business Day, as determined by the Calculation Agent using a
volume-weighted method).

 

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12.                               Calculations and Payment Date upon Early
Termination.

 

The parties acknowledge and agree that in calculating (a) the Close-Out Amount
pursuant to Section 6 of the Agreement and (b) the amount due upon cancellation
or termination of the Transaction (whether in whole or in part) pursuant to
Article 12 of the Equity Definitions as a result of an Extraordinary Event,
Wells Fargo may (but need not) determine such amount based on (i) expected
losses assuming a commercially reasonable (including, without limitation, with
regard to reasonable legal and regulatory guidelines) risk bid were used to
determine loss or (ii) the price at which one or more market participants would
offer to sell to the Seller a block of Shares equal in number to the Seller’s
hedge position in relation to the Transaction.  Notwithstanding anything to the
contrary in Section 6(d)(ii) of the Agreement or Article 12 of the Equity
Definitions, all amounts calculated as being due in respect of an Early
Termination Date under Section 6(e) of the Agreement or upon cancellation or
termination of the Transaction under Article 12 of the Equity Definitions will
be payable on the day that notice of the amount payable is effective.

 

13.                               Counterparts.

 

This Confirmation may be executed in any number of counterparts, all of which
shall constitute one and the same instrument, and any party hereto may execute
this Confirmation by signing and delivering one or more counterparts.

 

14.                               Waiver of Trial by Jury.

 

EACH PARTY HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS
OF WELLS FARGO, THE AGENT OR THEIR AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR
ENFORCEMENT HEREOF.

 

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15.                               Adjustments.

 

For the avoidance of doubt, whenever the Seller, Calculation Agent, Wells Fargo
or Determining Party are called upon to make an adjustment or determination
pursuant to the terms of this Confirmation or the Definitions to take into
account the effect of an event, the Seller, Calculation Agent and Determining
shall make such adjustment or determination by reference to the effect of such
event on the Hedging Party, assuming that the Hedging Party maintains a
commercially reasonable Hedge Position at the time of the event.

 

16.                               Amendments to the Equity Definitions.

 

(a)                                 Section 11.2(a) of the Equity Definitions is
hereby amended by deleting the words “a diluting or concentrative” and replacing
them with the words “an”; and adding the phrase “or such Transaction” at the end
of the sentence.

 

(b)                                 Section 11.2(c) of the Equity Definitions is
hereby amended by (i) replacing the words “a diluting or concentrative” with
“an” in the fifth line thereof, (ii) adding the phrase “or such Transaction”
after the words “the relevant Shares” in the same sentence, (iii) deleting the
words “dilutive or concentrative” in the sixth to last line thereof, and (iv)
deleting the phrase “(provided that no adjustments will be made to account
solely for changes in volatility, expected dividends, stock loan rate or
liquidity relative to the relevant Shares)” and replacing it with the phrase
“(and, for the avoidance of doubt, adjustments may be made to account solely for
changes in volatility, expected dividends, stock loan rate or liquidity relative
to the relevant Shares).”

 

(c)                                  Section 11.2(e)(vii) of the Equity
Definitions is hereby amended by deleting the words “a diluting or
concentrative” and replacing them with the word “a material”; and adding the
phrase “or the relevant Transaction” at the end of the sentence.

 

(d)                                 Section 12.6(a)(ii) of the Equity
Definitions is hereby amended by (i) deleting from the fourth line thereof the
word “or” after the word “official” and inserting a comma therefor, and (ii)
deleting the semi-colon at the end of subsection (B) thereof and inserting the
following words therefor “or (C) at Wells Fargo’s option, the occurrence of any
of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master
Agreement with respect to that Issuer.”

 

(e)                                  Section 12.9(b)(iv) of the Equity
Definitions is hereby amended by:

 

(i)                                     deleting (1) subsection (A) in its
entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase
“in each case” in subsection (B); and

 

(ii)                                  replacing the phrase “neither the
Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such
Lending Party does not lend Shares” in the penultimate sentence.

 

(f)                                   Section 12.9(b)(v) of the Equity
Definitions is hereby amended by:

 

(i)                                     adding the word “or” immediately before
subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(ii)                                  (1) deleting subsection (C) in its
entirety, (2) deleting the word “or” immediately preceding subsection (C), (3)
deleting the penultimate sentence in its entirety and replacing it with the
sentence “The Hedging Party will determine the Cancellation Amount payable by
one party to the other” and (4) deleting clause (X) in the final sentence.

