Exhibit 10.1

 

EXECUTION VERSION

 

From:  Citigroup Global Markets Inc.

390 Greenwich Street

New York, NY 10013

 

January 10, 2017

 

To:  Nabors Industries, Inc.
515 W. Greens Road
Suite 1200, Houston, TX 776067
Attention:  General Counsel
Telephone No.:  (281) 874-0035
Email:  general.counsel@nabors.com

 

Re: Additional Call Option Transaction

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the
terms and conditions of the call option transaction entered into among Citigroup
Global Markets Inc. (“Dealer”), Nabors Industries, Inc. (“Counterparty”) and
Nabors Industries Ltd. (“Parent”) as of the Trade Date specified below (the
“Transaction”).  This letter agreement constitutes a “Confirmation” as referred
to in the ISDA Master Agreement specified below.  Each party further agrees that
this Confirmation together with the Agreement evidence a complete binding
agreement between Counterparty, Parent and Dealer as to the subject matter and
terms of the Transaction to which this Confirmation relates, and shall supersede
all prior or contemporaneous written or oral communications with respect
thereto.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the International Swaps
and Derivatives Association, Inc. (“ISDA”) are incorporated into this
Confirmation.  In the event of any inconsistency between the Equity Definitions
and this Confirmation, this Confirmation shall govern.  Certain defined terms
used herein are based on terms that are defined in the Offering Memorandum dated
January 9, 2017 (the “Offering Memorandum”) relating to the 0.75% Exchangeable
Senior Notes due January 15, 2024 (as originally issued by Counterparty, the
“Exchangeable Notes” and each USD 1,000 principal amount of Exchangeable Notes,
an “Exchangeable Note”) issued by Counterparty in an aggregate initial principal
amount of USD 500,000,000 (as increased by an aggregate principal amount of USD
75,000,000 pursuant to the exercise by the Initial Purchasers (as defined
herein)) of their option to purchase additional Exchangeable Notes pursuant to
the Purchase Agreement (as defined herein)) pursuant to an Indenture to be dated
January 13, 2017 among Counterparty, Parent and Wilmington Trust, National
Association, as trustee (the “Indenture”).  In the event of any inconsistency
between the terms defined in the Offering Memorandum, the Indenture and this
Confirmation, this Confirmation shall govern.  The parties acknowledge that this
Confirmation is entered into on the date hereof with the understanding that
(i) definitions set forth in the Indenture which are also defined herein by
reference to the Indenture and (ii) sections of the Indenture that are referred
to herein will conform to the descriptions thereof in the Offering Memorandum. 
If any such definitions in the Indenture or any such sections of the Indenture
differ from the descriptions thereof in the Offering Memorandum, the
descriptions thereof in the Offering Memorandum will govern for purposes of this
Confirmation.  The parties further acknowledge that the Indenture section
numbers used herein are based on the draft of the Indenture last reviewed by
Dealer as of the date of this Confirmation, and if any such section numbers are
changed in the Indenture as executed, the parties will amend this Confirmation
in good faith to preserve the intent of the parties.  Subject to the foregoing,
references to the Indenture herein are references to the Indenture on the date
of its execution and if the Indenture is amended or supplemented following such
date (other than any amendment or supplement (x) pursuant to Section 9.01(m) of
the Indenture that, as determined by the Calculation Agent, conforms the
Indenture to the description of Exchangeable Notes in the Offering Memorandum or
(y) pursuant to Section 10.05 of the Indenture, subject, in the case of this
clause (y), to the second paragraph under “Method of Adjustment” in Section 3),
any such amendment or supplement will be disregarded for purposes of this
Confirmation (other than as provided in Section 9(i)(iii) below) unless the
parties agree otherwise in writing.

 

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.

 

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1.                                      This Confirmation evidences a complete
and binding agreement among Dealer, Counterparty and Parent as to the terms of
the Transaction to which this Confirmation relates.  This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the
2002 ISDA Master Agreement (the “Agreement”) as if Dealer, Counterparty and
Parent had executed an agreement in such form (but without any Schedule except
for the election that the “Cross Default” provisions of Section 5(a)(vi) of the
Agreement shall apply to Dealer, with a “Threshold Amount” equal to 3% of the
shareholders’ equity of Citigroup Inc.) 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.

 

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

 

General Terms.

 

Trade Date:

 

January 10, 2017

 

 

 

Effective Date:

 

The closing date of the issuance of the Exchangeable Notes issued pursuant to
the option to purchase additional Exchangeable Notes exercised on the date
hereof.

 

 

 

Option Style:

 

Modified American, as described under “Procedures for Exercise” below

 

 

 

Option Type:

 

Call

 

 

 

Buyer:

 

Counterparty

 

 

 

Seller:

 

Dealer

 

 

 

Shares:

 

The common shares of Parent, par value USD 0.001 per share (Exchange symbol
“NBR”).

 

 

 

Number of Options:

 

The number of Option Notes (as defined in the Purchase Agreement) in
denominations of USD 1,000 principal amount purchased pursuant to the exercise
by Citigroup Global Markets Inc. and Goldman, Sachs & Co. as representatives of
the Initial Purchasers (as defined in the Purchase Agreement), of their option
to purchase additional Exchangeable Notes pursuant to Section 2 of the Purchase
Agreement (as defined below). For the avoidance of doubt, the Number of Options
outstanding shall be reduced by each exercise of Options hereunder.

 

 

 

Option Entitlement:

 

As of any date, a number of Shares per Option equal to the Applicable Percentage
of the “Exchange Rate” (as defined in the Indenture, but without regard to any
adjustments to the Exchange Rate pursuant to Excluded Provisions).

 

 

 

Strike Price:

 

USD 25.1580

 

 

 

Cap Price:

 

USD 31.4475

 

 

 

Premium:

 

USD 2,625,000

 

 

 

Premium Payment Date:

 

Effective Date

 

 

 

Applicable Percentage:

 

50%

 

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Exchange:

 

The New York Stock Exchange

 

 

 

Related Exchange(s):

 

All Exchanges

 

 

 

Excluded Provisions:

 

Section 10.03 and Section 10.04(n) of the Indenture.

 

 

 

Procedures for Exercise.

 

 

 

 

 

Exchange Date:

 

With respect to any exchange of an Exchangeable Note (other than any exchange of
Exchangeable Notes with an Exchange Date occurring prior to the Free
Exchangeability Date (any such exchange, an “Early Exchange”), to which the
provisions of Section 9(i)(i) of this Confirmation shall apply), the date on
which the Holder (as such term is defined in the Indenture) of such Exchangeable
Note satisfies all of the requirements for exchange thereof as set forth in
Section 10.02(a) of the Indenture.

 

 

 

Free Exchangeability Date:

 

December 15, 2023

 

 

 

Expiration Time:

 

The Valuation Time

 

 

 

Expiration Date:

 

The “Maturity Date” (as defined in the Indenture).

 

 

 

Multiple Exercise:

 

Applicable, as described under “Automatic Exercise” below.

 

 

 

Automatic Exercise:

 

Notwithstanding Section 3.4 of the Equity Definitions, on each Exchange Date
occurring on or after the Free Exchangeability Date, in respect of which an
Exchange Notice that is effective as to Counterparty has been delivered by the
relevant exchanging Holder, a number of Options equal to (i) the number of
Exchangeable Notes in denominations of USD 1,000 as to which such Exchange Date
has occurred minus (ii) the number of Options that are or are deemed to be
automatically exercised on such Exchange Date under the Base Call Option
Transaction Confirmation letter agreement dated January 9, 2017 between Dealer
and Counterparty (the “Base Call Option Confirmation”), shall be deemed to be
automatically exercised; provided that such Options shall be exercised or deemed
exercised only if Counterparty has provided a Notice of Exercise to Dealer in
accordance with “Notice of Exercise” below.

