Exhibit 10.1

 

[tv520977_ex10-1img1.jpg] 

 

May 7, 2019

 

VARIABLE TENOR ASR

Stoneridge, Inc.

39675 MacKenzie Drive

Suite 400

Novi, Michigan 48377

 

Re: Accelerated Share Repurchase

 

Ladies and Gentlemen:

 

This master confirmation (this “Master Confirmation”), dated as of May 7, 2019
is intended to set forth certain terms and provisions of certain Transactions
(each, a “Transaction”) that may be entered into from time to time between
Citibank, N.A. (“Citibank”), and Stoneridge, Inc. (“Counterparty”). This Master
Confirmation, taken alone, is neither a commitment by either party to enter into
any Transaction nor evidence of a Transaction. The additional terms of any
particular Transaction shall be set forth in a Supplemental Confirmation
substantially in the form of Annex A hereto (a “Supplemental Confirmation”),
which shall reference this Master Confirmation and supplement, form a part of,
and be subject to this Master Confirmation. This Master Confirmation and each
Supplemental Confirmation together shall constitute a “Confirmation” as referred
to in the Agreement specified below.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the International Swaps
and Derivatives Association, Inc., are incorporated into this Master
Confirmation. This Master Confirmation and each Supplemental Confirmation
evidence a complete binding agreement between Counterparty and Citibank as to
the subject matter and terms of each Transaction to which this Master
Confirmation and such Supplemental Confirmation relate and shall supersede all
prior or contemporaneous written or oral communications with respect thereto.

 

This Master Confirmation and each Supplemental Confirmation supplement, form a
part of, and are subject to an agreement in the form of the ISDA 2002 Master
Agreement (the “Agreement”), as if Citibank and Counterparty had executed the
Agreement on the date of this Master Confirmation (but without any Schedule
except for (i) the election of New York law (without reference to its choice of
laws doctrine other than Title 14 of Article 5 of the New York General
Obligations Law) as the governing law and US Dollars (“USD”) as the Termination
Currency, (ii) the replacement of the number “30” in the fifth line of Section
5(a)(ii)(1) with the number “5”, (iii) the replacement of the number “15” in the
16th line of Section 5(a)(vii) with the number “5” and (iv) the election that
the “Cross Default” provisions of Section 5(a)(vi) shall apply to Counterparty,
with a “Threshold Amount” of USD 50 million (provided that (a) the phrase “or
becoming capable at such time of being declared” shall be deleted from clause
(1) of such Section 5(a)(vi) of the Agreement and (b) the following sentence
shall be added to the end thereof: “Notwithstanding the foregoing, a default
under subsection (2) hereof shall not constitute an Event of Default if (i) the
default was caused solely by error or omission of an administrative or
operational nature; (ii) funds were available to enable the party to make the
payment when due; and (iii) the payment is made within two Local Business Days
of such party’s receipt of written notice of its failure to pay.”)).

 

The Transactions shall be the sole Transactions under the Agreement. If there
exists any ISDA Master Agreement between Citibank and Counterparty or any
confirmation or other agreement between Citibank and Counterparty pursuant to
which an ISDA Master Agreement is deemed to exist between Citibank and
Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which
Citibank and Counterparty are parties, the Transactions shall not be considered
Transactions under, or otherwise governed by, such existing or deemed ISDA
Master Agreement.

 

 1 

[tv520977_ex10-1img1.jpg] 

 

All provisions contained or incorporated by reference in the Agreement shall
govern this Master Confirmation and each Supplemental Confirmation except as
expressly modified herein or in such Supplemental Confirmation.

 

If, in relation to any Transaction to which this Master Confirmation and a
Supplemental Confirmation relate, there is any inconsistency between the
Agreement, this Master Confirmation, such Supplemental Confirmation and the
Equity Definitions, the following will prevail for purposes of such Transaction
in the order of precedence indicated: (i) such Supplemental Confirmation; (ii)
this Master Confirmation; (iii) the Equity Definitions; and (iv) the Agreement.

 

1.            Each Transaction constitutes a Share Forward Transaction for the
purposes of the Equity Definitions. Set forth below are the terms and conditions
that, together with the terms and conditions set forth in the Supplemental
Confirmation relating to any Transaction, shall govern such Transaction.

 

General Terms:

 

Trade Date: For each Transaction, as set forth in the related Supplemental
Confirmation.     Buyer: Counterparty     Seller: Citibank     Shares: The
Counterparty’s common shares, without par value (Ticker: SRI)     Exchange: New
York Stock Exchange     Related Exchange(s): All Exchanges     Prepayment:
Applicable     Prepayment Amount: For each Transaction, as set forth in the
related Supplemental Confirmation.     Prepayment Date: For each Transaction, as
set forth in the related Supplemental Confirmation.

 

Valuation:

 

Reference Price: Subject to the provisions of “Pricing Disruption” below, for
each Transaction, the amount equal to the arithmetic average of the Rule 10b-18
VWAPs for all Exchange Business Days in the Pricing Period; provided that in the
event Calculation Agent determines that a Disrupted Day during the Pricing
Period is a Disrupted Day only in part, Calculation Agent shall determine the
Reference Price based on an appropriately weighted average instead of such
arithmetic average with respect to such Disrupted Day.     Reference Price  
Adjustment Amount: For each Transaction, as set forth in the related
Supplemental Confirmation.

 

 2 

[tv520977_ex10-1img1.jpg] 

 

Rule 10b-18 VWAP: Subject to the provisions of “Pricing Disruption” below, for
any Exchange Business Day, the volume-weighted average price at which the Shares
trade as determined by the Calculation Agent based on the composite transactions
for the principal U.S. securities exchange on which such Shares are then listed
on such Exchange Business Day, excluding (i) trades that do not settle regular
way, (ii) opening trades, as defined on Bloomberg using the function “SRI
<Equity> QR” and identifying trades marked as “OP” or “MO” in the “Condition”
column, as determined by the Calculation Agent, (iii) trades that occur in the
last ten minutes before the scheduled close of trading on the Exchange on such
Exchange Business Day and ten minutes before the scheduled close of the primary
trading in the market where the trade is effected, and (iv) trades on such
Exchange Business Day that do not satisfy the requirements of Rule 10b-18(b)(3)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as
determined in good faith by Calculation Agent.  Counterparty acknowledges that
Calculation Agent may refer to the Bloomberg Page “SRI <Equity> AQR SEC” (or any
successor thereto), in its judgment, for such Exchange Business Day to determine
the Rule 10b-18 VWAP; provided that the first trade in the Shares during the
regular trading session on the Exchange (even if such trade is reported on such
Bloomberg Page) shall be excluded from the Rule 10b-18 VWAP for such Exchange
Business Day.     Pricing Period: For any Transaction, the period commencing on
the Pricing Period Commencement Date and ending on the Pricing Period
Termination Date, subject to extension as provided herein.     Pricing Period  
Commencement Date For any Transaction, the first Scheduled Trading Day following
the Trade Date.       Pricing Period   Termination Date: For any Transaction,
the earlier of (a) the Scheduled Termination Date, or (b) any Exchange Business
Day occurring on or following the First Optional Termination Date that Citibank
designates as the Pricing Period Termination Date by delivering notice to
Counterparty prior to 11:59 p.m. New York City time on the second Exchange
Business Day immediately following such designated Exchange Business Day.    
First Optional   Termination Date: For each Transaction, as set forth in the
related Supplemental Confirmation.       Scheduled   Termination Date: For each
Transaction, as set forth in the related Supplemental Confirmation; provided
that the Scheduled Termination Date may be postponed by Calculation Agent as
provided in “Pricing Disruption” below.     Pricing Disruption: The definition
of “Market Disruption Event” contained in Section 6.3(a) of the Equity
Definitions is hereby amended by:

 

  (i) deleting the words “at any time during the one-hour period that ends at
the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or
Knock-out Valuation Time, as the case may be” and inserting the words “at any
time on any Scheduled Trading Day during the Pricing Period or the Settlement
Period” after the word “material” in the third line thereof; and  

 