 

19

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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation and returning it to
CorporateDerivativeNotifications@wellsfargo.com.

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

THE CHEESECAKE FACTORY INCORPORATED

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

By:

 

 

Title:

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

20

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Appendix A

 

Forward Floor Price:

 

As specified in the Hedge Completion Notice, to be equal to []% of the Initial
Price.

 

 

 

Forward Cap Price:

 

As specified in the Hedge Completion Notice, to be equal to []% of the Initial
Price.

 

 

 

Initial Price:

 

As specified in the Hedge Completion Notice, to be equal to the volume weighted
average price of the Seller’s purchases to establish its initial hedge to the
Transaction on the Initial Period Averaging Dates.

 

 

 

Initial Shares:

 

[ ] Shares; provided that if Wells Fargo is unable to borrow or otherwise
acquire a number of Shares equal to the Initial Shares for delivery to
Counterparty on the Initial Share Delivery Date, the Initial Shares delivered on
the Initial Share Delivery Date shall be reduced to such number of Shares that
Seller is able to so borrow or otherwise acquire.

 

 

 

Minimum Shares:

 

As specified in the Hedge Completion Notice, to be an amount equal to the
Prepayment Amount divided by the Forward Cap Price multiplied by [       ]%;
provided that if Wells Fargo is unable to borrow or otherwise acquire a number
of Shares equal to Minimum Shares for delivery to Counterparty on the Minimum
Share Delivery Date, the Minimum Shares delivered on the Minimum Share Delivery
Date shall be reduced to such number of Shares that Seller is able to so borrow
or otherwise acquire.

 

 

 

Maximum Shares:

 

As specified in the Hedge Completion Notice, to be an amount equal to the
Prepayment Amount divided by the Forward Floor Price multiplied by [   ]%.

 

 

 

Prepayment Amount:

 

USD $75,000,000

 

 

 

Valuation Date:

 

As specified in the Hedge Completion Notice, to be the date that is [] Exchange
Business Days following the Initial Period End Date (or if such date is not an
Exchange Business Day, the next following Exchange Business Day), provided that
Seller shall have the right in its absolute discretion, to accelerate the
Valuation Date to any date that is on or after [] Exchange Business Days
following the Initial Period End Date (or if such date is not an Exchange
Business Day, the next following Exchange Business Day) (such date, the
“Scheduled Earliest Acceleration Date”), by giving notice prior to 8:00 p.m. New
York City time on the Scheduled Trading Day following such date.

 

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Averaging Dates:

 

For the Valuation Date, each Scheduled Trading Day starting on the first
Scheduled Trading Day following the Initial Period End Date and ending on, and
including, such Valuation Date.

 

 

 

Price Adjustment:

 

As specified in the Hedge Completion Notice, to be equal to [ ]% of the Initial
Price.

 

 

 

Ordinary Dividend Amount:

 

[]

 

 

 

Expected Ex-Dividend Dates:

 

[]

 

22

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GRAPHIC [g268711km05i001.gif]

 

HEDGE COMPLETION NOTICE

 

To:

The Cheesecake Factory Incorporated
26901 Malibu Hills Road
Calabasas Hills, California  91301

 

 

From:

Wells Fargo Bank, National Association

 

 

Subject:

 

 

 

Date:

 

 

The purpose of this Hedge Completion Notice is to notify you of certain terms in
the Transaction entered into between Wells Fargo Bank, National Association
(“Wells Fargo”) and The Cheesecake Factory Incorporated  (“Counterparty”)
bearing the trade reference number set forth above.

 

Initial Price

[        ]

Forward Floor Price:

[        ]

Forward Cap Price:

[        ]

Initial Shares:

[        ]

Minimum Shares:

[        ]

Maximum Shares:

[        ]

Initial Period End Date:

[        ]

Valuation Date:

[        ]

Scheduled Earliest Acceleration Date:

[        ]

Price Adjustment:

[        ]

 

 

 

Yours sincerely,

 

 

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

 

 

By:

 

 

 

Name:

 

 

Title:

 

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