 

 

 

 

 

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

 

 

 

Notice of Exercise:

 

Notwithstanding anything to the contrary in the Equity Definitions or under
“Automatic Exercise” above, in order to exercise any Options relating to
Exchangeable Notes with an Exchange Date occurring on or after the Free
Exchangeability Date, Counterparty must notify Dealer in writing before 5:00
p.m. (New York City time) on the Scheduled Valid Day immediately preceding the
Expiration Date specifying the number of such Options;

 

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provided that if the Relevant Settlement Method for such Options is (x) Net
Share Settlement and the Specified Cash Amount (as defined below) is not USD
1,000, (y) Cash Settlement or (z) Combination Settlement, Dealer shall have
received a separate notice (the “Notice of Final Settlement Method”) in respect
of all such Exchangeable Notes before 5:00 p.m. (New York City time) on the Free
Exchangeability Date specifying (1) the Relevant Settlement Method for such
Options, and (2) if the settlement method for the related Exchangeable Notes is
not Settlement in Shares or Settlement in Cash (each as defined below), the
fixed amount of cash per Exchangeable Note that Counterparty has elected to
deliver to Holders (as such term is defined in the Indenture) of the related
Exchangeable Notes (the “Specified Cash Amount”). Counterparty acknowledges its
responsibilities under applicable securities laws, and in particular Section 9
and Section 10(b) of the Exchange Act (as defined below) and the rules and
regulations thereunder, in respect of any election of a settlement method with
respect to the Exchangeable Notes.

 

 

 

Valuation Time:

 

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

 

 

 

Market Disruption Event:

 

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

 

 

 

 

 

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

 

 

 

Settlement Terms.

 

 

 

 

 

Settlement Method:

 

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

 

 

 

Relevant Settlement Method:

 

In respect of any Option:

 

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(i)    if Counterparty has elected to settle its exchange obligations in respect
of the related Exchangeable Note (A) entirely in Shares pursuant to
Section 10.02(b)(i) of the Indenture (together with cash in lieu of fractional
Shares) (such settlement method, “Settlement in Shares”), (B) in a combination
of cash and Shares pursuant to Section 10.02(b)(iii) of the Indenture with a
Specified Cash Amount less than USD 1,000 (such settlement method, “Low Cash
Combination Settlement”) or (C) in a combination of cash and Shares pursuant to
Section 10.02(b)(iii) of the Indenture with a Specified Cash Amount equal to
USD 1,000, then, in each case, the Relevant Settlement Method for such Option
shall be Net Share Settlement;

 

 

 

 

 

(ii)    if Counterparty has elected to settle its exchange obligations in
respect of the related Exchangeable Note in a combination of cash and Shares
pursuant to Section 10.02(b)(iii) of the Indenture with a Specified Cash Amount
greater than USD 1,000, then the Relevant Settlement Method for such Option
shall be Combination Settlement; and

 

 

 

 

 

(iii)    if Counterparty has elected to settle its exchange obligations in
respect of the related Exchangeable Note entirely in cash pursuant to
Section 10.02(b)(ii) of the Indenture (such settlement method, “Settlement in
Cash”), then the Relevant Settlement Method for such Option shall be Cash
Settlement.

 

 

 

Net Share Settlement:

 

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

 

 

 

 

 

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

 

 

 

Combination Settlement:

 

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

 

 

 

 

 

(i)                       cash (the “Combination Settlement Cash Amount”) equal
to the sum, for each Valid Day

 

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

 

 

 

 

 

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

 

 

 

 

 

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

 

 

 

 

 

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

 

 

 

Cash Settlement:

 

If Cash Settlement is applicable to any Option exercised or deemed exercised
hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to
Counterparty, on the relevant Settlement Date for each such Option, an amount of
cash (the “Cash Settlement Amount”) equal to the sum, for each Valid Day during
the Settlement Averaging Period for such Option, of (i) the Daily Option Value
for such Valid Day, divided by (ii) the number of Valid Days in the Settlement
Averaging Period.

 

 

 

Daily Option Value:

 

For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid
Day, multiplied by (ii) (A) the lesser of the Relevant Price on such Valid Day
and the Cap Price, less (B) the Strike Price on such Valid Day; provided that if
the calculation contained in clause (ii) above results in a negative number, the
Daily Option

 

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Value for such Valid Day shall be deemed to be zero. In no event will the Daily
Option Value be less than zero.

 

 

 

Applicable Limit:

 

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

 

 

 

Applicable Limit Price:

 

On any day, the opening price as displayed under the heading “Op” on Bloomberg
page “NBR US <equity>” (or any successor thereto).

 

 

 

Valid Day:

 

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

 

 

 

Scheduled Valid Day:

 

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

 

 

 

Business Day:

 

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

 

 

 

Relevant Price:

 

On any Valid Day, the per Share volume-weighted average price as displayed under
the heading “Bloomberg VWAP” on Bloomberg page “NBR US <equity> AQR” (or its
equivalent successor if such page is not available) in respect of the period
from the scheduled opening time of the Exchange to the Scheduled Closing Time of
the Exchange on such Valid Day (or if such volume-weighted average price is
unavailable at such time, then (x) if the Indenture provides an alternate method
for determining the volume-weighted average price of Shares, the per Share
volume-weighted average price as determined pursuant to such alternate method
and (y) otherwise, the market value of one Share on such Valid Day, as
determined by the Calculation Agent using, if practicable, a volume-weighted
average price method). The Relevant Price will be determined without regard to
after-hours trading or any other trading outside of the regular trading session
trading hours.

 

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Settlement Averaging Period:

 

For any Option and regardless of the Settlement Method applicable to such
Option, the 20 consecutive Valid Days commencing on, and including, the
22nd Scheduled Valid Day immediately prior to the “Maturity Date” (as defined in
the Indenture); provided that if the Notice of Final Settlement Method for such
Option specifies that Settlement in Shares or Low Cash Combination Settlement
applies to the related Exchangeable Note, the Settlement Averaging Period shall
be the 40 consecutive Valid Days commencing on, and including, the
42nd Scheduled Valid Day immediately prior to the “Maturity Date” (as defined in
the Indenture). For the avoidance of doubt, the provisions of Section 9(i)(i) of
this Confirmation shall apply to any Early Exchange, and no Settlement Averaging
Period will apply to such Early Exchange.

 

 

 

Settlement Date:

 

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

 

 

 

Settlement Currency:

 

USD

 

 

 

Other Applicable Provisions:

 

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

 

 

 

Representation and Agreement:

 

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

 

 

 

3.                                      Additional Terms applicable to the
Transaction.

 

 

 

Adjustments applicable to the Transaction:

 

 

 

 

Potential Adjustment Events:

 

Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential
Adjustment Event” means an occurrence of any event or condition, as set forth in
any Dilution Adjustment Provision, that would result in an adjustment under the
Indenture to the “Exchange Rate” or the composition of a “unit of Reference
Property” or to any “Last Reported Sale Price,” “VWAP,” “Daily Exchange Value”
or “Daily Settlement Amount” (each as defined in the Indenture). For the
avoidance of doubt, Dealer shall not have any delivery or payment obligation

 

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hereunder, and no adjustment shall be made to the terms of the Transaction, on
account of (x) any distribution of cash, property or securities by Counterparty
to holders of the Exchangeable Notes (upon exchange or otherwise) or (y) any
other transaction in which holders of the Exchangeable Notes are entitled to
participate, in each case, in lieu of an adjustment under the Indenture of the
type referred to in the immediately preceding sentence (including, without
limitation, pursuant to the third paragraph of Section 10.04(c) of the Indenture
or the third paragraph of Section 10.04(d) of the Indenture).

 

 

 

Method of Adjustment:

 

Calculation Agent Adjustment, which means that, notwithstanding
Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event,
the Calculation Agent shall make:

 

 

 

 

 

(A) an adjustment corresponding to the adjustment to be made pursuant to the
Indenture (or, if no Exchangeable Notes are outstanding, that would have been
made if Exchangeable Notes were outstanding) to any one or more of the Strike
Price, Number of Options and/or Option Entitlement; and

 

 

 

 

 

(B) an appropriate adjustment to the Cap Price to the extent any adjustment is
made to the Strike Price pursuant to clause (A) above (for the avoidance of
doubt, such adjustment to each of the Strike Price and the Cap Price to be made
in good faith while consistently taking into account factors and other items
relevant to such adjustment); provided that in no event shall the Strike Price
be adjusted to be greater than the Cap Price.

