Exhibit 10.6

 

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    EXECUTION VERSION     Bank of America, N.A.    

c/o Merrill Lynch, Pierce, Fenner & Smith

   Incorporated

    Bank of America Tower at One Bryant Park     New York, NY 10036     Attn:
John Servidio     Telephone: 646-855-7127     Facsimile: 704-208-2869

 

DATE:    February 29, 2012 TO:    Stone Energy Corporation    625 East Kaliste
Saloom Road    Lafayette, LA 70508 ATTENTION:    Kenneth H. Beer TELEPHONE:   
337-237-0410 FACSIMILE:    337-521-2072; beerkh@stoneenergy.com FROM:    Bank of
America, N.A.    c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
TELEPHONE:    646-855-7127 FACSIMILE:    704-208-2869 SUBJECT:    Base Warrant
Transaction Reference Number(s):    128152587

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the Transaction entered into between Bank of America,
N.A. (“Dealer”) and Stone Energy Corporation (“Counterparty”) on the Trade Date
specified below (the “Transaction”). This Confirmation constitutes a
“Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the International Swaps
and Derivatives Association, Inc., are incorporated into this Confirmation. In
the event of any inconsistency between the Equity Definitions and this
Confirmation, this Confirmation shall govern. For purposes of the Equity
Definitions, this Transaction shall be deemed to be a Share Option Transaction,
and each reference herein to a Warrant shall be deemed to be a reference to a
Call or an Option, as context requires.

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

1. This Confirmation evidences a complete and binding agreement between Dealer
and Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to,
an agreement in the form of the ISDA 2002 Master Agreement as if Dealer and
Counterparty had executed an agreement (the “Agreement”) in such form (without
any Schedule but with the elections and modifications set forth in this
Confirmation) on the Trade Date. In the event of any inconsistency between

 

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provisions of the Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction. The parties hereby agree that no
Transaction other than the Transaction to which this Confirmation relates shall
be governed by the Agreement.

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

 

General Terms:      Trade Date:    March 1, 2012. Effective Date:    March 6,
2012, or such other date as agreed between the parties, subject to paragraph
5(s) below. Components:    The Transaction will be divided into individual
Components, each with the terms set forth in this Confirmation, and, in
particular, with the Number of Warrants and Expiration Date set forth in this
Confirmation. The payments and deliveries to be made upon settlement of the
Transaction will be determined separately for each Component as if each
Component were a separate Transaction under the Agreement. Warrant Style:   
European. Warrant Type:    Call. Seller:    Counterparty. Buyer:    Dealer.
Shares:    The common stock, par value USD 0.01 per share, of Counterparty
(Ticker symbol “SGY”). Number of Warrants:    For each Component of the
Transaction, as provided in Schedule B to this Confirmation. Warrant
Entitlement:    One Share per Warrant. Strike Price:    As provided in Schedule
A to this Confirmation. Premium:    As provided in Schedule A to this
Confirmation. Premium Payment Date:    The Effective Date. Exchange:    New York
Stock Exchange Related Exchange(s):    All Exchanges. Calculation Agent:   
Dealer. Following any calculation by the Calculation Agent hereunder, upon a
prior written request by Counterparty the Calculation Agent will provide
Counterparty with reasonable detail the basis for such calculation (including
any assumption used in making such calculation), it being understood that the
Calculation Agent shall not be obligated to disclose any proprietary models used
by it for such calculation.

Procedures for Exercise:

 

In respect of any Component

   Expiration Time:    The Valuation Time. Expiration Date(s):    As provided in
Schedule B to this Confirmation (or, if such date is not a Scheduled Trading
Day, the next following Scheduled Trading Day

 

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     that is not already an Expiration Date for another Component); provided
that if that
date is a Disrupted Day, the Expiration Date for such Component shall be the
first
succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is
not
deemed to be an Expiration Date in respect of any other Component of the
Transaction hereunder; and provided further that if the Expiration Date has not
occurred pursuant to the preceding proviso as of the Final Disruption Date, the
Calculation Agent shall have the right to elect, in its sole discretion, that
the Final
Disruption Date shall be the Expiration Date (irrespective of whether such date
is a
Disrupted Day or an Expiration Date in respect of any other Component for the
Transaction) and the Settlement Price for the Final Disruption Date shall be
determined by the Calculation Agent in a commercially reasonable manner.
Notwithstanding the foregoing and anything to the contrary in the Equity
Definitions,
if a Market Disruption Event occurs on any Expiration Date, (i) the Calculation
Agent
may determine that such Expiration Date is a Disrupted Day only in part, in
which
case the Calculation Agent shall make adjustments to the Number of Warrants for
the
relevant Component for which such day shall be the Expiration Date and shall
designate the Scheduled Trading Day determined in the manner described in the
immediately preceding sentence as the Expiration Date for the remaining Warrants
for
such Component and (ii) the Settlement Price for such Disrupted Day may be
adjusted
by the Calculation Agent as appropriate on the basis of the nature and duration
of the
relevant Market Disruption Event. Any day on which the Exchange is scheduled as
of
the Trade Date to close prior to its normal closing time shall be considered a
Disrupted Day in whole. Section 6.6 of the Equity Definitions shall not apply to
any
Valuation Date occurring on an Expiration Date. Final Disruption Date:    As
provided in Schedule A to this Confirmation. Automatic Exercise:    Applicable
for each Component and its related Expiration Date; provided that Section 3.4(a)
of the Equity Definitions shall apply as if Cash Settlement applied. Market
Disruption Event:   

Section 6.3(a) of the Equity Definitions shall be amended (i) by deleting 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” and replacing them with the words “at any
time during the regular trading session on the Exchange, without regard to after
hours or any other trading outside of the regular trading session hours”; (ii)
by amending and restating clause (a)(iii) thereof in its entirety to read as
follows: “(iii) an Early Closure that the Calculation Agent determines is
material”; and (iii) by adding the words “or (iv) a Regulatory Disruption” after
clause (a)(iii) as restated above.

 

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.

Regulatory Disruption:    A “Regulatory Disruption” shall occur if Dealer
determines in its reasonable discretion that it is appropriate in light of
legal, regulatory or self-regulatory requirements for Dealer to refrain from all
or any part of the market activity in which it would otherwise engage in
connection with this Transaction.

 

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Disrupted Day:    The definition of “Disrupted Day” in Section 6.4 of the Equity
Definitions shall be
amended by adding the following sentence after the first sentence: “A Scheduled
Trading Day on which a Related Exchange fails to open during its regular trading
session will not be a Disrupted Day if the Calculation Agent determines that
such
failure will not have a material impact on Dealer’s ability to unwind any
hedging
transactions related to the Transaction.”.

Valuation:

 

In respect of any Component

Valuation Time:    Scheduled Closing Time; provided that if the principal
trading session is extended, the Calculation Agent shall determine the Valuation
Time in its reasonable discretion. Valuation Date:    The Expiration Date.

Settlement Terms:

 

In respect of any Component

   Settlement Method:    Net Share Settlement. Net Share Settlement:    On each
Settlement Date, Counterparty shall deliver to Dealer a number of Shares equal
to the Net Share Amount for such Settlement Date to the account specified by
Dealer, and cash in lieu of any fractional Shares valued at the Settlement Price
for the Valuation Date corresponding to such Settlement Date. If, in the good
faith reasonable judgment of Dealer, the Shares deliverable hereunder for any
reason would not be immediately freely transferable by Dealer under Rule 144 (or
any successor provision, collectively, “Rule 144”) under the U.S. Securities Act
of 1933, as amended (the “Securities Act”), then Dealer may elect to either (x)
accept delivery of such Shares notwithstanding the fact that such Shares are not
freely transferable by Dealer under Rule 144 or (y) require that such delivery
take place pursuant to paragraph 5(j) below. Net Share Amount:    The Option
Cash Settlement Amount divided by the Settlement Price, each determined as if
Cash Settlement applied. Settlement Price:    On any Valuation Date, the per
Share volume-weighted average price as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “SGY <equity> AQR” (or any successor thereto) in respect
of the period from the scheduled opening time of the Exchange to the Scheduled
Closing Time on such Valuation Date (or if such volume-weighted average price is
unavailable or is manifestly incorrect, the market value of one Share on such
Valuation Date, as determined by the Calculation Agent using a volume-weighted
method). Settlement Date(s):    As determined in reference to Section 9.4 of the
Equity Definitions, subject to paragraph 5(j)(i) hereof. Other Provisions
Applicable to Net Share Settlement:    The provisions of Sections 9.1(c), 9.4
(except that “Settlement Date” shall be as defined above, unless a Settlement
Disruption Event prevents delivery of such Shares on that date), 9.8, 9.9, 9.10,
9.11 (as modified herein), 9.12 and 10.5 of the Equity Definitions will be
applicable as if “Physical Settlement” applied to the Transaction.