 3 

[tv520977_ex10-1img1.jpg] 

 

  (ii) replacing the words “or (iii) an Early Closure” in the fifth line thereof
with the words “, (iii) an Early Closure or (iv) a Regulatory Disruption”.      
Notwithstanding anything to the contrary in the Equity Definitions, if a
Disrupted Day occurs (i) in the Pricing Period, the Calculation Agent may, in
its good faith and commercially reasonable discretion, postpone the Scheduled
Termination Date, or (ii) in the Settlement Period, if any, the Calculation
Agent may extend the Settlement Period.  The Calculation Agent may also
determine that (i) such Disrupted Day is a Disrupted Day in full, in which case
the Rule 10b-18 VWAP for such Disrupted Day shall not be included for purposes
of determining the Reference Price or the Settlement Price, as the case may be,
or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the
Rule 10b-18 VWAP for such Disrupted Day shall be determined by the Calculation
Agent based on Rule 10b-18 eligible transactions in the Shares on such Disrupted
Day effected before the relevant Market Disruption Event occurred and/or after
the relevant Market Disruption Event ended (in each case, as determined by the
Calculation Agent), and the weighting of the Rule 10b-18 VWAP for the relevant
Exchange Business Days during the Pricing Period or the Settlement Period, as
the case may be, shall be adjusted in a commercially reasonable manner by the
Calculation Agent for purposes of determining the Reference Price or the
Settlement Price, as the case may be, with such adjustments based on the
duration of any Market Disruption Event and the volume, historical trading
patterns, price and volatility of the Shares.  Any Exchange Business Day on
which, as of the date hereof, the Exchange is scheduled to close prior to its
normal close of trading shall be deemed not to be an Exchange Business Day; if a
closure of the Exchange prior to its normal close of trading on any Exchange
Business Day is scheduled following the date hereof, then such Exchange Business
Day shall be deemed to be a Disrupted Day in full.         If a Disrupted Day
occurs during the Pricing Period or the Settlement Period for any Transaction,
as the case may be, and each of the nine immediately following Scheduled Trading
Days is a Disrupted Day (a “Disruption Event”), then the Calculation Agent, in
its good faith and commercially reasonable discretion, may (x) deem such ninth
Scheduled Trading Day to be an Exchange Business Day that is not a Disrupted Day
and determine the Rule 10b-18 VWAP for such ninth Scheduled Trading Day using
its good faith and commercially reasonable estimate of the value of the Shares
on such ninth Scheduled Trading Day based on the volume, historical trading
patterns, price and volatility of the Shares, (y) deem such Disruption Event
(and each consecutive Disrupted Day thereafter) to be a Potential Adjustment
Event and/or (z) deem such Disruption Event to be an Additional Termination
Event in respect of such Transaction, with Counterparty as the sole Affected
Party and such Transaction as the sole Affected Transaction.     Early Closure:
The definition of “Early Closure” contained in Section 6.3(d) of the Equity
Definitions is hereby amended by deleting the remainder of the provision
following the term “Scheduled Closing Time” in the fourth line thereof.  

 

 4 

[tv520977_ex10-1img1.jpg] 

 

Regulatory Disruption: In the event that Citibank reasonably concludes in good
faith and upon the advice of counsel that it is appropriate with respect to any
legal, regulatory or self-regulatory requirements or related policies and
procedures (whether or not such requirements, policies or procedures are imposed
by law or have been voluntarily adopted by Citibank), or due to any other Market
Disruption Event, for it to refrain from, decrease or otherwise materially alter
any market activity on any Scheduled Trading Day in order to establish, maintain
or unwind commercially reasonable Hedge Positions during the Pricing Period or,
if applicable, the Settlement Period, Citibank may by written notice to
Counterparty elect to suspend the Pricing Period or Settlement Period for such
day.  Citibank shall promptly notify Counterparty upon exercising its rights
pursuant to this provision and shall subsequently notify Counterparty in writing
on the day Citibank reasonably believes in good faith and upon the advice of
counsel that it may resume its market activity.  Citibank shall not be required
to communicate to Counterparty the reason for Citibank’s exercise of its rights
pursuant to this provision if Citibank reasonably determines in good faith and
upon the advice of counsel that disclosing such reason may result in a violation
of any legal, regulatory, or self-regulatory requirements or related policies
and procedures (whether or not such requirements, policies or procedures are
imposed by law or have been voluntarily adopted by Citibank).

 

Settlement Terms:

 

Settlement Procedures: For each Transaction, if the Number of Shares to be
Delivered is positive, Physical Settlement shall be applicable; provided that
Citibank does not, and shall not make the agreement or the representations set
forth in Section 9.11 of the Equity Definitions related to the restrictions
imposed by applicable securities laws with respect to any Shares delivered by
Citibank to Counterparty under any Transaction.  If the Number of Shares to be
Delivered is negative, then the Counterparty Settlement Provisions in Annex B
shall apply to such Transaction.     Number of Shares to be Delivered: For each
Transaction, a number of Shares equal to (i)(a) the Prepayment Amount divided by
(b) the Valuation Amount minus (ii) the Initial Share Number.     Valuation
Amount: For each Transaction, (i) the Reference Price minus (ii) the Reference
Price Adjustment Amount.     Excess Dividend Amount: For the avoidance of doubt,
all references to Excess Dividend Amount shall be deleted from Section
9.2(a)(ii) of the Equity Definitions.     Settlement Date: For each Transaction,
if the Number of Shares to be Delivered is positive, the date that is one
Settlement Cycle immediately following the earlier of (a) the Scheduled
Termination Date and (b) any date Citibank delivers notice of the Pricing Period
Termination Date.     Settlement Currency: USD

 

 5 

[tv520977_ex10-1img1.jpg] 

 

Initial Shares:

 

Initial Share Delivery: For any Transaction, upon payment by Counterparty of the
Prepayment Amount, Citibank or an affiliate of Citibank shall deliver to
Counterparty a number of Shares equal to the Initial Share Number on the Initial
Settlement Date for such Transaction, in accordance with Section 9.4 of the
Equity Definitions, with such Initial Settlement Date deemed to be a “Settlement
Date” for purposes of such Section 9.4.     Initial Settlement Date: For each
Transaction, as set forth in the related Supplemental Confirmation.     Initial
Share Number: For each Transaction, as set forth in the related Supplemental
Confirmation.

 

Share Adjustments:

 

Method of Adjustment: Calculation Agent Adjustment     Potential Adjustment
Event: Notwithstanding anything to the contrary in Section 11.2(e) of the Equity
Definitions, an Extraordinary Dividend shall not constitute a Potential
Adjustment Event.       An additional Potential Adjustment Event shall occur if
the Scheduled Termination Date for any Transaction is postponed pursuant to
“Pricing Disruption” above, in which case the Calculation Agent may, in its
commercially reasonable discretion, adjust any relevant terms of such
Transaction as necessary to preserve as nearly as practicable the fair value of
such Transaction to Citibank prior to such postponement.     Extraordinary
Dividend: Any dividend or distribution on the Shares (other than any dividend or
distribution of the type described in Section 11.2(e)(i) or Section
11.2(e)(ii)(A) of the Equity Definitions) the amount or value of which (as
determined by the Calculation Agent) when aggregated with the amount or value
(as determined by the Calculation Agent) of any and all previous Dividends with
ex-dividend dates occurring in the same calendar quarter, differs from the
Ordinary Dividend.     Ordinary Dividend: For each Transaction, as set forth in
the related Supplemental Confirmation. For the avoidance of doubt, in no event
shall the terms of any Transactions be adjusted to account for the Ordinary
Dividend on the Shares.     Early Ordinary Dividend Payment: If an ex-dividend
date for any dividend that is not an Extraordinary Dividend occurs during any
calendar quarter occurring (in whole or in part) during the Relevant Period (as
defined below) and is prior to the Scheduled Ex-Dividend Date for such calendar
quarter, the Calculation Agent shall make such adjustment to the exercise,
settlement, payment or any other terms of the relevant Transaction as the
Calculation Agent determines appropriate to account for the economic effect
attributable to the timing of such Dividend on such Transaction of such event.  
  Scheduled Ex-Dividend Dates: For each Transaction for each calendar quarter,
as set forth in the related Supplemental Confirmation.