 

 

 

 

 

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

 

 

 

 

 

(i)                                     if the Calculation Agent in good faith
disagrees with any adjustment to the Exchangeable Notes that involves an
exercise of discretion by Counterparty or its board of directors (including,
without limitation, pursuant to Section 10.04(q) of the Indenture, Section 10.05
of the Indenture or any supplemental indenture entered into thereunder or in
connection with any appropriate adjustment or the determination of the fair
value of any securities, property, rights or other assets), then in each such
case, the Calculation Agent will determine the adjustment to be made to any one
or more of the Strike Price, Number of Options, Option Entitlement and any other
variable relevant to the exercise, settlement or payment for the Transaction in
a commercially reasonable manner; provided that, notwithstanding the foregoing,
if any Potential Adjustment Event occurs during the Settlement Averaging Period
but no adjustment was made to any Exchangeable Note under the Indenture

 

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because the relevant Holder (as such term is defined in the Indenture) was
deemed to be a record owner of the underlying Shares on the related Exchange
Date, then the Calculation Agent shall make the adjustments that would have been
made under the Indenture in order to account for such Potential Adjustment
Event;

 

(ii)                                  in connection with any Potential
Adjustment Event as a result of an event or condition set forth in
Section 10.04(b) of the Indenture or Section 10.04(c) of the Indenture where, in
either case, the period for determining “Y” (as such term is used in
Section 10.04(b) of the Indenture) or “SP0” (as such term is used in
Section 10.04(c) of the Indenture), as the case may be, begins before
Counterparty has publicly announced the event or condition giving rise to such
Potential Adjustment Event, then the Calculation Agent shall have the right to
adjust any variable relevant to the exercise, settlement or payment for the
Transaction as appropriate to reflect the costs (including, but not limited to,
hedging mismatches and market losses) and expenses incurred by Dealer in
connection with its hedging activities as a result of such event or condition
not having been publicly announced prior to the beginning of such period;
provided that in no event shall the Cap Price after giving effect to any such
adjustment be less than the Strike Price; and

 

(iii)                               if any Potential Adjustment Event is
declared and (a) the event or condition giving rise to such Potential Adjustment
Event is subsequently amended, modified, cancelled or abandoned, (b) the
“Exchange Rate” (as defined in the Indenture) is otherwise not adjusted at the
time or in the manner contemplated by the relevant Dilution Adjustment Provision
based on such declaration or (c) the “Exchange Rate” (as defined in the
Indenture) is adjusted as a result of such Potential Adjustment Event and
subsequently re-adjusted (each of clauses (a), (b) and (c), a “Potential
Adjustment Event Change”) then, in each case, the Calculation Agent shall have
the right to adjust any variable relevant to the exercise, settlement or payment
for the Transaction as appropriate to reflect the costs (including, but not
limited to, hedging mismatches and market losses) and expenses incurred by
Dealer in connection with its hedging activities as a result of such Potential
Adjustment Event Change; provided that in no event shall the Cap Price after
giving effect to any such adjustment be less than the Strike Price.

 

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Dilution Adjustment Provisions:

 

Sections 10.04(a), (b), (c), (d) and (e) and Section 10.04(q) of the Indenture.

 

 

 

Extraordinary Events applicable to the Transaction:

 

 

 

Merger Events:

 

Applicable; provided that notwithstanding Section 12.1(b) of the Equity
Definitions, a “Merger Event” means the occurrence of any event or condition set
forth in Section 10.05 of the Indenture.

 

 

 

Tender Offers:

 

Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in Section 10.04(e) of the Indenture.

 

 

 

Consequences of Merger Events/ Tender Offers:

 

Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon
the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall
make

 

 

 

 

 

(A) a corresponding adjustment to any one or more of the nature of the Shares,
Strike Price, Number of Options and Option Entitlement, in each case, to the
extent an analogous adjustment would be made pursuant to the Indenture in
connection with such Merger Event or Tender Offer, or to the definitions of
“Exchange”, “Relevant Price”, and “Settlement Averaging Period” of this
Confirmation and any other variable relevant to the exercise, settlement or
payment for the Transaction, subject to the second paragraph under “Method of
Adjustment”; and

 

 

 

 

 

(B) an appropriate adjustment to the Cap Price to the extent any adjustment is
made to the Strike Price pursuant to clause (A) above (for the avoidance of
doubt, such adjustment to each of the Strike Price and the Cap Price to be made
in good faith while consistently taking into account factors and other items
relevant to such adjustment); provided that in no event shall the Strike Price
be adjusted to be greater than the Cap Price;

 

 

 

 

 

provided, however, that such adjustment shall be made without regard to any
adjustment to the Exchange Rate pursuant to any Excluded Provision; provided
further that the Calculation Agent acting in good faith and in a commercially
reasonable manner may limit or alter any such adjustment referenced in this
paragraph so that the fair value of the Transaction to Dealer (taking into
account a commercially reasonable hedge position) is not adversely affected as a
result of such adjustment.

 

 

 

 

 

Notwithstanding the foregoing, if, with respect to a Merger Event or a Tender
Offer, (a) (i) the consideration for the Shares includes (or, at the option of a
holder of Shares, may include) shares of an entity or person that is not a
corporation or is not organized under the laws of the

 

11

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United States, any State thereof, the District of Columbia, Bermuda or the
Cayman Islands or (ii) the Parent to the Transaction following such Merger Event
or Tender Offer will not be a corporation, and (b) Dealer determines, based on
advice of counsel, that such Merger Event or Tender Offer would result in a
material adverse effect to Dealer, in connection with this Transaction,
Cancellation and Payment (Calculation Agent Determination) may apply at Dealer’s
sole election; provided further that, for the avoidance of doubt, adjustments
shall be made pursuant to the provisions set forth above regardless of whether
any Merger Event or Tender Offer gives rise to an Early Exchange.

 

 

 

Consequences of Announcement Events:

 

Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the
Equity Definitions; provided that, in respect of an Announcement Event,
(v) references to “Tender Offer” shall be replaced by references to
“Announcement Event” and references to “Tender Offer Date” shall be replaced by
references to “date of such Announcement Event”, (w) the word “shall” in the
second line shall be replaced with “may”, (x) the phrase “exercise, settlement,
payment or any other terms of the Transaction (including, without limitation,
the spread)” shall be replaced by the phrase “Cap Price (provided that in no
event shall the Cap Price be less than the Strike Price)”, (y) the fifth and
sixth lines shall be deleted in their entirety and replaced with the words
“effect on the embedded warrants in favor of Dealer in such Transaction (as
represented by the Cap Price) of such Announcement Event solely to account for
changes in volatility, expected dividends, stock loan rate or liquidity relevant
to the Shares or such embedded warrants”, and (z) for the avoidance of doubt,
the Calculation Agent may adjust the terms of the Transaction for a single
Announcement Event on one or more occasions on or after the date of such
Announcement Event up to, and including, the Expiration Date, any Early
Termination Date and/or any other date of cancellation, it being understood that
any adjustment in respect of an Announcement Event shall take into account any
earlier adjustment relating to the same Announcement Event. An Announcement
Event shall be an “Extraordinary Event” for purposes of the Equity Definitions,
to which Article 12 of the Equity Definitions is applicable.