 

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Representation and Agreement:    Notwithstanding Section 9.11 of the Equity
Definitions, the
parties acknowledge that any Shares delivered to Dealer may
be, upon delivery, subject to restrictions and limitations arising
from Counterparty’s status as issuer of the Shares under
applicable securities laws as a result of the fact that
Counterparty is the issuer of the Shares. Dividends: Dividend Adjustments:    If
at any time during the period from but excluding the Trade Date, to and
including the final Expiration Date an ex-dividend date for a cash dividend
occurs with respect to the Shares, then the Calculation Agent will adjust the
Strike Price, the Number of Warrants, the Warrant Entitlement and other
variables as it deems appropriate to account for the economic effect on the
Transaction for Dealer of such dividend. Regular Dividend:    USD 0.00 per Share
per regular quarterly dividend period of the Issuer. Adjustments:    Method of
Adjustment:    Calculation Agent Adjustment; provided that the Equity
Definitions shall be amended by replacing the words “diluting or concentrative”
in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word
“material” and by adding the words “or the Transaction” after the words
“theoretical value of the relevant Shares” in Section 11.2(a), 11.2(c) and
11.2(e)(vii); provided further that adjustments may be made to account for
changes in volatility, expected dividends, stock loan rate and liquidity
relative to the relevant Shares. Extraordinary Events:    New Shares:    Section
12.1(i) of the Equity Definitions is hereby amended by deleting the text in
clause (i) in its entirety and replacing it with the phrase “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)”.
Share-for-Share:    The definition of “Share-for-Share” set forth in Section
12.1(f) of the Equity Definitions is hereby amended by the deletion of the
parenthetical in clause (i) thereof. Consequence of Merger Events:    Merger
Event:    Applicable.

Share-for-Share:

   Modified Calculation Agent Adjustment.

Share-for-Other:

   Cancellation and Payment (Calculation Agent Determination).

Share-for-Combined:

   Cancellation and Payment (Calculation Agent Determination); provided that
Dealer may elect Component Adjustment. Consequence of Tender Offers:    Tender
Offer:    Applicable.

Share-for-Share:

   Modified Calculation Agent Adjustment.

 

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Share-for-Other:

   Modified Calculation Agent Adjustment.

Share-for-Combined:

   Modified Calculation Agent Adjustment. Modified Calculation Agent Adjustment:
  

For greater certainty, the definition of “Modified Calculation Agent Adjustment”
in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by adding
the following italicized language after the stipulated parenthetical provision:
“(including adjustments to account for changes in volatility, expected
dividends, stock loan rate or liquidity relevant to the Shares or to this
Transaction) from the Exchange Business Day immediately preceding the
Announcement Date or the Determination Date, as applicable, to the first
Exchange Business Day immediately following the Merger Date (Section 12.2) or
Tender Offer Date (Section 12.3).”.

 

If, in respect of any Merger Event to which Modified Calculation Agent
Adjustment applies, the adjustments to be made in accordance with Section
12.2(e)(i) of the Equity Definitions would result in Counterparty being
different from the issuer of the Shares, then with respect to such Merger Event,
as a condition precedent to the adjustments contemplated in Section 12.2(e)(i)
of the Equity Definitions, Dealer, the issuer of the Affected Shares and the
entity that will be the issuer of the New Shares shall, prior to the Merger
Date, have entered into such documentation containing representations,
warranties and agreements relating to securities law and other issues as
requested by Dealer that Dealer has determined, in its reasonable discretion, to
be reasonably necessary or appropriate to allow Dealer to continue as a party to
the Transaction, as adjusted under Section 12.2(e)(i) of the Equity Definitions,
and to preserve its hedging or hedge unwind activities in connection with the
Transaction in a manner compliant with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable
to Dealer, and if such conditions are not met or if the Calculation Agent
determines that no adjustment that it could make under Section 12.2(e)(i) of the
Equity Definitions will produce a commercially reasonable result, then the
consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall
apply.

Announcement Date:    The definition of “Announcement Date” in Section 12.1 of
the Equity Definitions shall be amended by (i) replacing the word “leads to the”
in the third and the fifth lines thereof with the words “, if completed, would
lead to a”; (ii) replacing the words “voting shares” in the fifth line thereof
with the word “Shares”; (iii) inserting the words “by any entity” after the word
“announcement” in the second and the fourth lines thereof; (iv) replacing the
words “a firm” with the word “any” in the second and fourth lines thereof; (v)
inserting the words “or to explore the possibility of engaging in” after the
words “engage in” in the second line thereto; and (vi) inserting the words “or
to explore the possibility of purchasing or otherwise obtaining” after the word
“obtain” in the fourth line thereto. Announcement Event:    If an Announcement
Event has occurred, the Calculation Agent shall have the right to determine the
economic effect of the Announcement Event on the theoretical value of this
Transaction (including without limitation any change in volatility, stock loan
rate or liquidity relevant to the Shares or to this Transaction) (i) at a time
that it deems appropriate, for the period from the Announcement Date to the date
of such determination (the “Determination Date”), and (ii) on the

 

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   Valuation Date or on a date on which a payment amount is determined pursuant
to Sections 12.7 or 12.8 of the Equity Definitions, for the period from the
Exchange Business Day immediately preceding the Announcement Date or the
Determination Date, as applicable, to the Valuation Date or the date on which a
payment amount is determined pursuant to Sections 12.7 or 12.8 of the Equity
Definitions. If any such economic effect is material, the Calculation Agent will
either (i) adjust the terms of this Transaction to reflect such economic effect
or (ii) terminate the Transaction, in which case the Determining Party will
determine the Cancellation Amount payable by one party to the other; provided
that the reference in Section 12.8(a) of the Equity Definitions to
“Extraordinary Event” shall be replaced for this purpose with a reference to
“Announcement Event”; and provided further that, for the avoidance of doubt, if
as a result of any public withdrawal, abandonment, discontinuation or
termination, the event that has given or would give rise to any adjustment
pursuant to the provisions of this paragraph is no longer continuing, any
adjustment to reflect the economic effect of such event shall be determined by
the Calculation Agent by taking into account the actual duration of such event.
“Announcement Event” shall mean the occurrence of the Announcement Date of a
Merger Event or Tender Offer or of a potential Merger Event or potential Tender
Offer.

Composition of Combined Consideration:

   Not Applicable.

Nationalization, Insolvency or Delisting:

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

Reference Markets:

   For the avoidance of doubt, and without limiting the generality of the
foregoing provisions or the Equity Definitions, any adjustment effected by the
Calculation Agent pursuant to Section 12.2(e) and/or Section 12.3(d) of the
Equity Definitions may be determined by reference to the adjustment(s) made in
respect of Merger Events or Tender Offers, as the case may be, in the
convertible or exchangeable bond market. 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”; and (ii) by replacing the word “Shares” where it
appears in clause (X) thereof with the words “Hedge Position”.

 

The parties agree that, for the avoidance of doubt, for purposes of Section
12.9(a)(ii) of the Equity Definitions, “any applicable law or regulation”, and
for purposes of Section 5(b)(i) of the Agreement, “any applicable law”, shall
include the Dodd-Frank Wall Street

 

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   Reform and Consumer Protection Act of 2010, any rules and regulations
promulgated thereunder and any similar law or regulation (collectively, the
“Wall Street Act”), and the consequences specified in Section 12.9(b)(i) of the
Equity Definitions and Section 6 of the Agreement shall apply to any Change in
Law or Illegality, as the case may be, arising from any such act, rule or
regulation. The parties hereby agree that any additional capital charges or
other regulatory capital requirements imposed with respect to this Transaction
in connection with the Wall Street Act, if material, shall constitute “a
materially increased cost in performing its obligations under such Transaction”
for purposes of Section 12.9(a)(ii)(Y) of the Equity Definitions, if
applicable. The foregoing constitutes a specific reservation for purposes of the
Wall Street Act.