 

 6 

[tv520977_ex10-1img1.jpg] 

 

Extraordinary Events:

 

Consequences of Merger Events:       (a)      Share-for-Share: Modified
Calculation Agent Adjustment     (b)      Share-for-Other: Modified Calculation
Agent Adjustment     (c)      Share-for-Combined: Modified Calculation Agent
Adjustment     Tender Offer: Applicable; provided that (i) Section 12.1(l) of
the Equity Definitions shall be amended (x) by deleting the parenthetical in the
fifth line thereof, (y) by replacing “that” in the fifth line thereof with
“whether or not such announcement” and (z) by adding immediately after the words
“Tender Offer” in the fifth line thereof “, and any publicly announced change or
amendment to such an announcement (including the announcement of an abandonment
of such intention)” and (ii) Section 12.3(d) of the Equity Definitions shall be
amended by replacing the words “Tender Offer Date” with the words “Announcement
Date.”     Consequences of Tender Offers:       (a)      Share-for-Share:
Modified Calculation Agent Adjustment     (b)      Share-for-Other: Modified
Calculation Agent Adjustment     (c)      Share-for-Combined: Modified
Calculation Agent Adjustment     Nationalization, Insolvency or Delisting:
Cancellation and Payment; provided that in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if
the Exchange is located in the United States and the Shares are not immediately
re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or their respective
successors); if the Shares are immediately re-listed, re-traded or re-quoted on
any such exchange or quotation system, such exchange or quotation system shall
be deemed to be the Exchange.     Additional Disruption Events:      
(a)      Change in Law: Applicable; provided that Section 12.9(a)(ii) of the
Equity Definitions is hereby amended (i) by replacing the phrase “the
interpretation” in the third line thereof with the phrase “, or public
announcement of, the formal or informal interpretation”, (ii) by replacing the
word “Shares” where it appears in clause (X) thereof with the words “Hedge
Position”,  (iii) by immediately following the word “Transaction” in clause (X)
thereof, adding the phrase “in the manner contemplated by the Hedging Party on
the Trade Date” and (iv) by replacing the parenthetical beginning after the word
“regulation” in the second line thereof the words “(including, for the avoidance
of doubt and without limitation, (x) any tax law or (y) adoption or promulgation
of new regulations authorized or mandated by existing statute)”.

 

 7 

[tv520977_ex10-1img1.jpg] 

 

(b)      Failure to Deliver: Applicable     (c)      Insolvency Filing:
Applicable     (d)      Hedging Disruption: Applicable     (e)      Increased
Cost of Hedging: Applicable     (f)      Loss of Stock Borrow: Applicable    
Maximum Stock Loan Rate: 200 basis points per annum     (g)      Increased Cost
of Stock Borrow: Applicable     Initial Stock Loan Rate: 25 basis points per
annum     Hedging Party: For all applicable Extraordinary Events, Citibank.    
Determining Party: For all applicable Extraordinary Events, Citibank.    
Additional Termination Event(s): The declaration by the Issuer of any
Extraordinary Dividend, the ex-dividend date for which occurs or is scheduled to
occur during the Relevant Dividend Period, will constitute an Additional
Termination Event, with Counterparty as the sole Affected Party and all
Transactions hereunder as the Affected Transactions. Upon the occurrence of an
Additional Termination Event triggered by any Extraordinary Dividend, the
Payment Amount shall not take into account the economic effect of the triggering
Extraordinary Dividend.       Notwithstanding anything to the contrary in
Section 6 of the Agreement, if a Termination Price is specified in the
Supplemental Confirmation for a Transaction, then an Additional Termination
Event with Counterparty as the sole Affected Party and such Transaction as the
sole Affected Transaction will automatically occur without any notice or action
by Citibank or Counterparty if the price of the Shares on the Exchange at any
time falls below such Termination Price, and the Exchange Business Day on which
such event occurs will be the “Early Termination Date” for purposes of the
Agreement.     Relevant Dividend Period: The period from and including the first
day of the Pricing Period to and including the Relevant Dividend Period End
Date.     Relevant Dividend Period End Date: If the Number of Shares to be
Delivered is negative, the last day of the Settlement Period; otherwise, the
Pricing Period Termination Date.

 

 8 

[tv520977_ex10-1img1.jpg] 

 

Non-Reliance/Agreements and   Acknowledgments Regarding   Hedging
Activities/Additional   Acknowledgments: Applicable     Calculation Agent.
Citibank       (a) Adjustments: For the avoidance of doubt, whenever the
Calculation Agent, Determining Party or Hedging Party is called upon to make an
adjustment, determination or election (for the avoidance of doubt, including,
but not limited to, any determinations with respect to any amounts) pursuant to
the terms of this Master Confirmation or the Equity Definitions to take into
account the effect of an event, the Calculation Agent, Determining Party or
Hedging Party, as the case may be, shall make such adjustment, determination or
election in a commercially reasonable manner by taking into account the effect
of such event on the Hedging Party’s Hedge Position, assuming that the Hedging
Party maintains a commercially reasonable Hedge Position.

 

2.            Account Details, Offices and Notices.

 

(a)          Account Details:

 

Account for payments to Counterparty:

To be provided

 

Account for delivery of Shares to Counterparty:

To be provided

 

(ii)          Account for payments to Citibank:

 

Bank: [__________] BIC: [__________] F/O: [__________] A/C: [__________] Ref:
[__________]

 

Account for delivery of Shares to Citibank:

 

DTC#: [__________] A/C: [__________]

 

(b)          Notices. Unless otherwise specified, notices under this Master
Confirmation may be made by telephone, to be confirmed in writing to the address
below. Changes to the Notices must be made in writing.

 

(i)            If to Counterparty:

 

Stoneridge, Inc.

[__________]

Telephone: [__________]

Email: [__________]

 

 9 

[tv520977_ex10-1img1.jpg] 

 

(ii)          If to Citibank:

 

Citibank, N.A.

[__________]

[__________]

[__________]

Telephone: [__________]

Email: [__________]

 

(c)          Offices.

 

(i)The Office of Counterparty for each Transaction is: Not Applicable,
Counterparty is not a Multi-branch Party.

 

(ii)The Office of Citibank for each Transaction is: New York.

 

3.          Mutual Representations, Warranties and Covenants of Each Party.

 

In addition to the representations, warranties and covenants in the Agreement,
each party represents, warrants and covenants to the other party that:

 

(a)          Eligible Contract Participant. It is an “eligible contract
participant”, as defined in the U.S. Commodity Exchange Act (as amended), and is
entering into each Transaction hereunder as principal (and not as agent or in
any other capacity, fiduciary or otherwise) and not for the benefit of any third
party; and

 

(b)          Accredited Investor. Each party acknowledges that the offer and
sale of each Transaction to it is intended to be exempt from registration under
the Securities Act of 1933, as amended (the “Securities Act”), by virtue of
Section 4(a)(2) thereof. Accordingly, each party represents and warrants to the
other that (i) it has the financial ability to bear the economic risk of its
investment in each Transaction and is able to bear a total loss of its
investment, (ii) it is an “accredited investor” as that term is defined under
Regulation D under the Securities Act and (iii) the disposition of each
Transaction is restricted under this Master Confirmation, the Securities Act and
state securities laws.