 

 

 

Announcement Event:

 

(i) The public announcement by any entity of (x) any transaction or event that,
if completed, would constitute a Merger Event or Tender Offer, (y) any potential
acquisition by Issuer and/or its subsidiaries where the aggregate consideration
exceeds 25% of the market capitalization of Issuer as of the date of such
announcement (an “Acquisition Transaction”) or (z) the intention to enter into a
Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public
announcement by Issuer of an intention to solicit or enter into, or to

 

12

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explore strategic alternatives or other similar undertaking that may include, a
Merger Event or Tender Offer or an Acquisition Transaction or (iii) any
subsequent public announcement by any entity of a change to a transaction or
intention that is the subject of an announcement of the type described in clause
(i) or (ii) of this sentence (including, without limitation, a new announcement,
whether or not by the same party, relating to such a transaction or intention or
the announcement of a withdrawal from, or the abandonment or discontinuation of,
such a transaction or intention), as determined by the Calculation Agent. For
the avoidance of doubt, the occurrence of an Announcement Event with respect to
any transaction or intention shall not preclude the occurrence of a later
Announcement Event with respect to such transaction or intention. For purposes
of this definition of “Announcement Event,” (A) “Merger Event” shall mean such
term as defined under Section 12.1(b) of the Equity Definitions (but, for the
avoidance of doubt, the remainder of the definition of “Merger Event” in
Section 12.1(b) of the Equity Definitions following the definition of “Reverse
Merger” therein shall be disregarded) and (B) “Tender Offer” shall mean such
term as defined under Section 12.1(d) of the Equity Definitions.

 

 

 

Nationalization, Insolvency or Delisting:

 

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

 

 

 

Additional Disruption Events:

 

 

 

 

 

Change in Law:

 

Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the word “Shares” with the phrase “Hedge
Positions” in clause (X) thereof; (ii) inserting the parenthetical “(including,
for the avoidance of doubt and without limitation, adoption or promulgation of
new regulations authorized or mandated by existing statute)” at the end of
clause (A) thereof; (iii) replacing the phrase “the interpretation” in the third
line thereof with the phrase “or announcement of the formal or informal
interpretation”; and (iv) immediately following the word “Transaction” in clause
(X) thereof, adding the phrase “in the manner contemplated by the Hedging Party
on the Trade Date”.

 

13

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Failure to Deliver:

 

Applicable

 

 

 

Hedging Disruption:

 

Applicable; provided that:

 

 

 

 

 

(i)                                     Section 12.9(a)(v) of the Equity
Definitions is hereby amended by (a) inserting the following words at the end of
clause (A) thereof: “in the manner contemplated by the Hedging Party on the
Trade Date” and (b) inserting the following at the end of such Section:

 

 

 

 

 

“provided that any such inability that occurs solely due to the deterioration of
the creditworthiness of the Hedging Party shall not be deemed a Hedging
Disruption. For the avoidance of doubt, the term “equity price risk” shall be
deemed to include, but shall not be limited to, stock price and volatility risk.
And, for the further avoidance of doubt, any such transactions or assets
referred to in phrases (A) or (B) above must be available on commercially
reasonable pricing terms.”; and

 

 

 

 

 

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

 

 

 

Increased Cost of Hedging:

 

Applicable

 

 

 

Hedging Party:

 

For all applicable Additional Disruption Events, Dealer; provided that all
calculations and determinations by the Hedging Party shall be made in good faith
and in a commercially reasonable manner.

 

 

 

Determining Party:

 

For all applicable Extraordinary Events, Dealer; provided that all calculations
and determinations by the Determining Party shall be made in good faith and in a
commercially reasonable manner.

 

 

 

Non-Reliance:

 

Applicable

 

 

 

Agreements and Acknowledgments Regarding Hedging Activities:

 

Applicable

 

 

 

Additional Acknowledgments:

 

Applicable

 

 

 

4.                                      Calculation Agent.

 

Dealer; provided that, following the occurrence and during the continuance of an
Event of Default with respect to which Dealer is the sole Defaulting Party, and
if Dealer fails to perform its duties as the Calculation Agent hereunder,
Counterparty shall have the right to designate a nationally recognized
independent equity derivatives dealer to replace Dealer as the Calculation
Agent, and the parties shall work in good faith to execute any appropriate
documentation required by such replacement Calculation Agent. All calculations,
adjustments, specifications, choices and determinations

 

14

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by the Calculation Agent shall be made in good faith and in a commercially
reasonable manner.

 

 

 

 

 

In the case of any calculation, adjustment or determination by the Determining
Party or the Calculation Agent, as the case may be, following any written
request from Counterparty, the Determining Party or the Calculation Agent, as
the case may be, shall promptly provide to Counterparty a written explanation
describing in reasonable detail the basis for such calculation, adjustment or
determination (including any quotation, market data or information from internal
or external sources used in making such calculation, adjustment or
determination), but without disclosing any proprietary or confidential models
used by it for such calculation, adjustment or determination or any information
that is subject to an obligation not to disclose such information.

 

5.                                      Account Details.

 

(a)                                 Account for payments to Counterparty:

 

Bank:

Citibank NYDDAs

Branch:

Citibank New York

SWIFT:

CITIUS33

ABA:

021000089

Account Name:

Nabors Industries, Inc.

Account Number:

30883326

Address:

111 WALL STREET

 

NEW YORK, NEW YORK 10043

 

USA

 

 

Account for delivery of Shares to Counterparty:

 

Bank:

Morgan Stanley

DTC:

0015 — Morgan Stanley

Account Name:

Nabors Industries, Inc.

Account Number:

798-133229

 

 

(b)                                 Account for payments to Dealer:

 

 

Bank:

Citibank, New York

ABA#:

02100089

BIC:

CITIUS33

A/C:

30631049

Ref:

NY Swap Operations

 

 

Account for delivery of Shares from Dealer:

 

DTC:

0418

A/C:

002-87411-1-4

 

6.                                      Offices.

 

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

 

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

 

15

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Citigroup Global Markets Inc.

390 Greenwich Street

New York, NY 10013

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to
Counterparty and Parent:

 

Nabors Industries, Inc.
515 W. Greens Road
Suite 1200, Houston, TX 776067
Attention:                                         General Counsel
Telephone No.:             (281) 874-0035
Email:                                                           
general.counsel@nabors.com

 

Nabors Industries Ltd.
Crown House, 4 Pon-La Villa Road, Second Floor,
Hamilton, HM08, Bermuda
Attention:                                         Corporate Secretary
Telephone No.:             (441) 292-1510
Email:                                                           
mark.andrews@nabors.com

 

(b)                                 Address for notices or communications to
Dealer:

 

Citigroup Global Markets Inc.

390 Greenwich Street

New York, NY 10013

Attention:                                         Adam Muchnick

Telephone No.:             212 723 3850

Email:                                                           
adam.muchnick@citi.com

 

With a copy to:

 

Attention:                                         Dustin Sheppard
Telephone No:                212 723 5770
Email:                                                           
dustin.c.sheppard@citi.com

 

8.                                      Representations and Warranties of
Counterparty and Parent.

 

Each of Counterparty and Parent hereby represents and warrants to Dealer on the
date hereof and on and as of the Premium Payment Date that:

 

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

 

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(b)                                 Neither the execution and delivery of this
Confirmation nor the incurrence or performance of obligations of either of
Counterparty or Parent hereunder will (i) conflict with or result in a breach of
the certificate of incorporation or by-laws (or any equivalent documents) of
Counterparty or Parent, or (ii) contravene any applicable law or regulation, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries is bound
or to which Parent or any of its subsidiaries is subject, or constitute a
default under, or result in the creation of any lien under, any such agreement
or instrument except, in the case of this clause (ii), for any such conflict,
breach, default or lien that would not, individually or in the aggregate, have a
material adverse effect on Counterparty or Parent and their subsidiaries, taken
as a whole.

 

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

 

(d)                                 Neither Counterparty nor Parent is and,
after consummation of the transactions contemplated hereby, neither Counterparty
nor Parent will be required to register as an “investment company” as such term
is defined in the Investment Company Act of 1940, as amended.

 

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

 

(f)                                   None of Counterparty, Parent nor their
respective affiliates is, on the date hereof, in possession of any material
non-public information with respect to Counterparty, Parent or the Shares.

 

(g)                                  Each of Counterparty’s and Parent’s filings
under the Exchange Act or other applicable securities laws that are required to
be filed have been filed and, as of the respective dates thereof and as of the
Trade Date, when taken together and considered as a whole, there is no
misstatement of material fact contained therein or 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.