Failure to Deliver:

   Not Applicable.

Insolvency Filing:

   Applicable.

Hedging Disruption:

  

Applicable; provided that Section 12.9(a)(v) of the Equity Definitions is hereby
modified by inserting the following two phrases at the end of such Section:

“For the avoidance of doubt, the term “equity price risk” shall be deemed to
include stock price and volatility risk. And, for the further avoidance of
doubt, any such transactions or assets referred to in phrases (A) or (B) above
must be available on commercially reasonable pricing terms.”.

Increased Cost of Hedging:

   Not Applicable.

Loss of Stock Borrow:

   Applicable.

Maximum Stock Loan Rate:

   200 basis points

Increased Cost of Stock Borrow:

   Applicable.

Initial Stock Loan Rate:

   25 basis points, as adjusted by the Calculation Agent to reflect any
subsequent Price Adjustment due to an Increased Cost of Stock Borrow.

Hedging Party:

   Dealer or an affiliate of Dealer that is involved in the hedging of this
Transaction for all applicable Additional Disruption Events.

Determining Party:

   Dealer for all applicable Extraordinary Events. Acknowledgments:   

Non-Reliance:

   Applicable.

Agreements and Acknowledgments Regarding Hedging Activities:

   Applicable.

Additional Acknowledgments:

   Applicable.

3. Mutual Representations, Warranties and Agreements.

In addition to the representations, warranties and agreements in the Agreement
and those contained elsewhere herein, each of Dealer and Counterparty represents
and warrants to, and agrees with, the other party that:

 

  (a)

Commodity Exchange Act. It is an “eligible contract participant” within the
meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the
“CEA”). The Transaction has been subject to individual negotiation by the
parties. The Transaction has not been executed or traded on a “trading facility”
as defined in the CEA.

 

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  (b) Securities Act. It is a “qualified institutional buyer” as defined in Rule
144A under the Securities Act, or an “accredited investor” as defined in
Section 2(a)(15)(ii) of the Securities Act.

 

  (c) ERISA. The assets used in the Transaction (1) are not assets of any “plan”
(as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the
“Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as
such term is defined in Section 3(3) of the U.S. Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and
(2) do not constitute “plan assets” within the meaning of Department of Labor
Regulation 2510.3-101, 29 CFR Section 2510-3-101.

4. Representations, Warranties and Agreements of Counterparty.

In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Counterparty further represents, warrants and agrees
that:

 

  (a) the representations and warranties of Counterparty set forth in Section 3
of the Agreement and Section 2 of the Purchase Agreement dated as of the Trade
Date between Counterparty, Barclays Capital Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representatives of the initial purchasers party
thereto (the “Purchase Agreement”), relating to the issuance of USD 275,000,000
principal amount of 1.75% senior convertible notes due 2017 (the “Convertible
Notes”), are true and correct and are hereby deemed to be made directly to
Dealer as if set forth herein;

 

  (b) the Shares of Counterparty initially issuable upon exercise of the Warrant
(the “Warrant Shares”) have been reserved for issuance by all required corporate
action of Counterparty. The Warrant Shares have been duly authorized and, when
delivered as contemplated by the terms of the Warrant following its exercise in
accordance with the terms and conditions thereof, will be validly issued,
fully-paid and non-assessable, and the issuance of the Warrant Shares will not
be subject to any pre-emptive or similar rights;

 

  (c) Counterparty shall promptly provide written notice to Dealer upon the
occurrence and continuation of an Event of Default, a Potential Adjustment
Event, a Merger Event or any other Extraordinary Event; provided, however, that
should Counterparty be in possession of material non-public information
regarding Counterparty, Counterparty shall not communicate such information to
Dealer;

 

  (d) (A) Counterparty is acting for its own account, and it has made its own
independent decisions to enter into the Transaction and as to whether the
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisers as it has deemed necessary, (B) Counterparty is not
relying on any communication (written or oral) of Dealer or any of its
affiliates as investment advice or as a recommendation to enter into the
Transaction (it being understood that information and explanations related to
the terms and conditions of the Transaction shall not be considered investment
advice or a recommendation to enter into the Transaction) and (C) no
communication (written or oral) received from Dealer or any of its affiliates
shall be deemed to be an assurance or guarantee as to the expected results of
the Transaction;

 

  (e) Counterparty is entering into the Transaction, solely for the purposes
stated in the board resolution authorizing the Transaction and in its public
disclosure, and there is no internal policy, whether written or oral, of
Counterparty that would prohibit Counterparty from entering into any aspect of
the Transaction, including, but not limited to, the issuance of Shares to be
made pursuant hereto;

 

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  (f) Counterparty has not and will not directly or indirectly violate any
applicable law (including, without limitation, the Securities Act and the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
regulations promulgated thereunder) in connection with the Transaction;

 

  (g) Counterparty is not as of the Trade Date and as of the date on which
Counterparty delivers any Share Termination Delivery Units, and shall not be
after giving effect to the transactions contemplated hereby, “insolvent” (as
such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of
the United States Code) (the “Bankruptcy Code”));

 

  (h) Counterparty understands, agrees and acknowledges that Dealer has no
obligation or intention to register the Transaction under the Securities Act,
any state securities law or other applicable federal securities law;

 

  (i) each of Counterparty’s filings under the Securities Act, the Exchange Act,
or other applicable securities laws that are required to be filed have been
filed and that, as of the respective dates thereof and as of the date of this
representation, such filings when considered as a whole (with the more recent
such filings deemed to amend inconsistent statements contained in any earlier
such filings) do not contain any misstatement of a material fact or any omission
of a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading;

 

  (j) On the Trade Date and as of the date of on which Counterparty delivers any
Share Termination Delivery Units, none of Counterparty and its officers and
directors is aware or in possession of any “material non-public information”
(within the meaning of Section 10(b) of the Exchange Act and the rules
promulgated thereunder) regarding Counterparty or the Shares;

 

  (k) Counterparty 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;

 

  (l) Counterparty understands, agrees and acknowledges that no obligations of
Dealer to it hereunder shall be entitled to the benefit of deposit insurance and
that such obligations shall not be guaranteed by any affiliate of Dealer or any
governmental agency;

 

  (m) without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that Dealer is not making any representations or
warranties with respect to the treatment of the Transaction under any accounting
standards, including ASC Topic 260, Earnings Per Share, ASC Topic 815,
Derivatives and Hedging, ASC Topic 480, Distinguishing Liabilities from Equity
and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or
any successor issue statements) or under FASB’s Liabilities & Equity Project;

 

  (n) Counterparty is not entering into the Transaction for the purpose of
(i) creating actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or (ii) raising or depressing
or otherwise manipulating the price of the Shares (or any security convertible
into or exchangeable for the Shares) or otherwise in violation of the Exchange
Act;

 

  (o) Counterparty has no knowledge, and is otherwise not aware, of any federal,
state or local (including non-U.S. jurisdictions) law, rule, regulation or
regulatory order applicable to Counterparty or the Shares that would give rise
to any reporting, consent, registration or other requirement (including without
limitation a requirement to obtain prior approval from any person or entity) as
a result of Dealer or its affiliates owning or holding (however defined) Shares,
except as required (i) pursuant to the Exchange Act and (ii) by the Securities
Act in connection with any registration rights held by Dealer pursuant to this
Confirmation;

 

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  (p) Counterparty has not entered into any obligation or undertaking that would
contractually limit it from effecting Net Share Settlement under this
Transaction and it agrees not to enter into any such obligation or undertaking
during the term of this Transaction;

 

  (q) Counterparty shall not take any action to decrease the number of Available
Shares below the Maximum Amount (each as defined below);

 