 

4.          Representations of Counterparty.

 

In addition to the representations, warranties and covenants in the Agreement,
Counterparty additionally hereby represents, warrants and covenants to Citibank
that:

 

(a)          Corporate Existence and Authorization; Required Company Approvals.
Counterparty has all corporate power to enter into this Master Confirmation and
any Supplemental Confirmation hereunder and to consummate the transactions
contemplated hereby and thereby and to purchase the Shares and deliver any
Settlement Shares in accordance with the terms hereof and thereof. Each
Transaction contemplated by this Master Confirmation and any repurchase of
Shares by Counterparty in connection with such Transaction are pursuant to a
publicly announced share repurchase program that has been approved by its board
of directors, and any such repurchase has been or will when so required be
publicly disclosed in its periodic filings under the Exchange Act, and, at the
time of making this representation, such Transaction is not subject to any
internal policy or procedure of Counterparty, whether written or oral, which
would prohibit Counterparty from effecting any aspect of such Transaction,
including, without limitation, the purchases of the Shares made pursuant to such
Transaction at such time;

 

(b)          Material Non-Public Information and Manipulation. As of the Trade
Date for each Transaction hereunder, it is not entering into such Transaction,
and as of the date of any election with respect to any Transaction hereunder, it
will not make such election, in each case, (i) on the basis of or while being
aware of any material non-public information regarding Counterparty or the
Shares; (ii) in anticipation of, in connection with, or to facilitate, a
distribution of its securities, a self-tender offer or a third-party tender
offer; or (iii) 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);

 

 10 

[tv520977_ex10-1img1.jpg] 

 

(c)          Compliance with Filing Requirements. As of the Trade Date for each
Transaction hereunder, and as of the date of any election with respect to any
Transaction hereunder, Counterparty is in compliance in all material respects
with its reporting obligations under the Exchange Act;

 

(d)          Issuer Tender Offer. As of the Trade Date for each Transaction
hereunder, the purchase or writing of such Transaction contemplated hereby will
not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act;

 

(e)          Regulation M. The Shares are not, and Counterparty will not cause
the Shares to be, subject to a “restricted period” (as defined in Regulation M)
at any time during any Regulation M Period (as defined below) for any
Transaction. “Regulation M Period” means, for any Transaction, (i) the Relevant
Period (as defined below) for such Transaction, (ii) the Settlement Period, if
any, for such Transaction and (iii) the Seller Termination Purchase Period (as
defined below), if any, for such Transaction. “Relevant Period” means, for any
Transaction, the period commencing on the first day of the Pricing Period for
such Transaction and ending on the later of (i) the earlier of (x) the Scheduled
Termination Date and (y) the last Additional Relevant Day (as specified in the
related Supplemental Confirmation) for such Transaction, or such earlier day as
elected by Citibank and communicated to Counterparty on such day (or, if later,
the First Optional Termination Date without regard to any acceleration thereof
pursuant to “Special Provisions for Acquisition Transaction Announcements”
below) and (ii) if Section 9 is applicable to such Transaction, the date on
which all deliveries owed pursuant to Section 9 have been made;

 

(f)           Counterparty’s Actions. Counterparty will not take any action or
refrain from taking any action that would limit or in any way adversely affect
Citibank’s rights under the Agreement, this Master Confirmation and any
Supplemental Confirmation. Counterparty shall cooperate with Citibank, and
execute and deliver, or use its commercially reasonable efforts to cause to be
executed and delivered, all such other instruments, and to obtain all consents,
approvals or authorizations of any person, and take all such other actions as
Citibank may reasonably request from time to time, consistent with the terms of
the Agreement, this Master Confirmation and any Supplemental Confirmation, in
order to effectuate the purposes of the Agreement, this Master Confirmation, any
Supplemental Confirmation and any Transaction;

 

(g)          Rule 10b-18 Purchases of Blocks. Counterparty shall, at least one
day prior to the Trade Date for any Transaction, notify Citibank of the total
number of Shares purchased in Rule 10b-18 purchases of blocks pursuant to the
once-a-week block exception set forth in paragraph (b)(4) of Rule 10b-18 under
the Exchange Act (“Rule 10b-18”) by or for Counterparty or any of its
“affiliated purchasers” (as defined in Rule 10b-18) during each of the four
calendar weeks preceding such day and during the calendar week in which such day
occurs (“Rule 10b-18 purchases” and “blocks” each being used as defined in Rule
10b-18);

 

(h)          Liquidity. As of the Trade Date for each Transaction hereunder, its
financial condition is such that it has no need for liquidity with respect to
its investment in the transactions contemplated by this Master Confirmation and
no need to dispose of any portion thereof to satisfy any existing or
contemplated undertaking or indebtedness;

 

(i)           Solvency. As of the Trade Date, the Prepayment Date, the Initial
Share Delivery Date and the Settlement Date for each Transaction, Counterparty
is not, and will not be, “insolvent” (as such term is defined under Section
101(32) of the Bankruptcy Code (as defined below)) and Counterparty would be
able to purchase a number of the Shares with a value equal to the Prepayment
Amount in compliance with the laws of the jurisdiction of Counterparty’s
incorporation;

 

 11 

[tv520977_ex10-1img1.jpg] 

 

(j)          Financial Expertise and Total Assets. Counterparty (i) is capable
of evaluating investment risks independently, both in general and with regard to
all transactions and investment strategies involving a security or securities;
(ii) 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 (iii) has total assets of at least USD 50,000,000
as of the date hereof;

 

(k)          Investment Company Act of 1940. Counterparty is not, and after
giving effect to each Transaction, will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended; and

 

(l)           No Deposit Insurance. It understands that no obligations of
Citibank to it hereunder will be entitled to the benefit of deposit insurance
and that such obligations will not be guaranteed by any affiliate of Citibank or
any governmental agency.

 

5.           Acknowledgments and Agreements of Counterparty.

 

(a)          Authorized Shares. Counterparty agrees that while this Master
Confirmation is in effect, it shall cause (i) the number of authorized Shares
minus (ii) the number of outstanding Shares minus (iii) the number of the Shares
reserved for other purposes minus (iv) without duplication of clause (iii), the
aggregate maximum number of the Shares deliverable under warrants, options,
swaps, forwards, convertible or exchangeable securities or other similar
transactions, agreements or instruments issued by Counterparty or to which
Counterparty is a party that provide for physical or net share settlement or
otherwise may require the issuance of the Shares by Counterparty, to exceed the
then applicable Share Cap. “Share Cap” means, as of any date of determination,
ten times (x) the Initial Share Number minus (y) the number of Shares delivered
by Counterparty to Citibank on or prior to such date hereunder subject to
“Extraordinary Events” and “Loss of Stock Borrow” above. At the conclusion of
the Pricing Period with respect to any Transaction, Counterparty will have a
sufficient number of treasury shares or duly authorized but unissued Shares
available to satisfy its obligations with respect to such Transaction, such
Shares to be fully paid and nonassessable and free of preemptive and other
rights. Counterparty agrees that a failure by Counterparty to comply with the
preceding sentence shall be an Additional Termination Event with Counterparty as
the sole Affected Party and all Transactions hereunder as the Affected
Transactions.

 

(b)          Nature of Rights. Counterparty acknowledges and agrees that this
Master Confirmation is not intended to convey to Citibank rights against
Counterparty hereunder that are senior to the claims of common shareholders in
any U.S. bankruptcy proceedings of Counterparty; provided, however, that nothing
herein shall limit or shall be deemed to limit Citibank’s right to pursue
remedies in the event of a breach by Counterparty of its obligations and
agreements with respect to this Master Confirmation; and provided further that
in pursuing a claim against Counterparty in the event of a bankruptcy,
insolvency or dissolution with respect to Counterparty, Citibank’s rights
hereunder shall rank on a parity with the rights of a holder of the Shares
enforcing similar rights under a contract involving the Shares.

 

(c)          Bankruptcy Code. The parties hereto intend for (i) each Transaction
hereunder to be a “securities contract” as defined in the Bankruptcy Code (Title
11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto
are entitled to the protections afforded by, among other Sections, Sections
362(b)(6), 362(o), 546, 555 and 561 of the Bankruptcy Code; (ii) a party’s right
to liquidate, terminate or accelerate such Transaction and to exercise any other
remedies upon the occurrence of any Event of Default or Termination Event under
this Master Confirmation with respect to the other party to constitute a
“contractual right” within the meaning of the Bankruptcy Code; (iii) all
transfers of cash, securities or other property under or in connection with such
Transaction are “transfers” made “by or to (or for the benefit of)” a “master
netting agreement participant”, a “financial institution”, a “financial
participant” or a “forward contract merchant” (each as defined in the Bankruptcy
Code) within the meaning of Sections 546(e), 546(f) and 546(j) of the Bankruptcy
Code; (iv) all obligations under or in connection with such Transaction
represent obligations in respect of “termination values”, “payment amounts” or
“other transfer obligations” within the meaning of Section 362 and 561 of the
Bankruptcy Code; and (v) each of the parties hereto to be a “financial
participant” within the meaning of Section 101(22A) of the Bankruptcy Code.