 

(h)                                 Assuming compliance with the representation
and warranties by the Initial Purchasers and each subsequent purchaser, no state
or local law, rule, regulation or regulatory order applicable to the Shares
would give rise to any reporting, consent, registration or other requirement
(including without limitation a requirement to obtain prior approval from any
person or entity) as a result of Dealer or its affiliates owning or holding
(however defined) Shares.

 

(i)                                     Each of Counterparty and Parent
understands that no obligations of Dealer to Counterparty or Parent, as
applicable,  hereunder will be entitled to the benefit of deposit insurance and
that such obligations will not be guaranteed by any Affiliate of Dealer or any
governmental agency.

 

(j)                                    EACH OF COUNTERPARTY AND PARENT
UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT MAY ARISE
WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY
AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND
CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS.

 

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

 

17

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(l)                                     Neither Counterparty nor Parent is as of
the Trade Date, and neither Counterparty nor Parent shall 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”)).  Each of Counterparty and Parent would be able to
purchase a number of Shares equal to the Number of Shares in compliance with the
laws of the jurisdiction of Counterparty’s incorporation or organization.

 

(m)                             Each of Counterparty and Parent has (and shall
at all times during the Transaction have) the capacity and authority to invest
directly in the Shares underlying the Transaction and has not entered into the
Transaction with the intent to avoid any regulatory filings.

 

(n)                                 Each of Counterparty’s and Parent’s
financial condition is such that it has no need for liquidity with respect to
its investment in the Transaction and no need to dispose of any portion thereof
to satisfy any existing or contemplated undertaking or indebtedness.

 

(o)                                 Each of Counterparty’s and Parent’s
investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and each of Counterparty and Parent is able to bear any loss in
connection with the Transaction, including the loss of its entire investment in
the Transaction.

 

(p)                                 Each of Counterparty and Parent 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.

 

(q)                                 Without limiting the generality of
Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1
or Rule 13e-4 under the Exchange Act.

 

9.                                      Other Provisions.

 

(a)                                 Opinions.  Counterparty and Parent shall
deliver to Dealer one or more opinions of counsel, dated as of the Effective
Date, with respect to the matters set forth in Sections 3(a)(i), (ii) and, only
with respect to documents and agreements filed as Exhibits to Counterparty’s
Form 10-K, (iii) of the Agreement; provided that any such opinion(s) of counsel
may contain customary exceptions and qualifications, including, without
limitation, exceptions and qualifications relating to indemnification
provisions.  Delivery of such opinion(s) to Dealer shall be a condition
precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to
each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(b)                                 Repurchase Notices.  Parent shall, on any
day on which Counterparty and/or Parent 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 number of outstanding Shares as
determined on such day is (i) less than 252.6 million (in the case of the first
such notice) or (ii) thereafter more than 227.5 million less than the number of
Shares included in the immediately preceding Repurchase Notice.  Counterparty
and Parent jointly and severally agree to indemnify and hold harmless Dealer and
its affiliates and their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an “Indemnified Person”) from
and against any and all losses (including losses relating to Dealer’s hedging
activities as a consequence of becoming, or of the risk of becoming, a
Section 16 “insider”, including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in connection
therewith with respect to the Transaction), claims, damages, judgments,
liabilities and reasonable expenses (including reasonable attorney’s fees),
joint or several, which an Indemnified Person may become subject to, as a result
of Parent’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

 

18

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the Indemnified Person as a result of Parent’s failure to provide Dealer with a
Repurchase Notice in accordance with this paragraph, such Indemnified Person
shall promptly notify Parent in writing, and Counterparty and/or Parent, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others
Counterparty and/or Parent may designate in such proceeding and shall pay the
reasonable fees and expenses of such counsel related to such proceeding. 
Neither Counterparty nor Parent shall 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 and Parent jointly and severally agree to indemnify
any Indemnified Person from and against any loss or liability by reason of such
settlement or judgment.  Neither Counterparty nor Parent shall, without the
prior written consent of the Indemnified Person (such consent not to be
unreasonably withheld, delayed or conditioned), 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 and Parent hereunder, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities.  The remedies provided for in this paragraph (b) are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity.  The indemnity and
contribution agreements contained in this paragraph shall remain operative and
in full force and effect regardless of the termination of the Transaction.

 

(c)                                  Regulation M.  Each of Parent and its
subsidiaries is not on the Trade Date engaged in a distribution, as such term is
used in Regulation M under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of any securities of Counterparty, other than a distribution
meeting the requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M.  Parent shall not, and shall cause its subsidiaries
not to, until the second Scheduled Trading Day immediately following the
Effective Date, engage in any such distribution.

 

(d)                                 No Manipulation.  Neither Counterparty nor
Parent is entering into the Transaction to create actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate the price of the Shares
(or any security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.

 

(e)                                  Transfer or Assignment.

 

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

 

(A)                               With respect to any Transfer Options, neither
Counterparty nor Parent shall be released from its notice and indemnification
obligations pursuant to Section 9(b) or any obligations under Section 9(n) or
9(s) of this Confirmation;

 

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

 

(C)                               Such transfer or assignment shall be effected
on terms, including any reasonable undertakings by such third party (including,
but not limited to, an undertaking

 

19

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with respect to compliance with applicable securities laws in a manner that, in
the reasonable judgment of Dealer, will not expose Dealer to material risks
under applicable securities laws) and execution of any reasonable and necessary
documentation and delivery of reasonable and customary legal opinions with
respect to securities laws and other matters by such third party and
Counterparty or Parent, as are reasonably requested and reasonably satisfactory
to Dealer;

 

(D)                               Dealer will not, as a result of such transfer
and assignment and after giving effect thereto, be required to pay the
transferee on any payment date an amount under Section 2(d)(i)(4) of the
Agreement greater than an amount that Dealer would have been required to pay to
Counterparty or Parent in the absence of such transfer and assignment;

 

(E)                                An Event of Default, Potential Event of
Default or Termination Event with respect to Counterparty will not occur as a
result of such transfer and assignment;

 

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

 

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

 

(ii)                                  Dealer may (A) without Counterparty’s or
Parent’s consent, transfer or assign all or any part of its rights or
obligations under the Transaction to any affiliate of Dealer (1) that has a
long-term issuer rating that is equal to or better than Dealer’s credit rating
at the time of such transfer or assignment, or (2) whose obligations hereunder
will be guaranteed, pursuant to the terms of a customary guarantee in a form
used by Dealer generally for similar transactions, by Dealer, or (B) in
consultation with Counterparty and/or Parent, and with Counterparty’s and/or
Parent’s prior written consent (which consent not to be delayed or unreasonably
withheld), transfer or assign all or any part of its rights or obligations under
the Transaction to any other third party with a long-term issuer rating equal to
or better than the lesser of (1) the credit rating of Dealer at the time of the
transfer and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor
(“S&P”), or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P
or Moody’s ceases to rate such debt, at least an equivalent rating or better by
a substitute rating agency mutually agreed by Counterparty, Parent and Dealer;
provided that:

 

(X)                               any transfer or assignment described in clause
(A) above shall be made to a transferee or assignee that is a “dealer in
securities” within the meaning of Section 475(c)(1) of the Code;

 

(Y)                               Counterparty will not be required (or, as
determined by Dealer in good faith, reasonably expected, as of the date of such
transfer or assignment, to pay the transferee or assignee on any payment date an
amount under Section 2(d)(i)(4) of the Agreement greater than the amount, if
any, that Counterparty would have been required to pay Dealer in the absence of
such transfer or assignment and

 

(Z)                                Dealer shall cause the transferee or assignee
to make such Payee Tax Representations and to provide such tax documentation as
may be reasonably requested by Counterparty to permit Counterparty to determine
that the results described in clause (Y) of this proviso will not occur upon or
after such transfer and assignment.