  (r) (x)(A) On the Trade Date, the Shares or securities that are convertible
into, or exchangeable or exercisable for Shares, are not, and shall not be,
subject to a “restricted period,” as such term is defined in Regulation M under
the Exchange Act (“Regulation M”) other than the distribution of the convertible
notes subject to the Purchase Agreement and (B) Counterparty shall not engage in
any “distribution,” as such term is defined in Regulation M, other than a
distribution meeting the requirements of the exceptions set forth in sections
101(b)(10) and 102(b)(7) of Regulation M until the second Exchange Business Day
immediately following the Trade Date, and (y)(A) during the period starting on
the first Expiration Date and ending on the last Expiration Date (the
“Settlement Period”), the Shares or securities that are convertible into, or
exchangeable or exercisable for Shares, are not, and shall not be, subject to a
“restricted period,” as defined in Regulation M and (B) Counterparty shall not
engage in any “distribution,” as such term is defined in Regulation M, other
than a distribution meeting the requirements of the exceptions set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Settlement Period;

 

  (s) During the Settlement Period and on any other Exercise Date, neither
Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in
Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall directly or indirectly
(including, without limitation, by means of any cash-settled or other derivative
instrument) purchase, offer to purchase, place any bid or limit order that would
effect a purchase of, or commence any tender offer relating to, any Shares (or
an equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share) or any security convertible into or
exchangeable or exercisable for Shares, except through Dealer; and

 

  (t) Counterparty agrees that it (A) will not during the Settlement Period
make, or permit to be made, any public announcement (as defined in Rule 165(f)
under the Securities Act) of any Merger Transaction or potential Merger
Transaction unless such public announcement is made prior to the opening or
after the close of the regular trading session on the Exchange for the Shares;
(B) shall promptly (but in any event prior to the next opening of the regular
trading session on the Exchange) notify Dealer following any such announcement
that such announcement has been made; and (C) shall promptly (but in any event
prior to the next opening of the regular trading session on the Exchange)
provide Dealer with written notice specifying (i) Counterparty’s average daily
Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar
months immediately preceding the announcement date that were not effected
through Dealer or its affiliates and (ii) the number of Shares purchased
pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the
three full calendar months preceding the announcement date. Such written notice
shall be deemed to be a certification by Counterparty to Dealer that such
information is true and correct. In addition, Counterparty shall promptly notify
Dealer of the earlier to occur of the completion of such transaction and the
completion of the vote by target shareholders. “Merger Transaction” means any
merger, acquisition or similar transaction involving a recapitalization as
contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

5. Other Provisions:

 

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

 

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  (b) Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any repurchase of Shares, promptly give Dealer a written notice of such
repurchase (a “Repurchase Notice”) on such day if following such repurchase, the
Warrant Equity Percentage as determined on such day is (i) equal to or greater
than 9.0% or (ii) greater by 0.5% than the Warrant Equity Percentage included in
the immediately preceding Repurchase Notice (or, in the case of the first such
Repurchase Notice, greater than the Warrant Equity Percentage as of the Trade
Date). The “Warrant Equity Percentage” as of any day is the fraction, expressed
as a percentage, (A) the numerator of which is the product of the Number of
Warrants in aggregate and the Warrant Entitlement and (B) the denominator of
which is the number of Shares outstanding on such day. In the event that
Counterparty fails to provide Dealer with a Repurchase Notice on the day and in
such manner specified in this paragraph 5(b), Counterparty agrees to indemnify
and hold harmless Dealer and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling persons
(each, an “Indemnified Person”) from and against any and all losses (including
losses relating to Dealer’s hedging activities as a consequence of becoming, or
of the risk of becoming, a Section 16 “insider”, including without limitation,
any forbearance from hedging activities or cessation of hedging activities and
any losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s
fees), joint or several, which an Indemnified Person may become subject to, as a
result of Counterparty’s failure to provide Dealer with a Repurchase Notice on
the day and in the manner specified in this paragraph, and to reimburse, within
30 days, upon written request, each of such Indemnified Persons for any
reasonable legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection with or
defending any of the foregoing. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against the Indemnified Person in respect of the foregoing, such
Indemnified Person shall promptly notify Counterparty in writing, and
Counterparty, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others Counterparty may designate in such proceeding and shall
pay the fees and expenses of such counsel related to such proceeding.
Counterparty shall not be liable for any settlement of any proceeding
contemplated by this paragraph that is effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
Counterparty agrees to indemnify any Indemnified Person from and against any
loss or liability by reason of such settlement or judgment. Counterparty shall
not, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding contemplated by this
paragraph that is in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of
such proceeding on terms reasonably satisfactory to such Indemnified Person. If
the indemnification provided for in this paragraph is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Counterparty hereunder, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity. The indemnity and
contribution agreements contained in this paragraph shall remain operative and
in full force and effect regardless of the termination of the Transaction.

 

  (c)

Transfer or Assignment. Counterparty may not transfer or assign any of its
rights or obligations under the Transaction or the Agreement without the prior
written consent of Dealer. Notwithstanding any provision of the Agreement to the
contrary, Dealer may, subject to applicable law, freely transfer and assign all
of its rights and obligations under the Transaction and the Agreement without
the consent of Counterparty to (x) any affiliate of Dealer whose obligations are

 

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guaranteed by Dealer or an affiliate of Dealer of credit quality equivalent to
that of Dealer or (y) any third party with a rating (or whose guarantor has a
rating) for its long term, unsecured and unsubordinated indebtedness equal to
the Required Rating. “Required Rating” means a rating of A- or better by
Standard & Poor’s Ratings Services or its successor (“S&P”), or A3 or better by
Moody’s Investors Service, Inc. or its successor (“Moody’s”) or, if either S&P
or Moody’s ceases to rate such debt, at least an equivalent rating or better by
a substitute rating agency mutually agreed by Counterparty and Dealer.

If at any time at which (1) the Equity Percentage exceeds 9.0% or (2) Dealer,
Dealer Group (as defined below) or any person whose ownership position would be
aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such
person, a “Dealer Person”) under any relevant state corporate law or any state
or federal bank holding company or banking laws, or other federal, state or
local laws, regulations or regulatory orders applicable to ownership of Shares
(“Applicable Laws”), owns, beneficially owns, constructively owns, controls,
holds the power to vote or otherwise meets a relevant definition of ownership in
excess of a number of Shares equal to (x) the number of Shares that, in the good
faith determination of the relevant Dealer Person, would give rise to materially
burdensome reporting or registration obligations or other requirements
(including obtaining prior approval by a state or federal regulator) of a Dealer
Person under Applicable Laws (including, without limitation, “interested
stockholder” or “acquiring person” status under Section 203 of the Delaware
General Corporation Law, but excluding any report or filing required pursuant to
Section 13 of the Exchange Act and the rules promulgated thereunder) and with
respect to which such requirements have not been met or the relevant approval
has not been received minus (y) 1.0% of the number of Shares outstanding on the
date of determination (either such condition described in clause (1) or (2), an
“Excess Ownership Position”) and Dealer is unable, after commercially reasonable
efforts, to eliminate such Excess Ownership Position or effect a transfer or
assignment on pricing terms and within a time period reasonably acceptable to it
of all or a portion of the Transaction such that an Excess Ownership Position no
longer exists, Dealer may designate any Scheduled Trading Day as an Early
Termination Date with respect to a portion (the “Terminated Portion”) of the
Transaction, such that an Excess Ownership Position no longer exists. In the
event that Dealer so designates an Early Termination Date with respect to a
portion of this Transaction, a payment shall be made pursuant to Section 6 of
the Agreement as if (x) an Early Termination Date had been designated in respect
of a Transaction having terms identical to this Transaction and a Number of
Shares equal to the Terminated Portion, (y) Counterparty shall be the sole
Affected Party with respect to such partial termination and (z) such Transaction
shall be the only Terminated Transaction (and, for the avoidance of doubt, the
provisions of paragraph 5(i) shall apply to any amount that is payable by Dealer
to Counterparty pursuant to this sentence). 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 Dealer and any of its affiliates subject to
aggregation with Dealer, for purposes of the “beneficial ownership” test under
Section 13 of the Exchange Act, and all persons who may form a “group” (within
the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (“Dealer
Group”), beneficially own (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.

 

  (d) [Intentionally Omitted.]

 

  (e) Regulatory Provisions. The time of dealing for the Transaction will be
confirmed by Dealer upon written request by Counterparty.