 

 12 

[tv520977_ex10-1img1.jpg] 

 

(d)          Citibank’s Activities. Counterparty understands and acknowledges
that Citibank and its affiliates may from time to time effect transactions for
their own account or the account of customers and hold positions in securities
or options on securities of Counterparty and that Citibank and its affiliates
may continue to conduct such transactions during the Pricing Period and the
Settlement Period.

 

(e)          Establishment of Hedge Position. Counterparty acknowledges that
during the term of any Transaction, Citibank 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 establish, adjust or
unwind its commercially reasonable hedge position with respect to such
Transaction.

 

(f)           Other Market Activities. Counterparty acknowledges that Citibank
and its affiliates may also be active in the market for Shares and transactions
linked to the Shares other than in connection with hedging activities in
relation to any Transaction.

 

(g)          Manner of Hedging or Market Activities. Counterparty acknowledges
that Citibank shall make its own determination as to whether, when or in what
manner any hedging or market activities in Counterparty’s securities shall be
conducted and shall do so in a manner that it deems appropriate to hedge its
price and market risk with respect to the Reference Price and the Rule 10b-18
VWAP.

 

(h)          Effect of Market Activities. Counterparty acknowledges that any
market activities of Citibank and its affiliates with respect to the Shares may
affect the market price and volatility of the Shares, as well as the Reference
Price and Rule 10b-18 VWAP, each in a manner that may be adverse to
Counterparty.

 

(i)           Purchase Price. Counterparty acknowledges that each Transaction is
a derivative transaction in which it has granted Citibank an option; Citibank
may purchase shares for its own account at an average price that may be greater
than, or less than, the price paid by Counterparty under the terms of such
Transaction.

 

6.            Calculations and Payment Date upon Early Termination.

 

The parties acknowledge and agree that in calculating (a) the Close-Out Amount
pursuant to Section 6 of the Agreement and (b) the amount due upon cancellation
or termination of any Transaction (whether in whole or in part) pursuant to
Article 12 of the Equity Definitions as a result of an Extraordinary Event,
Citibank may (but need not) determine such amount based on (i) expected losses
assuming a commercially reasonable (including, without limitation, with regard
to reasonable legal and regulatory guidelines) risk bid were used to determine
loss or (ii) the price at which one or more market participants would offer to
sell to Citibank a block of Shares (assuming such price is determined in a
commercially reasonable manner and reflect prevailing market prices) equal in
number to Citibank’s commercially reasonable hedge position in relation to such
Transaction. Notwithstanding anything to the contrary in Section 6(d)(ii) of the
Agreement or Article 12 of the Equity Definitions, all amounts calculated as
being due in respect of an Early Termination Date under Section 6(e) of the
Agreement or upon cancellation or termination of such Transaction under Article
12 of the Equity Definitions will be payable on the day that notice of the
amount payable is effective; provided that if Counterparty elects to receive or
deliver Shares or Alternative Delivery Units in accordance with Section 9, such
Shares or Alternative Delivery Units shall be delivered on a date selected by
Citibank as promptly as practicable.

 

 13 

[tv520977_ex10-1img1.jpg] 

 

7.           10b5-1 Plan.

 

(a)          It is the intent of Counterparty and Citibank that each Transaction
comply with the requirements of Rule 10b5-1(c) of the Exchange Act and that this
Master Confirmation shall be interpreted to comply with the requirements of Rule
10b5-1(c)(1)(i)(B) and Citibank shall take no action that results in the
transaction not so complying with such requirements.

 

(b)          Counterparty is entering into this Master Confirmation and each
Transaction hereunder in good faith and not as part of a plan or scheme to evade
the prohibitions of Rule 10b5-1 under the Exchange Act (“Rule 10b5-1”) or any
other antifraud or anti-manipulation provisions of the federal or applicable
state securities laws and that it has not entered into or altered and will not
enter into or alter any corresponding or hedging transaction or position with
respect to the Shares. Counterparty acknowledges that it is the intent of the
parties that each Transaction entered into under this Master Confirmation comply
with the requirements of paragraphs (c)(1)(i)(A) and (B) of Rule 10b5-1 and each
Transaction entered into under this Master Confirmation shall be interpreted to
comply with the requirements of Rule 10b5-1(c).

 

(c)          During the term of any Transaction and in connection with the
delivery of any Alternative Delivery Units for any Transaction, Citibank (or its
agent or affiliate) may effect transactions in Shares in connection with such
Transaction. The timing of such transactions by Citibank, the price paid or
received per Share pursuant to such transactions and the manner in which such
transactions are made, including, without limitation, whether such transactions
are made on any securities exchange or privately, shall be within the sole
judgment of Citibank. Counterparty acknowledges and agrees that all such
transactions shall be made in Citibank’s sole judgment and for Citibank’s own
account.

 

(d)          Counterparty does not have, and shall not attempt to exercise, any
control or influence over how, when or whether Citibank (or its agent or
affiliate) makes any “purchases or sales” (within the meaning of Rule
10b5-1(c)(1)(i)(B)(3)) in connection with any Transaction, including, without
limitation, the price paid per Share pursuant to such purchases, whether such
purchases are made on any securities exchange or privately and how, when or
whether Citibank (or its agent or affiliate) enters into any hedging
transactions. Counterparty represents and warrants that it has consulted with
its own advisors as to the legal aspects of its adoption and implementation of
this Master Confirmation and each Supplemental Confirmation under Rule 10b5-1.

 

(e)          Counterparty acknowledges and agrees that any amendment,
modification, waiver or termination of this Master Confirmation or any
Supplemental Confirmation must be effected in accordance with the requirements
for the amendment or termination of a “plan” as defined in Rule 10b5-1(c).
Without limiting the generality of the foregoing, any such amendment,
modification, waiver or termination shall be made in good faith and not as part
of a plan or scheme to evade the prohibitions of Rule 10b-5, and no such
amendment, modification or waiver shall be made at any time at which
Counterparty or any officer, director, manager or similar person of Counterparty
is aware of any material non-public information regarding Counterparty or the
Shares.

 

8.           Counterparty Purchases.

 

Counterparty (including its “affiliated purchasers”, as defined in Rule 10b-18)
shall not, without a prior written consent of Citibank, directly or indirectly
purchase, offer to purchase, place any bid or limit order that would effect a
purchase of, or commence any tender offer relating to, any Shares (or an
equivalent interest, or any security convertible into or exchangeable for such
Shares and including, without limitation, by means of a derivative instrument)
on the open market, or enter into any accelerated share repurchase program, or
any derivative share repurchase transaction, or other similar transaction,
during the Relevant Period, Settlement Period or Seller Termination Purchase
Period and thereafter until all payments or deliveries of Shares under this
Master Confirmation have been made. During such time, any purchases of Shares by
Counterparty shall be made through Citibank or its affiliates, subject to such
reasonable conditions as Citibank or such affiliate shall impose, and in
compliance with Rule 10b-18 or otherwise in a manner that Counterparty and
Citibank believe is in compliance with applicable requirements.