 

20

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If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the
Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the
Applicable Share Limit (if any applies) (any such condition described in clauses
(A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using
its commercially reasonable efforts to effect a transfer or assignment of
Options to a third party on pricing terms reasonably acceptable to Dealer and
within a time period reasonably acceptable to Dealer such that no Excess
Ownership Position exists, then Dealer may designate any Exchange Business Day
as an Early Termination Date with respect to a portion of the Transaction (the
“Terminated Portion”), such that following such partial termination no Excess
Ownership Position exists.  In the event that Dealer so designates an Early
Termination Date with respect to a portion of the Transaction, a payment shall
be made pursuant to Section 6 of the Agreement as if (1) an Early Termination
Date had been designated in respect of a Transaction having terms identical to
the Transaction and a Number of Options equal to the number of Options
underlying the Terminated Portion, (2) Counterparty were the sole Affected Party
with respect to such partial termination (except if such an Excess Ownership
Position was caused or increased by Dealer’s willful misconduct or gross
negligence, in which case Dealer shall be deemed to be the sole Affected Party
with respect to such partial termination) and (3) the Terminated Portion were
the sole Affected Transaction (and, for the avoidance of doubt, the provisions
of Section 9(l) shall apply to any amount that is payable by Dealer to
Counterparty pursuant to this sentence as if Counterparty was not the Affected
Party).  Dealer shall notify Counterparty of an Excess Ownership Position with
respect to which it intends to seek a transfer or assignment as soon as
reasonably practicable after becoming aware of such an Excess Ownership
Position.  The “Section 16 Percentage” as of any day is the fraction, expressed
as a percentage, (A) the numerator of which is the number of Shares that Dealer
and any of its affiliates or any other person subject to aggregation with Dealer
for purposes of the “beneficial ownership” test under Section 13 of the Exchange
Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of
which Dealer is or may be deemed to be a part beneficially owns (within the
meaning of Section 13 of the Exchange Act) (collectively, the “Dealer Group”),
without duplication, on such day (or, to the extent that for any reason the
equivalent calculation under Section 16 of the Exchange Act and the rules and
regulations thereunder results in a higher number, such higher number) and
(B) the denominator of which is the number of Shares outstanding on such day. 
The “Option Equity Percentage” as of any day is the fraction, expressed as a
percentage, (A) the numerator of which is the sum of (1) the product of the
Number of Options and the Option Entitlement and (2) the aggregate number of
Shares underlying any other call option transaction sold by Dealer to
Counterparty, and (B) the denominator of which is the number of Shares
outstanding.  The “Share Amount” as of any day is the number of Shares that
Dealer, Dealer Group and any person whose ownership position would be aggregated
with that of Dealer (Dealer or any such person, a “Dealer Person”) under any
law, rule, regulation, regulatory order or organizational documents or contracts
of Counterparty that are, in each case, applicable to ownership of Shares
(“Applicable Restrictions”), owns, beneficially owns, constructively owns,
controls, holds the power to vote or otherwise meets a relevant definition of
ownership under any Applicable Restriction, as determined by Dealer in its
reasonable discretion.  The “Applicable Share Limit” means a number of Shares
equal to (A) the minimum number of Shares that could give rise to reporting or
registration obligations or other requirements (including obtaining prior
approval from any person or entity) of a Dealer Person, or could result in an
adverse effect on a Dealer Person, under any Applicable Restriction, as
determined by Dealer in its reasonable discretion, minus (B) 1% of the number of
Shares outstanding.  Dealer represents and warrants to Parent and Counterparty
that, as of the Effective Date, the Section 16 Percentage is not greater than
7%, the Option Equity Percentage is not greater than 7%, and the Share Amount is
not greater than 23,351,841.

 

(iii)                               Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities, or

 

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make or receive any payment in cash, to or from Counterparty and/or Parent,
Dealer shall have the right to assign any or all of its rights and obligations
under the Transaction to deliver or accept delivery of cash, Shares or Share
Termination Delivery Units to any of its Affiliates; provided that Counterparty
or Parent, as applicable, shall have recourse to Dealer in the event of failure
by the assignee to perform any of such obligations hereunder. Notwithstanding
the foregoing, the recourse to Dealer shall be limited to recoupment of
Counterparty’s or Parent’s monetary damages and each of Counterparty and Parent
hereby waives any right to seek specific performance by Dealer of its
obligations hereunder.  Such failure after any applicable grace period shall be
deemed to be an Additional Termination Event and, with respect to such
Additional Termination Event, (A) Dealer shall be deemed to be the sole Affected
Party, (B) the Transaction shall be the sole Affected Transaction and
(C) Counterparty or Parent, as applicable, shall be the party entitled to
designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

 

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

 

(i)                                     in such notice, Dealer will specify to
Counterparty the related Staggered Settlement Dates (the first of which will be
such Nominal Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal Settlement Date)
and the number of Shares that it will deliver on each Staggered Settlement Date;

 

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

 

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

 

(g)                                  Jurisdiction. THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN
CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE
LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE
COURTS.

 

(h)                                 Dividends.  If at any time during the period
from and including the Effective Date, to but excluding the Expiration Date, an
ex-dividend date for a regular quarterly cash dividend occurs with respect to
the Shares (an “Ex-Dividend Date”), and that dividend differs from the Regular
Dividend on a per Share basis, then the Calculation Agent will adjust the Cap
Price to preserve the fair value of the Options to Dealer after taking into
account such dividend or lack thereof.  “Regular Dividend” shall mean USD 0.06
per Share per quarterly dividend period of Counterparty.  Upon any adjustment to
the “Initial Dividend Threshold” (as defined in the Indenture) for the
Exchangeable Notes pursuant to the Indenture, the Calculation Agent will make a
corresponding adjustment to the Regular Dividend for the Transaction.

 

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(i)                                     Additional Termination Events.

 

(i)                                     Notwithstanding anything to the contrary
in this Confirmation, upon any Early Exchange in respect of which an Exchange
Notice that is effective as to Counterparty has been delivered by the relevant
exchanging Holder:

 

(A)                               Counterparty shall, within five Scheduled
Trading Days of the Exchange Date for such Early Exchange, provide written
notice (an “Early Exchange Notice”) to Dealer specifying the number of
Exchangeable Notes surrendered for exchange on such Exchange Date (such
Exchangeable Notes, the “Affected Exchangeable Notes”), and the giving of such
Early Exchange Notice shall constitute an Additional Termination Event as
provided in this clause (i);

 

(B)                               upon receipt of any such Early Exchange
Notice, Dealer shall designate an Exchange Business Day as an Early Termination
Date (which Exchange Business Day shall be no earlier than one Scheduled Trading
Day following the Exchange Date for such Early Exchange) with respect to the
portion of the Transaction corresponding to a number of Options (the “Affected
Number of Options”) equal to the lesser of (x) the number of Affected
Exchangeable Notes minus the “Affected Number of Options” (as defined in the
Base Call Option Confirmation), if any, that relate to such Affected
Exchangeable Notes and (y) the Number of Options as of the Exchange Date for
such Early Exchange;

 

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

 

(D)                               for the avoidance of doubt, in determining the
amount payable in respect of such Affected Transaction pursuant to Section 6 of
the Agreement, the Calculation Agent shall assume that (x) the relevant Early
Exchange and any exchanges, adjustments, agreements, payments, deliveries or
acquisitions by or on behalf of Counterparty leading thereto had not occurred,
(y) no adjustments to the Exchange Rate have occurred pursuant to any Excluded
Provision and (z) the corresponding Exchangeable Notes remain outstanding; and

 

(E)                                the Transaction shall remain in full force
and effect, except that, as of the Exchange Date for such Early Exchange, the
Number of Options shall be reduced by the Affected Number of Options.

 

(ii)                                 Notwithstanding anything to the contrary in
this Confirmation if an event of default occurs under the terms of the
Exchangeable Notes as set forth in Section 6.01 of the Indenture and such event
of default results in the Exchangeable Notes becoming or being declared due and
payable pursuant to the Indenture, then such event of default shall constitute
an Additional Termination Event applicable to the Transaction and, with respect
to such Additional Termination Event, (A) Counterparty shall be deemed to be the
sole Affected Party, (B) the Transaction shall be the sole Affected Transaction
and (C) 

 

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Dealer shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement.