 

  (f) Additional Termination Events. The occurrence of any of the following
shall constitute an Additional Termination Event with respect to which
(1) Counterparty shall be the sole Affected Party and (2) the Transaction shall
be the sole Affected Transaction; provided that with respect to any of the
following Additional Termination Events, Dealer may choose to treat part of the
Transaction as the sole Affected Transaction, and, upon termination of the
Affected Transaction, a Transaction with a Number of Warrants equal to the
unaffected number of Warrants shall be treated for all purposes as the
Transaction, which shall remain in full force and effect and, for the avoidance
of doubt, shall be subject to all relevant provisions and adjustments as if an
Additional Termination Event had not occurred:

 

  (i) if at any time Dealer is unable, or reasonably determines that it is
inadvisable, to hedge its obligations pursuant to this Transaction in the public
market without registration under the Securities Act or as a result of 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 Dealer);

 

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  (ii) the consummation of any transaction (other than any transaction described
in clause (iii) below whether or not the proviso therein applies) the result of
which is that any “person” or “group” within the meaning of Section 13(d) of the
Exchange Act other than Counterparty, its subsidiaries or the employee benefit
plans of Counterparty or its subsidiaries, becomes the “beneficial owner” (as
that term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 50% of Counterparty’s capital stock that is entitled to
vote generally in elections of Counterparty’s directors (“voting stock”);

 

  (iii) the consummation of (A) any recapitalization, reclassification or change
of the Shares (other than changes resulting from a subdivision or combination)
as a result of which all or substantially all of the Shares are converted into,
or exchanged for, stock, other securities or other property or assets; (B) any
binding share exchange, consolidation or merger of Counterparty pursuant to
which the Shares will be converted into cash, securities or other property; or
(C) any sale, lease or other transfer in one transaction or a series of
transactions of all of the consolidated assets of Counterparty and its
subsidiaries, taken as a whole, to any person other than one of Counterparty’s
subsidiaries; provided, however, that a transaction in which the holders of more
than 50% of all classes of common equity of Counterparty immediately prior to
such transaction own, directly or indirectly, more than 50% of all classes of
common equity of the continuing or surviving corporation or transferee or any
direct or indirect parent thereof immediately after the consummation of such
transaction shall not be an Additional Termination Event;

 

  (iv) Counterparty’s stockholders approve any plan or proposal for liquidation
or dissolution of Counterparty; or

 

  (v) the Shares (or other common stock or depositary shares or receipts in
respect thereof) cease to be listed or quoted on any of the New York Stock
Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or any other
national securities exchange or automated quotation system (or any of their
respective successors).

Notwithstanding any provision of paragraph 5(f)(ii) or (iii), however, an
Additional Termination Event will not be deemed to have occurred if 90% of the
consideration received or exchanged by common stockholders of Counterparty
(excluding cash payments for fractional shares and cash payments made pursuant
to dissenters’ appraisal rights), in connection with the transaction or
transactions otherwise constituting the Additional Termination Event consists of
shares of common stock or depositary shares or receipts in respect thereof
traded on any of the New York Stock Exchange, The NASDAQ Global Select Market,
The NASDAQ Global Market or any other national securities exchange or automated
quotation system (or any of their respective successors) or which will be so
traded when issued or exchanged in connection with such transaction or
transactions (“Publicly Traded Securities”) and as a result of such transaction
or transactions the Convertible Notes (as defined in the Purchase Agreement)
become convertible into cash, such Publicly Traded Securities or a combination
of cash and such Publicly Traded Securities.

 

  (g) No Collateral. Notwithstanding any provision of this Confirmation, the
Agreement, Equity Definitions or any other agreement between the parties to the
contrary, the obligations of Counterparty under the Transaction are not secured
by any collateral.

 

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  (h) Netting and Setoff. Obligations under the 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 the 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; provided that both parties agree that subparagraph
(ii) of Section 2(c) of the Agreement shall apply to the Transaction.

 

  (i) Alternative Calculations and Counterparty Payment on Early Termination and
on Certain Extraordinary Events. If Counterparty owes Dealer any amount in
connection with the Transaction (i) pursuant to Sections 12.2, 12.3, 12.6, 12.7
or 12.9 of the Equity Definitions (except in the case of an Extraordinary Event
in which the consideration or proceeds to be paid to holders of Shares as a
result of such event consists solely of cash) or (ii) pursuant to
Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party, other than (x) an Event of Default of the
type described in Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or
(y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii),
(iv), (v) or (vi) of the Agreement that in the case of either (x) or
(y) resulted from an event or events outside Counterparty’s control) (a “Payment
Obligation”), Counterparty shall have the right, in its sole discretion, to
satisfy any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Dealer, confirmed in
writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and
4:00 p.m. New York time on the Merger Date, Tender Offer Date, Announcement
Date, Early Termination Date or other date the Transaction is cancelled or
terminated, as applicable, where such notice shall include a representation and
warranty from Counterparty that it is not, as of the date of the telephonic
notice and the date of such written notice, aware of any “material non-public
information” (within the meaning of Section 10(b) of the Exchange Act and the
rules promulgated thereunder) concerning itself or the Shares (“Notice of Share
Termination”). Upon such Notice of Share Termination, the following provisions
shall apply on the Scheduled Trading Day immediately following the Merger Date,
the Tender Offer Date, Announcement Date, Early Termination Date or other date
the Transaction is cancelled or terminated, as applicable:

 

  Share Termination Alternative:    Applicable and means that Counterparty shall
deliver to Dealer the Share Termination Delivery Property on the date on which
the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9
of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable
(the “Share Termination Payment Date”), in satisfaction of the Payment
Obligation.   Share Termination Delivery Property:    A number of Share
Termination Delivery Units, as calculated by the Calculation Agent, equal to the
Payment Obligation divided by the Share Termination Unit Price. The Calculation
Agent shall adjust the Share Termination Delivery Property by replacing any
fractional portion of the aggregate amount of a security therein with an amount
of cash equal to the value of such fractional security based on the values used
to calculate the Share Termination Unit Price.   Share Termination Unit Price:
   The value of property contained in one Share Termination Delivery Unit on the
date such Share Termination Delivery Units are to be delivered as Share
Termination Delivery Property, as determined by the

 

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     Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Counterparty at the time of notification of
the Payment Obligation.   Share Termination Delivery Unit:    In the case of a
Termination Event, Event of Default or Delisting, one Share or, in the case of
an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a
unit consisting of the number or amount of each type of property received by a
holder of one Share (without consideration of any requirement to pay cash or
other consideration in lieu of fractional amounts of any securities) in such
Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If
such Insolvency, Nationalization, Merger Event or Tender Offer 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.   Failure to Deliver:   
Applicable   Other Applicable Provisions:    If Share Termination Alternative is
applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable
securities laws arising as a result of the fact that Seller is the issuer of the
Shares or any portion of the Share Termination Delivery Units) and 9.12 of the
Equity Definitions will be applicable as if “Physical Settlement” applied to the
Transaction, except that all references to “Shares” shall be read as references
to “Share Termination Delivery Units”. If, in the reasonable judgment of Dealer,
for any reason, any securities comprising the Share Termination Delivery Units
deliverable pursuant to this paragraph 5(i) would not be immediately freely
transferable by Dealer under Rule 144 under the Securities Act, then Dealer may
elect to either (x) accept delivery of such securities notwithstanding any
restriction on transfer or (y) have the provisions set forth in paragraph 5(j)
below apply.

 

  (j)

Registration/Private Placement Procedures. If, in the reasonable opinion of
Dealer, following any delivery of Shares or Share Termination Delivery Units to
Dealer hereunder, such Shares or Share Termination Delivery Units would be in
the hands of Dealer subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery requirement for
such Shares or Share Termination Delivery Units pursuant to any applicable
federal or state securities law (including, without limitation, any such
requirement arising under Section 5 of the Securities Act as a result of such
Shares or Share Termination Delivery Units being “restricted securities”, as
such term is defined in Rule 144 under the Securities Act, or as a result of the
sale of such Shares or Share Termination Delivery Units) (such Shares or Share
Termination Delivery Units, “Restricted Shares”), then delivery of such
Restricted Shares shall be effected pursuant to either clause (i) or (ii) below
at the election of Counterparty, unless waived by Dealer. Notwithstanding the
foregoing, solely in respect of any Daily Number of Warrants

 

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  exercised or deemed exercised on any Expiration Date, Counterparty shall
elect, prior to the first Settlement Date for the first Expiration Date, a
Private Placement Settlement (as defined below) or Registered Settlement (as
defined below) for all deliveries of Restricted Shares for all such Expiration
Dates which election shall be applicable to all Settlement Dates for such
Warrants and the procedures in clause (i) or clause (ii) below shall apply for
all such delivered Restricted Shares on an aggregate basis commencing after the
final Settlement Date for such Warrants. The Calculation Agent shall make
reasonable adjustments to settlement terms and provisions under this
Confirmation to reflect a single Private Placement or Registered Settlement for
such aggregate Restricted Shares delivered hereunder.