 

 14 

[tv520977_ex10-1img1.jpg] 

 

9.           Loss Settlement Election.

 

In the event that (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 any
Transaction or (b) any Transaction is cancelled or terminated upon the
occurrence of an Extraordinary Event (except as a result of (i) a
Nationalization, Insolvency or Merger Event in which the consideration to be
paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender
Offer that is within Counterparty’s control, or (iii) an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a
Termination Event of the type described in Section 5(b) of the Agreement, in
each case that resulted from an event or events outside Counterparty’s control),
if either party would owe any amount to the other party pursuant to Section
6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of
the Equity Definitions (any such amount, a “Payment Amount”), then, in lieu of
any payment of such Payment Amount, unless Counterparty makes an election to the
contrary no later than the Early Termination Date or the date on which such
Transaction is terminated or cancelled, Counterparty or Citibank, as the case
may be, shall deliver to the other party a number of Shares (or, in the case of
a Nationalization, Insolvency or Merger Event, a number of units, each
comprising the number or amount of the securities or property that a
hypothetical holder of one Share would receive in such Nationalization,
Insolvency or Merger Event, as the case may be (each such unit, an “Alternative
Delivery Unit”)) with a value equal to the Payment Amount, as determined by the
Calculation Agent over a commercially reasonable period of time (and the parties
agree that, in making such determination of value, the Calculation Agent shall
take into account volatility, liquidity and the market price of the Shares or
Alternative Delivery Unit on the Early Termination Date or the date of early
cancellation or termination, as the case may be, and if such delivery is made by
Citibank, the prices at which Citibank purchases Shares or Alternative Delivery
Units, assuming such purchases are executed in a commercially reasonable manner
and within a commercially reasonable period of time and reflect the prevailing
market price of Shares or Alternative Delivery Unit to fulfill its delivery
obligation under this Section 9); provided that in determining the composition
of any Alternative Delivery Unit, if the relevant Nationalization, Insolvency or
Merger Event involves a choice of consideration to be received by holders of
Shares, such holder shall be deemed to have elected to receive the maximum
possible amount of cash; and provided further that Counterparty may elect that
the provisions of this Section 9 above providing for the delivery of Shares or
Alternative Delivery Units, as the case may be, shall not apply only if
Counterparty represents and warrants to Citibank, in writing on the date it
notifies Citibank of such election, that, as of such date, Counterparty is not
aware of any material non-public information regarding Counterparty or the
Shares and is making such election in good faith and not as part of a plan or
scheme to evade compliance with the federal securities laws. If delivery of
Shares or Alternative Delivery Units, as the case may be, pursuant to this
Section 9 is to be made by Counterparty, paragraphs 2 through 7 of Annex B
hereto shall apply as if (A) such delivery were a settlement of such Transaction
to which Net Share Settlement applied, (B) the Cash Settlement Payment Date were
the Early Termination Date or the date of early cancellation or termination, as
the case may be, and (C) the Forward Cash Settlement Amount were equal to (x)
zero minus (y) the Payment Amount owed by Counterparty. For the avoidance of
doubt, if Counterparty validly elects for the provisions of this Section 9
relating to the delivery of Shares or Alternative Delivery Units, as the case
may be, not to apply to any Payment Amount, the provisions of Article 12 of the
Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as
the case may be, shall apply. If delivery of Shares or Alternative Delivery
Units, as the case may be, is to be made by Citibank pursuant to this Section 9,
the period during which Citibank purchases Shares or Alternative Delivery Units
to fulfill its delivery obligations under this Section 9 shall be referred to as
the “Seller Termination Purchase Period”.

 

10.         Special Provisions for Merger Transaction.

 

Notwithstanding anything to the contrary herein or in the Equity Definitions:

 

(a)          Counterparty agrees that it:

 

 15 

[tv520977_ex10-1img1.jpg] 

 

(i)will not during the period commencing on the Trade Date for any Transaction
and ending on the last day of the Relevant Period or the last day of the
Settlement Period and the last day of the Seller Termination Purchase Period,
for such Transaction make, or permit to be made, any public announcement (as
defined in Rule 165(f) under the Securities Act) of any Merger Transaction or
potential Merger Transaction (a “Merger Announcement”) unless such Merger
Announcement is made prior to the opening or after the close of the regular
trading session on the Exchange for the Shares;

 

(ii)shall promptly (but in any event prior to the next opening of the regular
trading session on the Exchange) notify Citibank following any such Merger
Announcement that such Merger Announcement has been made; and

 

(iii)shall promptly (but in any event prior to the next opening of the regular
trading session on the Exchange) provide Citibank with written notice specifying
(i) Counterparty’s average daily Rule 10b-18 Purchases (as defined in Rule
10b-18) during the three full calendar months immediately preceding the
announcement date of any Merger Transaction or potential Merger Transaction that
were not effected through Citibank or its affiliates and (ii) the number of
Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange
Act for the three full calendar months preceding the announcement date of any
Merger Transaction or potential Merger Transaction. Such written notice shall be
deemed to be a certification by Counterparty to Citibank that such information
is true and correct. In addition, Counterparty shall promptly notify Citibank of
the earlier to occur of the completion of such transaction and the completion of
the vote by target shareholders.

 

(b)          Counterparty acknowledges that any such Merger Announcement or
delivery of a notice with respect thereto may cause the terms of any Transaction
to be adjusted or such Transaction to be terminated; accordingly, Counterparty
acknowledges that its delivery of such notice must comply with the standards set
forth in Section 7 above.

 

(c)          Upon the occurrence of any Merger Announcement (whether made by
Counterparty or a third party), Citibank in its sole discretion may (i) make
adjustments to the terms of any Transaction, including, without limitation, the
Scheduled Termination Date or the Reference Price Adjustment Amount, and/or
suspend the Settlement Period or (ii) treat the occurrence of such Merger
Announcement as an Additional Termination Event with Counterparty as the sole
Affected Party and the Transactions hereunder as the Affected Transactions and
with the amount under Section 6(e) of the Agreement determined taking into
account the fact that the Settlement Period had fewer Scheduled Trading Days
than originally anticipated. In making adjustments to the terms of any
Transaction upon the occurrence of any Merger Announcement, Citibank shall do so
in a commercially reasonable manner to take into account of the effect of such
Merger Announcement on Citibank’s commercially reasonable Hedge Position in
relations to any Transaction.

 

“Merger Transaction” means any merger, acquisition or similar transaction
involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the
Exchange Act.

 

11.        Special Provisions for Acquisition Transaction Announcements.

 

(a)          If an Acquisition Transaction Announcement occurs on or prior to
the Settlement Date for any Transaction, then the Calculation Agent shall make
such adjustments in a commercially reasonable manner, to the exercise,
settlement, payment or any other terms of such Transaction as the Calculation
Agent determines appropriate, at such time or at multiple times as the
Calculation Agent deems appropriate (without duplication), to account for the
economic effect on such Transaction of such Acquisition Transaction
Announcement. If an Acquisition Transaction Announcement occurs after the Trade
Date, but prior to the First Optional Termination Date of any Transaction, the
First Optional Termination Date shall be the date of such Acquisition
Transaction Announcement.

 

 16 

[tv520977_ex10-1img1.jpg] 

 

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

 

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

 

12.        Delivery Procedures and Limitation.

 

Notwithstanding anything to the contrary in this Master Confirmation,
Counterparty acknowledges and agrees that, on any day, Citibank (or its agent or
affiliate) shall not be obligated to deliver or receive any Shares to or from
Counterparty and Counterparty shall not be entitled to receive any Shares if
such receipt or delivery would result in Citibank directly or indirectly
beneficially owning (as such term is defined for purposes of Section 13(d) of
the Exchange Act) at any time in excess of 4.9% of the outstanding Shares. Any
purported receipt or delivery of the Shares shall be void and have no effect to
the extent (but only to the extent) that such receipt or delivery of such Shares
would result in Citibank directly or indirectly so beneficially owning in excess
of 4.9% of the outstanding Shares. If, on any day, any delivery or receipt of
the Shares by Citibank (or its agent or affiliate) is not effected, in whole or
in part, as a result of this provision, Citibank’s and Counterparty’s respective
obligations to make or accept such receipt or delivery shall not be extinguished
and such receipt or delivery shall be effected over time as promptly as Citibank
reasonably determines that such receipt or delivery would not result in Citibank
directly or indirectly beneficially owning in excess of 4.9% of the outstanding
Shares.