 

(iii)                             Notwithstanding anything to the contrary in
this Confirmation, the occurrence of an Amendment Event shall constitute an
Additional Termination Event applicable to the Transaction and, with respect to
such Additional Termination Event, (A) Counterparty shall be deemed to be the
sole Affected Party, (B) the Transaction shall be the sole Affected Transaction
and (C) Dealer shall be the party entitled to designate an Early Termination
Date pursuant to Section 6(b) of the Agreement. “Amendment Event” means that
Counterparty and/or Parent amends, modifies, supplements, waives or obtains a
waiver in respect of any term of the Indenture or the Exchangeable Notes
governing the principal amount, coupon, maturity, repurchase obligation of
Counterparty and/or Parent, any term relating to exchange of the Exchangeable
Notes (including changes to the exchange rate, exchange rate adjustment
provisions, exchange settlement dates or exchange conditions), or any term that
would require consent of the holders of not less than 100% of the principal
amount of the Exchangeable Notes to amend (other than, in each case, any
amendment or supplement (x) pursuant to Section 9.01(m) of the Indenture that,
as determined by the Calculation Agent, conforms the Indenture to the
description of Exchangeable Notes in the Offering Memorandum or (y) pursuant to
Section 10.05 of the Indenture), in each case, without the consent of Dealer.

 

(iv)                              Promptly (but in any event within five
Scheduled Trading Days) following any Repurchase Event (as defined below),
Counterparty may notify Dealer of such Repurchase Event and the aggregate
principal amount of Exchangeable Notes subject to such Repurchase Event (any
such notice, an “Exchangeable Notes Repurchase Notice”); provided that any such
Exchangeable Notes Repurchase Notice shall contain an acknowledgment by
Counterparty and Parent of their respective responsibilities under applicable
securities laws, and in particular Section 9 and Section 10(b) of the Exchange
Act and the rules and regulations thereunder, in respect of such Repurchase
Event and the delivery of such Exchangeable Notes Repurchase Notice.

 

The receipt by Dealer from Counterparty of any Exchangeable Notes Repurchase
Notice shall constitute an Additional Termination Event as provided in this
Section 9(i)(iv).

 

Upon receipt of any such Exchangeable Notes Repurchase Notice, Dealer shall
designate an Exchange Business Day following receipt of such Exchangeable Notes
Repurchase Notice (which Exchange Business Day shall be on or as promptly as
reasonably practicable after the related settlement date for the relevant
Repurchase Event) as an Early Termination Date with respect to the portion of
the Transaction corresponding to a number of Options (the “Repurchase Options”)
equal to the lesser of

 

(A)                               the aggregate principal amount of such
Exchangeable Notes specified in such Exchangeable Notes Repurchase Notice,
divided by USD 1,000; and

 

(B)                               the Number of Options as of the date Dealer
designates such Early Termination Date;

 

and, as of such date, the Number of Options shall be reduced by the number of
Repurchase Options.  Any payment hereunder with respect to such termination (the
“Repurchase Unwind Payment”) shall be calculated pursuant to Section 6 of the
Agreement as if

 

(1)                                 an Early Termination Date had been
designated in respect of a Transaction having terms identical to the Transaction
and a Number of Options equal to the number of Repurchase Options;

 

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(2)                                 Counterparty were the sole Affected Party
with respect to such Additional Termination Event; and

 

(3)                                 the terminated portion of the Transaction
were the sole Affected Transaction (and, for the avoidance of doubt, the
provisions of Section 9(l) shall apply to any amount that is payable by Dealer
to Counterparty pursuant to this Section 9(i)(iv) as if Counterparty was not the
Affected Party).

 

“Repurchase Event” means that (i) any Exchangeable Notes are repurchased
(whether pursuant to Section 3.01 of the Indenture or otherwise) by Parent or
Counterparty or any of their respective subsidiaries, (ii) any Exchangeable
Notes are delivered to Parent or Counterparty in exchange for delivery of any
property or assets of Parent or Counterparty or any of their respective
subsidiaries (howsoever described), (iii) any principal of any of the
Exchangeable Notes is repaid prior to the final maturity date of the
Exchangeable Notes (other than upon acceleration of the Exchangeable Notes
described in Section 9(i)(ii)), or (iv) any Exchangeable Notes are exchanged by
or for the benefit of the Holders (as defined in the Indenture) thereof for any
other securities of Parent or Counterparty or any of their respective Affiliates
(or any other property, or any combination thereof) pursuant to any exchange
offer or similar transaction; provided that neither (i) any exchange of
Exchangeable Notes pursuant to the terms of the Indenture, nor (ii) any exchange
of Exchangeable Notes pursuant to Section 12.01 of the Indenture, shall in
either case constitute a Repurchase Event.

 

(j)                                    Amendments to Equity Definitions.

 

(i)                                     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 words “a material” and adding the
phrase “or the Options” at the end of the sentence.

 

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

 

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

 

(iv)                              Section 12.9(b)(vi) of the Equity Definitions
is hereby amended by (1) adding the word “or” immediately before subsection
“(B)”, (2) deleting the comma at the end of subsection (A), (3) deleting
subsection (C) in its entirety, (4) deleting the word “or” immediately preceding
subsection (C) and (5) replacing the words “either party” in the last sentence
of such Section with “Dealer”.

 

(k)                                 No Collateral or Setoff.  Neither party
shall have the right to set off any obligation that it may have to the other
party under the Transaction against any obligation such other party may have to
it, whether arising under the Agreement, this Confirmation or any other
agreement between the parties hereto, by operation of law or otherwise.

 

(l)                                     Alternative Calculations and Payment on
Early Termination and on Certain  Extraordinary Events.  If (a) an Early
Termination Date (whether as a result of an Event of Default or a Termination
Event) occurs or is designated with respect to the Transaction or (b) the
Transaction is cancelled or terminated upon the occurrence of an Extraordinary
Event (except as a result of (i) a Nationalization, Insolvency or Merger Event
in which the consideration to be paid to holders of Shares consists solely of
cash, (ii) a Merger Event or Tender Offer that is within Counterparty’s control,
or (iii) an Event of Default in which Counterparty is the Defaulting Party or a
Termination

 

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

 

Share Termination Alternative:

 

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

 

 

 

Share Termination Delivery Property:

 

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

 

 

 

Share Termination Unit Price:

 

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

 

 

 

Share Termination Delivery Unit:

 

One Share or, if the Shares have changed into cash or any other property or the
right to receive cash or any other property as the result of a
Nationalization, Insolvency or Merger Event (any such cash or other property,
the “Exchange Property”), a unit consisting of the type and amount of such
Exchange Property received by a holder of one Share (without consideration of
any requirement to pay cash or other

 

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consideration in lieu of fractional amounts of any securities) in such
Nationalization, Insolvency or Merger Event, as determined by the Calculation
Agent.

 

 

 

Failure to Deliver:

 

Applicable

 

 

 

Other applicable provisions:

 

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

 

(m)                             Waiver of Jury Trial.  Each party waives, to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to the Transaction. 
Each party (i) certifies that no representative, agent or attorney of either
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.

 

(n)                                 Registration.  Parent hereby agrees that if,
in the good faith reasonable judgment of Dealer, the Shares or other Hedge
Positions  (the “Hedge Shares”) acquired by Dealer for the purpose of hedging
its obligations pursuant to the Transaction cannot be sold in the public market
by Dealer without registration under the Securities Act, Parent shall, at its
election in its sole and absolute discretion, either (i) in order to allow
Dealer to sell the Hedge Shares in a registered offering, make available to
Dealer an effective registration statement under the Securities Act and enter
into an agreement, in form and substance satisfactory to Dealer, substantially
in the form of an underwriting agreement for a registered secondary offering;
provided, however, that if Dealer, in its sole 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 paragraph
shall apply at the election of Parent, (ii) in order to allow Dealer to sell the
Hedge 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, in form and substance satisfactory to
Dealer (in which case, the Calculation Agent shall make any adjustments to the
terms of the Transaction that are necessary, in its reasonable judgment, to
compensate Dealer for any discount from the public market price of the Shares or
other Hedge Positions incurred on the sale of Hedge Shares in a private
placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price
on such Exchange Business Days, and in the amounts, requested by Dealer.