 

  (i) If Counterparty elects to settle the Transaction pursuant to this clause
(i) (a “Private Placement Settlement”), then delivery of Restricted Shares by
Counterparty shall be effected in customary private placement procedures with
respect to such Restricted Shares reasonably acceptable to Dealer; provided that
Counterparty may not elect a Private Placement Settlement if, on the date of its
election, it has taken, or caused to be taken, any action that would make
unavailable either the exemption pursuant to Section 4(2) of the Securities Act
for the sale by Counterparty to Dealer (or any affiliate designated by Dealer)
of the Restricted Shares or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Restricted Shares by
Dealer (or any such affiliate of Dealer). The Private Placement Settlement of
such Restricted Shares shall include customary representations, covenants, blue
sky and other governmental filings and/or registrations, indemnities to Dealer,
due diligence rights (for Dealer or any designated buyer of the Restricted
Shares by Dealer), opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably acceptable to Dealer.
In the case of a Private Placement Settlement, Dealer shall determine the
appropriate discount (in the case of settlement of Share Termination Delivery
Units pursuant to paragraph 5(i) above) or any Settlement Price (in the case of
settlement of Shares pursuant to Section 2 above) applicable to such Restricted
Shares in a commercially reasonable manner and appropriately adjust the number
of such Restricted Shares to be delivered to Dealer hereunder. Notwithstanding
the Agreement or this Confirmation, the date of delivery of such Restricted
Shares shall be the Scheduled Trading Day following notice by Dealer to
Counterparty, of such applicable discount and the number of Restricted Shares to
be delivered pursuant to this clause (i). For the avoidance of doubt, delivery
of Restricted Shares shall be due as set forth in the previous sentence and not
be due on the date described in paragraph 5(i) (in the case of settlement of
Share Termination Delivery Units) or on the Settlement Date (in the case of
settlement in Shares pursuant to Section 2 above).

In the event Counterparty shall not have delivered the full number of Restricted
Shares otherwise applicable as a result of the proviso above relating to the
Maximum Amount, as defined below, (such deficit, the “Deficit Restricted
Shares”), Counterparty shall be continually obligated to deliver, from time to
time until the full number of Deficit Restricted Shares have been delivered
pursuant to this paragraph, Restricted Shares when, and to the extent, that
(i) Shares are repurchased, acquired or otherwise received by Counterparty or
any of its subsidiaries after the Trade Date (whether or not in exchange for
cash, fair value or any other consideration), (ii) authorized and unissued
Shares reserved for issuance in respect of other transactions prior to such date
which prior to the relevant date become no longer so reserved and
(iii) Counterparty additionally authorizes any unissued Shares that are not
reserved for other transactions. Counterparty shall immediately notify Dealer of
the occurrence of any of the foregoing events (including the number of Shares
subject to clause (i), (ii) or (iii) and the corresponding number of Restricted
Shares to be delivered) and promptly deliver such Restricted Shares thereafter.

 

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  (ii) If Counterparty elects to settle the Transaction pursuant to this clause
(ii) (a “Registration Settlement”), then Counterparty shall promptly (but in any
event no later than the beginning of the Resale Period (as defined below)) file
and use its reasonable best efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding registration
statement in form and substance reasonably satisfactory to Dealer, to cover the
resale of such Restricted Shares (and any Counterparty Make-whole Shares) in
accordance with customary resale registration procedures, including covenants,
conditions, representations, underwriting discounts (if applicable), commissions
(if applicable), indemnities due diligence rights, opinions and certificates,
and such other documentation as is customary for equity resale underwriting
agreements, all reasonably acceptable to Dealer. If Dealer, in its sole
reasonable discretion, is not satisfied with such procedures and documentation
Private Placement Settlement shall apply. If Dealer is satisfied with such
procedures and documentation, it shall sell the Restricted Shares pursuant to
such registration statement during a period (the “Resale Period”) commencing on
the Exchange Business Day following delivery of such Restricted Shares (and any
Counterparty Make-whole Shares) and ending on the earliest of (i) the Exchange
Business Day on which Dealer completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds of such sales exceed the
Payment Obligation (as defined above) and (ii) the date upon which all
Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar
provisions then in force) or Rule 145(d)(1) or (2) (or any similar provision
then in force) under the Securities Act.

 

  (iii) (A) If (ii) above is applicable and the Net Share Settlement Amount or
the Payment Obligation, as applicable, exceeds the realized net proceeds from
such resale, or if (i) above is applicable and the Freely Tradeable Value (as
defined below) of the Net Share Settlement Amount or the Payment Obligation (in
each case as adjusted pursuant to (i) above), as applicable, exceeds the
realized net proceeds from such resale, Counterparty shall transfer to Dealer by
the open of the regular trading session on the Exchange on the Exchange Trading
Day immediately following the last day of the Resale Period the amount of such
excess (the “Counterparty Additional Amount”), at Counterparty’s option, either
in cash or in a number of Shares (“Counterparty Make-whole Shares”; provided
that the aggregate number of Shares and Counterparty Make-whole Shares delivered
shall not exceed the Maximum Amount) that, based on the Settlement Price on the
last day of the Resale Period (as if such day was the “Valuation Date” for
purposes of computing such Settlement Price), has a value equal to the
Counterparty Additional Amount. Dealer shall use commercially reasonable efforts
to promptly sell any Counterparty Make-whole Shares, and the Resale Period shall
continue to enable the sale of such Counterparty Make-whole Shares. If
Counterparty elects to pay the Counterparty Additional Amount in Counterparty
Make-whole Shares, the requirements and provisions for either Private Placement
Settlement or Registration Settlement shall apply to such payment. This
provision shall be applied successively until the Counterparty Additional Amount
is equal to zero.

(B) If (ii) above is applicable and the realized net proceeds from such resale
(including the sale of any Counterparty Make-whole Shares) exceed the Net Share
Settlement Amount or the Payment Obligation, as applicable, or if (i) above is
applicable and the realized net proceeds from such resale (including the

 

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sale of any Counterparty Make-whole Shares) exceed the Freely Tradeable Value
(as defined below) of the Net Share Settlement Amount or the Payment Obligation
(in each case as adjusted pursuant to (i) above), as applicable, Dealer shall
transfer to Counterparty the amount of such excess (the “Dealer Additional
Amount”), at Counterparty’s option, either in cash or in a number of Shares
(“Dealer Make-whole Shares”) that, based on the Settlement Price on the last day
of the Resale Period (as if such day was the Valuation Date for purposes of
computing such Settlement Price), has a value equal to the Dealer Additional
Amount. The transfer of the Dealer Additional Amount shall be made (x) if in
cash, by the open of the regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the Resale Period, and (y) if
in Shares, one Settlement Cycle following the date Dealer is able, using
commercially reasonable efforts, to purchase Dealer Make-whole Shares. This
provision shall be applied successively until the Dealer Additional Amount is
equal to zero.

“Freely Tradeable Value” means the value of the number of Shares delivered to
Dealer which such Shares would have if they were freely tradeable (without
prospectus delivery) upon receipt by Dealer, as determined by the Calculation
Agent by commercially reasonable means.

 

  (iv) Without limiting the generality of the foregoing, Counterparty agrees
that any Restricted Shares delivered to Dealer, as purchaser of such Restricted
Shares, (A) may be transferred by and among Dealer and its affiliates and
Counterparty shall effect such transfer without any further action by Dealer and
(B) after the minimum “holding period” within the meaning of Rule 144(d) under
the Securities Act has elapsed after any settlement date for such Restricted
Shares, Counterparty shall promptly remove, or cause the transfer agent for such
Restricted Shares to remove, any legends referring to any such restrictions or
requirements from such Restricted Shares upon delivery by Dealer (or such
affiliate of Dealer) to Counterparty or such transfer agent of seller’s and
broker’s representation letters customarily delivered by Dealer in connection
with resales of restricted securities pursuant to Rule 144 under the Securities
Act, without any further requirement for the delivery of any certificate,
consent, agreement, opinion of counsel, notice or any other document, any
transfer tax stamps or payment of any other amount or any other action by Dealer
(or such affiliate of Dealer).