 

13.        Additional Amendments to the Equity Definitions.

 

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

 

 17 

[tv520977_ex10-1img1.jpg] 

 

(b)          Section 11.2(c) of the Equity Definitions is hereby amended by (i)
replacing the words “a diluting or concentrative” with “an” in the fifth line
thereof, (ii) adding the phrase “or such Transaction” after the word “Shares” in
the sixth line thereof, (iii) deleting the words “diluting or concentrative” in
the seventeenth line thereof, and (iv) replacing the parenthetical phrase in the
eighteenth and nineteenth lines thereof with the following: “(and, for the
avoidance of doubt, adjustments may be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity relative to the
relevant Shares).”

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14.        Staggered Settlement.

 

Citibank may, by notice to Counterparty on or prior to any Settlement Date (a
“Nominal Settlement Date”), elect to deliver any Shares deliverable on such
Nominal Settlement Date on two or more dates (each, a “Staggered Settlement
Date”) or at two or more times on the Nominal Settlement Date as follows: (i) in
such notice, Citibank will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date) or delivery times and how it will allocate the Shares it is required to
deliver under the applicable settlement method above among the Staggered
Settlement Dates or delivery times; and (ii) the aggregate number of Shares that
Citibank will deliver to Counterparty hereunder on all such Staggered Settlement
Dates and delivery times will equal the number of Shares that Citibank would
otherwise be required to deliver on such Nominal Settlement Date.

 

15.        Right to Extend.

 

Citibank may postpone any potential Valuation Date or postpone or extend any
other date of valuation or delivery with respect to some or all of the relevant
Shares, upon written notice to Counterparty, if Citibank determines, in its
reasonable discretion, that such postponement or extension is reasonably
necessary or appropriate to preserve Citibank’s commercially reasonable hedging
or hedge unwind activity in a commercially reasonable manner hereunder in light
of existing liquidity conditions of Shares (including but not limited to the
liquidity in the stock borrow market) or to enable Citibank to effect purchases
or sale of Shares in connection with its commercially reasonable hedging, hedge
unwind or settlement activity hereunder in a manner that would, if Citibank were
Issuer or an affiliated purchaser of Issuer, be in compliance with applicable
legal, regulatory or self-regulatory requirements, or with related policies and
procedures applicable to Citibank.

 

 18 

[tv520977_ex10-1img1.jpg] 

 

16.          Matters Relating to Taxes.

 

(a)          For purposes of 3(e) of the Agreement, Citibank and Counterparty
each represent and warrant that it is not required by any applicable law, as
modified by the practice of any relevant governmental revenue authority, of any
relevant jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment to be made by it to the other party under this Master
Confirmation and each Transaction evidenced hereby.

 

(b)          For the purpose of Sections 4(a)(i) and (ii) of the Agreement,
Citibank agrees to deliver to Counterparty one duly executed and completed
United States Internal Revenue Service Form W-9 (or successor thereto) upon
execution of this Master Confirmation and shall provide a new form promptly upon
(A) reasonable request of Counterparty or (B) learning that any form previously
provided has become obsolete or incorrect. For the purpose of Sections 4(a)(i)
and (ii) of the Agreement, Counterparty agrees to deliver to Citibank one duly
executed and completed United States Internal Revenue Service Form W-9 (or
successor thereto) upon execution of this Master Confirmation and shall provide
a new form promptly upon (A) reasonable request of Citibank or (B) learning that
any form previously provided has become obsolete or incorrect.

 

(c)          “Tax” as used in subsection (a) immediately above and Section 5(b)
of the Agreement, and “Indemnifiable Tax” as defined in Section 14 of the
Agreement, shall not include any withholding tax imposed or collected pursuant
to (A) Section 871(m) of the U.S. Internal Revenue Code of 1986, as amended (the
“Code”), or any current or future regulations or official interpretations
thereof (a “Section 871(m) Withholding Tax”) or (B) Sections 1471 through 1474
of the Code, any current or future regulations or official interpretations
thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or
any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation
of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of
doubt, each of a Section 871(m) Withholding Tax and a FATCA Withholding Tax is a
Tax the deduction or withholding of which is required by applicable law for the
purposes of Section 2(d) of the Agreement.

 

17.          U.S. QFC Provisions.

 

(a)          Recognition of U.S. Special Resolution Regimes. (i) In the event
Citibank becomes subject to a proceeding under the FDI Act or OLA (together, the
“U.S. Special Resolution Regimes”), the transfer of the Agreement or this Master
Confirmation, and any interest and obligation in or under, and any property
securing, the Agreement or this Master Confirmation, from Citibank will be
effective to the same extent as the transfer would be effective under the U.S.
Special Resolution Regime if the Agreement, this Master Confirmation, and any
interest and obligation in or under, and any property securing, the Agreement or
this Master Confirmation were governed by the laws of the United States or a
State of the United States; and (ii) in the event Citibank or any Citibank
Affiliate becomes subject to a proceeding under a U.S. Special Resolution
Regime, Default Rights with respect to the Agreement or this Master Confirmation
that may be exercised against Citibank are permitted to be exercised to no
greater extent than such Default Rights could be exercised under such U.S.
Special Resolution Regime if the Agreement or this Master Confirmation, as the
case may be, were governed by the laws of the United States or a State of the
United States.

 

(b)          Limitation on Exercise of Certain Default Rights Related to
Citibank Affiliate’s Entry into Insolvency Proceedings. Notwithstanding anything
to the contrary in the Agreement, this Master Confirmation or any other
agreement, the parties hereto expressly acknowledge and agree that subject to
Section 17(c), Counterparty shall not be permitted to exercise any Default Right
against Citibank with respect to the Agreement or this Master Confirmation that
is related, directly or indirectly, to a Citibank Affiliate becoming subject to
an Insolvency Proceeding.

 

(c)          General Creditor Protections. Nothing in Section 17(b) shall
restrict the exercise by Counterparty of any Default Right against Citibank with
respect to the Agreement or this Master Confirmation that arises as a result of:

 

 19 

[tv520977_ex10-1img1.jpg] 

 

(i)            Citibank becoming subject to an Insolvency Proceeding; or

 

(ii)           Citibank not satisfying a payment or delivery obligation pursuant
to (A) the Agreement, or (B) this Master Confirmation.

 

(d)          Burden of Proof. After a Citibank Affiliate has become subject to
an Insolvency Proceeding, if Counterparty seeks to exercise any Default Right
with respect to the Agreement or this Master Confirmation, Counterparty shall
have the burden of proof, by clear and convincing evidence, that the exercise of
such Default Right is permitted hereunder.

 

(e)          Applicability of Section 17(a). The requirements of Section 17(a)
apply notwithstanding Sections 17(b) and (c).

 

(f)           General Conditions.

 

(i)            Effective Date. The provisions set forth in Section 17 will come
into effect on the later of the Applicable Compliance Date and the date of this
Master Confirmation.

 

(ii)           Prior Adherence to the U.S. Protocol. If Citibank and
Counterparty have adhered to the ISDA U.S. Protocol prior to the date of this
Master Confirmation, the terms of the ISDA U.S. Protocol shall be incorporated
into and form a part of this Master Confirmation and shall replace the terms of
this Section 17. For purposes of incorporating the ISDA U.S. Protocol, Citibank
shall be deemed to be a Regulated Entity, Counterparty shall be deemed to be an
Adhering Party and each of the Agreement and this Master Confirmation shall be
deemed to be a Protocol Covered Agreement.

 

(iii)          Subsequent Adherence to the U.S. Protocol. If, after the date of
this Master Confirmation, both Citibank and Counterparty shall have become
adhering parties to the ISDA U.S. Protocol, the terms of the ISDA U.S. Protocol
will supersede and replace this Section 17.

 

(g)          Definitions. For the purposes of Section 17, the following
definitions apply:

 

“Applicable Compliance Date” with respect to the Agreement and this Master
Confirmation shall be determined as follows: (a) if Counterparty is an entity
subject to the requirements of the QFC Stay Rules, January 1, 2019, (b) if
Counterparty is a Financial Counterparty (other than a Small Financial
Institution) that is not an entity subject to the requirements of the QFC Stay
Rules, July 1, 2019 and (c) if Counterparty is not described in clause (a) or
(b), January 1, 2020.