 

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

 

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(p)                                 Right to Extend.  Dealer may postpone or
add, in whole or in part, any Valid Day or Valid Days during the Settlement
Averaging Period or any other date of valuation, payment or delivery by Dealer,
with respect to some or all of the Options hereunder, if Dealer reasonably
determines, in its discretion, that such action is reasonably necessary or
appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in
light of existing liquidity conditions (but only if there is a material decrease
in liquidity relative to Dealer’s expectations on the Trade Date) or to enable
Dealer to effect purchases of Shares or other Hedge Positions in connection with
its hedging, hedge unwind or settlement activity hereunder in a manner that
would, if Dealer were Parent or an affiliated purchaser of Parent, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Dealer (so long as such
policies and procedures would generally be applicable to counterparties similar
to Counterparty and transactions similar to the Transaction); provided that no
such Valid Day or other  date of valuation, payment or delivery may be postponed
or added more than 20 Valid Days after the original Valid Day or other date of
valuation, payment or delivery, as the case may be; provided further that in the
event of an addition or postponement due to self- regulatory requirement or with
related policies and procedures applicable to Dealer, such addition or
postponement must be made for a whole day.

 

(q)                                 Status of Claims in Bankruptcy.  Dealer
acknowledges and agrees that this Confirmation is not intended to convey to
Dealer rights against either of Counterparty or Parent with respect to the
Transaction that are senior to the claims of common stockholders of Counterparty
or Parent, as applicable, in any United States bankruptcy proceedings of
Counterparty or Parent, as applicable; 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 either of Counterparty or Parent, as applicable, 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.

 

(r)                                    Securities Contract; Swap Agreement.  The
parties hereto intend for (i) the Transaction to be a “securities contract” and
a “swap agreement” as defined in the Bankruptcy Code, and the parties hereto to
be entitled to the protections afforded by, among other Sections, Sections
362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code,
(ii) a party’s right to liquidate the Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a “contractual right” as described in
the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or
other property hereunder to constitute a “margin payment” or “settlement
payment” and a “transfer” as defined in the Bankruptcy Code.

 

(s)                                   Notice of Certain Other Events. Each of
Counterparty and Parent covenants and agrees that:

 

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

 

(ii)                                  promptly following any adjustment to the
Exchangeable Notes in connection with any Potential Adjustment Event, Merger
Event or Tender Offer, Counterparty and/or Parent shall give Dealer written
notice of the details of such adjustment.

 

(t)                                    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 and/or Parent, Dealer may designate any of its affiliates
to purchase, sell,

 

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receive or deliver such shares or other securities and otherwise to perform
Dealer obligations in respect of the Transaction and any such designee may
assume such obligations. Dealer shall be discharged of its obligations to
Counterparty and Parent to the extent of any such performance.

 

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

 

(v)                                 Early Unwind. In the event the sale of the
“Option Notes” (as defined in the Purchase Agreement dated as of January 9, 2017
between Counterparty, Parent and Citigroup Global Markets Inc. and Goldman,
Sachs & Co. as representatives of the Initial Purchasers party thereto (the
“Initial Purchasers”) (the “Purchase Agreement”)) is not consummated with the
Initial Purchasers for any reason, or either Counterparty or Parent fails to
deliver to Dealer opinion(s) of counsel as required pursuant to Section 9(a), in
each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such
later date as agreed upon by the parties (the Premium Payment Date or such later
date the “Early Unwind Date”), the Transaction shall automatically terminate
(the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all
of the respective rights and obligations of Dealer, Counterparty and Parent
under the Transaction shall be cancelled and terminated and (ii) each party
shall be released and discharged by the other parties from and agrees not to
make any claim against any other party with respect to any obligations or
liabilities of any other party arising out of and to be performed in connection
with the Transaction either prior to or after the Early Unwind Date; provided
that Counterparty shall purchase from Dealer on the Early Unwind Date all Shares
and other Hedge Positions purchased by Dealer or one or more of its affiliates
in connection with the Transaction at the then prevailing market price.  Each of
Dealer, Counterparty and Parent represents and acknowledges to the other parties
that, subject to the proviso included in this Section 9(v), upon an Early
Unwind, all obligations with respect to the Transaction shall be deemed fully
and finally discharged.

 

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

 

(x)                                 Governing Law. THE AGREEMENT, THIS
CONFIRMATION AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS
CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW
DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(y)                                 FATCA Carve-out.  The parties agree that the
definitions and provisions contained in the ISDA 2012 FATCA Protocol as
published by the International Swaps and Derivatives Association, Inc. on
August 15, 2012, are incorporated into and apply to the Agreement as if set
forth in full herein.

 

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(z)                                  871(m) Provision.  The parties agree that
the definitions and provisions contained in the ISDA 2015
Section 871(m) Protocol, as published by the International Swaps and Derivatives
Association, Inc and as may be amended, supplemented, replaced or superseded
from time to time (the “871(m) Protocol”) shall apply to this Agreement as if
the parties had adhered to the 871(m) Protocol as of the effective date of this
Agreement.  If there is any inconsistency between this provision and a provision
in any other agreement executed between the parties, this provision shall
prevail unless such other agreement expressly overrides the provisions of the
871(m) Protocol.

 

(aa)                          Tax Representations and Forms.

 

For purposes of Section 3(f) of the Agreement:

 

Counterparty is a corporation established under the laws of the State of
Delaware.

 

Counterparty is a “U.S. Person” within the meaning of Section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended, and its tax identification number is
93-0711613.

 

Counterparty is “exempt” within the meaning Sections 1.6041-3(p) and
1.6049-4(c) of the United States Treasury Regulations (the “Regulations”) from
information reporting on Form 1099 and backup withholding.

 

Parent is a corporation established under the laws of Bermuda and is classified
as a corporation for U.S. federal income tax purposes.

 

No income received or to be received under this Agreement will be effectively
connected with the conduct of a trade or business by Parent in the United
States.

 

Parent is a “non-U.S. branch of a foreign person” as that term is used in
Section 1.1441-4(a)(3)(ii) of the Regulations, and it is a “foreign person” as
that term is used in Section 1.6041-4(a)(4) of the Regulations.

 

For the purpose of Section 4(a) of the Agreement:

 

Tax forms, documents or certificates to be delivered are:

 

Party required to
deliver document

 

Form/Document/ Certificate

 

Date by which to be delivered

Counterparty

 

As required under Section 4(a)(i) of the Agreement, IRS Form W-9 or successor
form or document prescribed by the IRS from time to time.

 

Promptly upon execution of the Confirmation; promptly upon learning that any
form previously provided by Counterparty has become obsolete or incorrect; and
promptly upon reasonable request by the Dealer.

 

 

 

 

 

Parent

 

As required under Section 4(a)(i) of the Agreement, IRS Form W-8BEN-E or any
successor form or document prescribed by the IRS from time to time.

 

Promptly upon execution of the Confirmation; promptly upon learning that any
form previously provided by Parent has become obsolete or incorrect; and
promptly upon reasonable request by the Dealer.

 

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Each of Counterparty and Parent 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, Counterparty and Parent 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 Dealer.

 

 

Very truly yours,

 

 

 

 

 

CITIGROUP GLOBAL MARKETS INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Stephen Roti

 

 

Name:

Stephen Roti

 

 

Title:

Managing Director

 

Accepted and confirmed
as of the Trade Date:

 

NABORS INDUSTRIES, INC.

 

 

 

 

 

 

 

By:

/s/ William Restrepo

 

Name:

William Restrepo

 

Title:

Chief Financial Officer

 

 

 

 

NABORS INDUSTRIES LTD.

 

 

 

 

 

 

 

By:

/s/ Mark D. Andrews

 

Name:

Mark D. Andrews

 

Title:

Corporate Secretary

 

 

[Signature Page to Additional Capped Call Confirmation]

 

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