If the Private Placement Settlement or the Registration Settlement shall not be
effected as set forth in clauses (i), (ii) or (iii), as applicable, then failure
to effect such Private Placement Settlement or such Registration Settlement
shall constitute an Event of Default with respect to which Counterparty shall be
the Defaulting Party.

 

  (k) Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, Dealer may not exercise any Warrant hereunder, Automatic Exercise shall
not apply with respect thereto, and no delivery hereunder (including pursuant to
paragraphs 5(j), (m) or (n)) shall be made, to the extent (but only to the
extent) that, the receipt of any Shares upon such exercise or delivery would
result in the existence of an Excess Ownership Position. Any purported delivery
hereunder shall be void and have no effect to the extent (but only to the
extent) that such delivery would result in the existence of an Excess Ownership
Position. Subject to paragraph 5(c), if any delivery owed to Dealer hereunder is
not made, in whole or in part, as a result of this provision, Counterparty’s
obligation to make such delivery and Dealer’s right to exercise a Warrant shall
not be extinguished and Counterparty shall make such delivery as promptly as
practicable after, but in no event later than one Scheduled Trading Day after,
Dealer gives notice to Counterparty that, such exercise or delivery would not
result in the existence of an Excess Ownership Position.

 

19

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  (l) Share Deliveries. Counterparty acknowledges and agrees that, to the extent
that Dealer is not then an affiliate, as such term is used in Rule 144 under the
Securities Act, of Counterparty and has not been such an affiliate of
Counterparty for 90 days (it being understood that Dealer shall not be
considered such an affiliate of Counterparty solely by reason of its receipt of
or right to receive Shares pursuant to this Transaction), and otherwise
satisfies all holding period and other requirements of Rule 144 under the
Securities Act applicable to it, any Shares or Share Termination Delivery Units
delivered hereunder at any time after 1 year from the Premium Payment Date shall
be eligible for resale under Rule 144 under the Securities Act, and Counterparty
agrees to promptly remove, or cause the transfer agent for such Shares or Share
Termination Delivery Units to remove, any legends referring to any restrictions
on resale under the Securities Act from the certificates representing such
Shares or Share Termination Delivery Units. Counterparty further agrees that
with respect to any Shares or Share Termination Delivery Units delivered
hereunder at any time after 6 months from the Premium Payment Date but prior to
1 year from the Premium Payment Date, to the extent that Counterparty then
satisfies the current information requirement of Rule 144 under the Securities
Act, Counterparty shall promptly remove, or cause the transfer agent for such
Shares or Share Termination Delivery Units to remove, any legends referring to
any such restrictions or requirements from the certificates representing such
Shares or Share Termination Delivery Units upon delivery by Dealer to
Counterparty or such transfer agent of customary seller’s and broker’s
representation letters in connection with resales of such Shares or Share
Termination Delivery Units pursuant to Rule 144 under the Securities Act,
without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by Dealer.
Counterparty further agrees and acknowledges that Dealer shall run a holding
period under Rule 144 under the Securities Act with respect to the Warrants
and/or any Shares or Share Termination Delivery Units delivered hereunder
notwithstanding the existence of any other transaction or transactions between
Counterparty and Dealer relating to the Shares. Counterparty further agrees that
Shares or Share Termination Delivery Units delivered hereunder prior to the date
that is 6 months from the Premium Payment Date may be freely transferred by
Dealer to its affiliates, and Counterparty shall effect such transfer without
any further action by Dealer. Notwithstanding anything to the contrary herein,
Counterparty agrees that any delivery of Shares or Share Termination Delivery
Units shall be effected by book-entry transfer through the facilities of the
Clearance System if, at the time of such delivery, the certificates representing
such Shares or Share Termination Delivery Units would not contain any
restrictive legend as described above. Notwithstanding anything to the contrary
herein, to the extent the provisions of Rule 144 under the Securities Act or any
successor rule are amended, or the applicable interpretation thereof by the
Securities and Exchange Commission or any court changes after the Trade Date,
including without limitation to lengthen or shorten the holding periods, the
agreements of Counterparty herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of Counterparty, to comply with
Rule 144 under the Securities Act, including Rule 144, as in effect at the time
of delivery of the relevant Shares or Share Termination Delivery Units.

 

  (m)

Maximum Share Delivery. Notwithstanding any other provision of this Confirmation
or the Agreement, in no event will Counterparty be required to deliver more than
4,885,578 Shares (the “Maximum Amount”) in the aggregate to Dealer in connection
with the Transaction, subject to the provisions below regarding Deficit Shares
and to adjustment from time to time in accordance with the provisions of this
Confirmation or the Equity Definitions. Counterparty represents and warrants to
Dealer (which representation and warranty shall be deemed to be repeated on each
day that the Transaction is outstanding) that the Maximum Amount is equal to or
less than the number of authorized but unissued Shares of Counterparty that are
not reserved for future issuance in connection with transactions in the Shares
(other than the Transaction) on the date of the determination of the Maximum
Amount (such Shares, the “Available Shares”). In the event Counterparty shall
not have delivered the full number of Shares otherwise due in connection with
the Transaction as a result of the first sentence of this paragraph relating to
the Maximum Amount (such deficit, the “Deficit Shares”), Counterparty shall be
continually obligated to deliver, from time to time until the full number of
Deficit Shares have been delivered pursuant to this paragraph,

 

20

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  Shares when, and to the extent, that (i) Shares are repurchased, acquired or
otherwise received by Counterparty or any of its subsidiaries after the Trade
Date (whether or not in exchange for cash, fair value or any other
consideration), (ii) authorized and unissued Shares reserved for issuance in
respect of other transactions prior to such date which prior to the relevant
delivery date become no longer so reserved and (iii) Counterparty additionally
authorizes any unissued Shares that are not reserved for other transactions.
Counterparty shall immediately notify Dealer of the occurrence of any of the
foregoing events (including the aggregate number of Shares subject to clause
(i), (ii) or (iii) and the corresponding number of Shares to be delivered) and
promptly deliver of such aggregate number of Shares thereafter.

 

  (n) Tax Disclosure. Notwithstanding anything to the contrary herein, in the
Equity Definitions or in the Agreement, and notwithstanding any express or
implied claims of exclusivity or proprietary rights, the parties (and each of
their employees, representatives or other agents) are authorized to disclose to
any and all persons, beginning immediately upon commencement of their
discussions and without limitation of any kind, the tax treatment and tax
structure of the Transaction, and all materials of any kind (including opinions
or other tax analyses) that are provided by either party to the other relating
to such tax treatment and tax structure.

 

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

 

  (p) Securities Contract; Swap Agreement. The parties hereto agree and
acknowledge that Dealer is one or more of a “financial institution,” “swap
participant” and “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 (A) that this Confirmation is (i) a “securities contract,” as
such term is defined in Section 741(7) 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 “settlement payment” (as
such term is defined in Section 741(8) of the Bankruptcy Code) or a “transfer”
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” within the meaning of Section 546 of the Bankruptcy Code, and
(B) that Dealer is entitled to the protections afforded by, among other
sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g),
546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

  (q) Right to Extend. Dealer may postpone any potential Expiration Date or
postpone or extend any other date of valuation or delivery with respect to some
or all of the relevant Warrants (in which event the Calculation Agent shall make
appropriate adjustments to the Net Share Amount for such Expiration Date), if
Dealer determines, in its reasonable discretion, that such postponement or
extension is reasonably necessary or appropriate to (i) preserve Dealer’s or its
affiliate’s hedging or hedge unwind activity hereunder in light of existing
liquidity conditions in the cash market, the stock loan market or any other
relevant market or (ii) enable Dealer or its affiliate to effect purchases or
sales of Shares in connection with its hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Dealer or such affiliate were
Issuer or an affiliated purchaser of Issuer, be in compliance with applicable
legal, regulatory or self-regulatory requirements, or with related policies and
procedures applicable to Dealer and/or such affiliate.

 

21

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  (r) Effectiveness. If, prior to the Effective Date, Dealer reasonably
determines that it is advisable to cancel the Transaction because of concerns
that Dealer’s related hedging activities could be viewed as not complying with
applicable securities laws, rules or regulations, the Transaction shall be
cancelled and shall not become effective, and neither party shall have any
obligation to the other party in respect of the Transaction.

 

  (s) Adjustments. For the avoidance of doubt, whenever the Calculation Agent is
called upon to make an adjustment pursuant to the terms of this Confirmation or
the Equity Definitions to take into account the effect of an event, the
Calculation Agent shall make such adjustment by reference to the effect of such
event on the Hedging Party, assuming that the Hedging Party maintains a
commercially reasonable hedge position.

 

  (t) Governing Law. The law of the State of New York (without reference to its
choice of law doctrine other than Title 14 of the New York General Obligations
Law).

 

  (u) Waiver of Jury Trial. EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY SUIT, ACTION OR PROCEEDING RELATING TO THE TRANSACTION. EACH PARTY
(I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF SUCH A SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER
INTO THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS PROVIDED HEREIN.

 

  (v) Additional ISDA Schedule Terms.

(i) “Specified Entity” means in relation to each of Dealer and Counterparty for
purposes of Sections 5(a)(v), 5(a)(vi), 5(a)(vii) and 5(b)(v) of the Agreement,
not applicable.

(ii) “Specified Transaction” will have the meaning specified in Section 14 of
the Agreement.

(iii) The “Cross-Default” provisions of Section 5(a)(vi) of the Agreement will
not apply to either party.

(iv) Automatic Early Termination. The “Automatic Early Termination” provision of
Section 6(a) of the Agreement will not apply to Dealer and will not apply to
Counterparty.

(v) “Termination Currency” means United States Dollars (“USD”).

(vi) Consent to Recording. Each party (i) consents to the monitoring or
recording, at any time and from time to time, by the other party of any and all
communications between officers or employees of the parties, (ii) waives any
further notice of such monitoring or recording, and (iii) agrees to notify (and,
if required by law, obtain the consent of) its officers and employees with
respect to such monitoring or recording. Any such recording may be submitted in
evidence to any court or in any Proceeding for the purpose of establishing any
matters pertinent to this Transaction.

(vii) Severability. In the event any one or more of the provisions contained in
this Confirmation or the Agreement shall be held illegal, invalid or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.

 

22

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(viii) Deduction or Withholding for Tax. So long as Counterparty is organized
under the laws of the United States or any State thereof, the provisions of
Section 2(d)(i)(4) of the Agreement shall not apply to the Transaction.

(ix) [Intentionally Omitted.]

(x) Part 3(a) of the ISDA Schedule – Tax Forms:

Party Required to Deliver Document

 

    

Form/Document/Certificate

  

Date by which to be Delivered

Counterparty    A complete and duly executed United States Internal Revenue
Service Form W-9 (or successor thereto.)    (i) Upon execution and delivery of
this Agreement; (ii) promptly upon reasonable demand by Dealer; and (iii)
promptly upon learning that any such Form previously provided by Counterparty
has become obsolete or incorrect. Dealer    A complete and duly executed United
States Internal Revenue Service Form W-9 (or successor thereto).    (i) Upon
execution and delivery of this Agreement; (ii) promptly upon reasonable demand
by Counterparty; and (iii) promptly upon learning that any such Form previously
provided by Dealer has become obsolete or incorrect.

6. Account Details:

 

  (a) Account for payments to Counterparty:

Bank: JPMorgan Chase Bank, N.A.

Location: Lafayette, LA

ABA: 021000021

Acct: Stone Energy Corporation

Acct No.: 8700378593

SWIFT Code: CHASUS33

 

  (b) Account for payments to Dealer:

Bank of America, N.A.

New York, NY

SWIFT: BOFAUS3N

Bank Routing: 026-009-593

Account Name: Bank of America

Account No. : 0012334-61892

Account for delivery of Shares to Dealer:

To be provided by Dealer.

 

23

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7. Process Agent:

For purposes of Section 13(c) of the Agreement:

Counterparty appoints as its Process Agent: not applicable.

Dealer appoints as its Process Agent: not applicable.

8. Offices:

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

The Office of Dealer for the Transaction is: New York.

9. Notices:

For purposes of this Confirmation:

 

  (a) Address for notices or communications to Counterparty:

Stone Energy Corporation

625 East Kaliste Saloom Road

Lafayette, LA 70508

Attention: Kenneth H. Beer

Telephone No.: 337-237-0410

Facsimile No.: 337-521-2072; beerkh@stoneenergy.com

 

  (b) Address for notices or communications to Dealer:

Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036

Attention: John Servidio

Telephone: 646-855-7127

Facsimile: 704-208-2869

This Confirmation may be executed in several counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.

THE SECURITIES REPRESENTED BY THE CONFIRMATION HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER UNITED STATES FEDERAL OR STATE SECURITIES LAWS; SUCH
SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
APPROPRIATE REGISTRATION UNDER SUCH SECURITIES LAWS OR EXCEPT IN A TRANSACTION
EXEMPT FROM OR NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES
LAWS.

 

24

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Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing
this Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to John Servidio, Facsimile No. 704-208-2869.

 

Yours faithfully, BANK OF AMERICA, N.A. By:  

/s/ Christopher A. Hutmaker

  Name: Christopher A. Hutmaker   Title: Managing Director

 

Agreed and Accepted By: STONE ENERGY CORPORATION By:  

/s/ Kenneth H. Beer

  Name: Kenneth H. Beer   Title: Executive Vice President & Chief Financial
Officer

 

25

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SCHEDULE A

For purposes of this Transaction, the following terms shall have the following
values/meanings:

 

1.

  

Strike Price:

   USD 55.9125.   

2.

  

Premium:

   USD 18,411,250.   

3.

  

Final Disruption Date:

     August 24, 2017.   

 

Schedule A–1

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SCHEDULE B

For each Component of the Transaction, the Number of Warrants and Expiration
Date is set forth below.

 

Component Number

   Number of Warrants      Expiration Date

1.

     64,473       June 1, 2017

2.

     64,473       June 2, 2017

3.

     64,473       June 5, 2017

4.

     64,473       June 6, 2017

5.

     64,473       June 7, 2017

6.

     64,473       June 8, 2017

7.

     64,473       June 9, 2017

8.

     64,473       June 12, 2017

9.

     64,473       June 13, 2017

10.

     64,473       June 14, 2017

11.

     64,473       June 15, 2017

12.

     64,473       June 16, 2017

13.

     64,473       June 19, 2017

14.

     64,473       June 20, 2017

15.

     64,473       June 21, 2017

16.

     64,473       June 22, 2017

17.

     64,473       June 23, 2017

18.

     64,473       June 26, 2017

19.

     64,473       June 27, 2017

20.

     64,473       June 28, 2017

21.

     64,473       June 29, 2017

22.

     64,473       June 30, 2017

23.

     64,473       July 3, 2017

24.

     64,473       July 5, 2017

25.

     64,473       July 6, 2017

26.

     64,473       July 7, 2017

27.

     64,473       July 10, 2017

28.

     64,473       July 11, 2017

29.

     64,473       July 12, 2017

30.

     64,473       July 13, 2017

31.

     64,473       July 14, 2017

32.

     64,473       July 17, 2017

33.

     64,473       July 18, 2017

34.

     64,473       July 19, 2017

35.

     64,473       July 20, 2017

36.

     64,473       July 21, 2017

37.

     64,473       July 24, 2017

38.

     64,473       July 25, 2017

39.

     64,473       July 26, 2017

40.

     64,473       July 27, 2017

41.

     64,473       July 28, 2017

42.

     64,473       July 31, 2017

43.

     64,473       August 1, 2017

44.

     64,473       August 2, 2017

45.

     64,473       August 3, 2017

46.

     64,473       August 4, 2017

47.

     64,473       August 7, 2017

48.

     64,473       August 8, 2017

49.

     64,473       August 9, 2017

50.

     64,496       August 10, 2017

 

Schedule B–1