 

“BHC Affiliate” has the same meaning as the term “affiliate” as defined in, and
shall be interpreted in accordance with, 12 U.S.C. 1813(w) and 12 U.S.C.
1841(k).

 

“Citibank Affiliate” means, with respect to Citibank, a BHC Affiliate of that
party.

 

“Consolidated Affiliate” has the same meaning specified in, and shall be
interpreted in accordance with, 12 C.F.R. 252.81, 12 C.F.R. 382.1 and 12 C.F.R.
47.2.

 

“Counterparty Affiliate” means a Consolidated Affiliate of Counterparty.

 

“Default Right” means, with respect to the Agreement or this Master Confirmation
(including any Transaction or Confirmation hereunder), any:

 

 20 

[tv520977_ex10-1img1.jpg] 

 

(i) right of a party, whether contractual or otherwise (including, without
limitation, rights incorporated by reference to any other contract, agreement,
or document, and rights afforded by statute, civil code, regulation, and common
law), to liquidate, terminate, cancel, rescind, or accelerate such agreement or
transactions thereunder, set off or net amounts owing in respect thereto (except
rights related to same-day payment netting), exercise remedies in respect of
collateral or other credit support or property related thereto (including the
purchase and sale of property), demand payment or delivery thereunder or in
respect thereof (other than a right or operation of a contractual provision
arising solely from a change in the value of collateral or margin or a change in
the amount of an economic exposure), suspend, delay, or defer payment or
performance thereunder, or modify the obligations of a party thereunder, or any
similar rights; and

 

(ii) right or contractual provision that alters the amount of collateral or
margin that must be provided with respect to an exposure thereunder, including
by altering any initial amount, threshold amount, variation margin, minimum
transfer amount, the margin value of collateral, or any similar amount, that
entitles a party to demand the return of any collateral or margin transferred by
it to the other party or a custodian or that modifies a transferee’s right to
reuse collateral or margin (if such right previously existed), or any similar
rights, in each case, other than a right or operation of a contractual provision
arising solely from a change in the value of collateral or margin or a change in
the amount of an economic exposure; but

 

(iii) solely with respect to Section 17(b) does not include any right under a
contract that allows a party to terminate the contract on demand or at its
option at a specified time, or from time to time, without the need to show
cause.

 

“FDI Act” means the Federal Deposit Insurance Act and the regulations
promulgated thereunder.

 

“Financial Counterparty” has the meaning given to such term in, and shall be
interpreted in accordance with, 12 C.F.R. 252.81, 12 C.F.R. 382.1 and 12 C.F.R.
47.2.

 

“Insolvency Proceeding” means a receivership, insolvency, liquidation,
resolution, or similar proceeding.

 

“ISDA U.S. Protocol” means the ISDA 2018 U.S. Resolution Stay Protocol, as
published by ISDA on July 31, 2018.

 

“OLA” means Title II of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the regulations promulgated thereunder.

 

“QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.81–8 (the
“Federal Reserve Rule”), 12 C.F.R. 382.1-7 (the “FDIC Rule”) and 12 C.F.R.
47.1-8 (the “OCC Rule”), respectively. All references herein to the specific
provisions of the Federal Reserve Rule, the FDICs Rule and the OCC Rule shall be
construed, with respect to Citibank, to the particular QFC Stay Rule(s)
applicable to it.

 

“Small Financial Institution” has the meaning given to such term in, and shall
be interpreted in accordance with, 12 C.F.R. 252.81, 12 C.F.R. 382.1 and 12
C.F.R. 47.2.

 

“State” means any state, commonwealth, territory, or possession of the United
States of America, the District of Columbia, the Commonwealth of Puerto Rico,
the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, or the
United States Virgin Islands.

 

18.          Miscellaneous.

 

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

 

 21 

[tv520977_ex10-1img1.jpg] 

 

(b)          Waiver of Trial by Jury. Each of Counterparty and Citibank hereby
irrevocably waives (on its own behalf and, to the extent permitted by applicable
law, on behalf of its SHAREholders) all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Master Confirmation or the actions of
Citibank or its affiliates in the negotiation, performance or enforcement
hereof.

 

(e)          Non-Confidentiality; SEC Filings. Notwithstanding anything to the
contrary herein, (i) Citibank acknowledges that this Master Confirmation may be
intended to produce U.S. federal income tax benefits for Counterparty and (ii)
Counterparty and Citibank hereby agree that (A) Counterparty is not obligated to
Citibank to keep confidential from any and all persons or otherwise limit the
use of any aspect of this Master Confirmation relating to the structure or tax
aspects thereof, and (B) Citibank does not assert any claim of proprietary
ownership in respect of any such aspect of this Master Confirmation. Citibank
understands and agrees that Counterparty may describe this Master Confirmation
and other related agreements in Counterparty’s SEC filings and that this Master
Confirmation and other related agreements may be filed by Counterparty as an
exhibit with Counterparty’s SEC filings.

 

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

 

(g)          No Transfer; Designation. The rights and duties under this Master
Confirmation may not be assigned or transferred by either party hereto without
the prior written consent of the other party hereto; provided, however, that
Citibank may designate any of its affiliates to purchase, sell, receive or
deliver such shares or other securities and otherwise to perform Citibank’s
obligations in respect of any Transaction hereunder and any such designee may
assume such obligations without the written consent of Counterparty. Citibank
shall be discharged of its obligations to Counterparty solely to the extent of
any such performance. For the avoidance of doubt, Citibank hereby acknowledges
that notwithstanding any such designation hereunder, to the extent any of
Citibank’s obligations in respect of any Transaction are not completed by its
designee, Citibank shall be obligated to continue to perform or to cause any
other of its designees to perform in respect of such obligations.

 

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

 

(i)            Submission to Jurisdiction. Section 13(b) of the Agreement is
hereby amended by: (x) deleting in the second line of subparagraph (i)(2)
thereof the word, “non-”; and (y) adding in the third line of subparagraph
(i)(2) thereof before the semicolon, “and each party irrevocably agrees to
designate any Proceedings brought in the courts of the State of New York as
‘commercial’ on the Request for Judicial Intervention seeking assignment to the
Commercial Division of the Supreme Court”.

 

 22 

[tv520977_ex10-1img1.jpg] 

 

Please confirm your agreement to the foregoing by signing and returning to us
the enclosed duplicate of this Master Confirmation.

 

  Very truly yours,       CITIBANK, N.A.       By: /s/ Eric Natelson   Name:
Eric Natelson   Authorized Representative

 

Acknowledged and agreed to as of

the date first above written,

 

STONERIDGE, INC.       By: /s/ Robert R. Krakowiak Name: Robert R. Krakowiak  
Title: CFO  

 

[Signature Page to Master Confirmation]

 

 

[tv520977_ex10-1img1.jpg] 

 

ANNEX A

Citibank, N.A.

Corporate Equity Derivatives

390 Greenwich Street, 3rd Floor

New York, NY 10013

 

May [__], 2019

 

Stoneridge, Inc.

39675 MacKenzie Drive

Suite 400

Novi, Michigan 48377

 

Re: Accelerated Share Repurchase: Supplemental Confirmation

 

Ladies and Gentlemen:

 

Reference is made to the Master Confirmation between Citibank, N.A. (“Citibank”)
and Stoneridge, Inc. (“Counterparty”) dated May 7, 2019 (as amended or modified
from time to time, the “Master Confirmation”). Capitalized terms used without
definition in this Supplemental Confirmation have the definitions assigned to
them in the Master Confirmation.

 

This Supplemental Confirmation confirms the terms and conditions of the
Transaction entered into between Citibank and Counterparty on the Trade Date
specified below. This Supplemental Confirmation is a binding contract between
Citibank and Counterparty as of the relevant Trade Date for the Transaction
referenced below. Citibank is acting as principal in this Transaction.

 

1.     This Supplemental Confirmation supplements, forms part of, and is subject
to the Master Confirmation. All provisions contained in the Master Confirmation
govern this Supplemental Confirmation except as expressly modified below.

 

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

 

Trade Date: [         ]     Prepayment Amount: USD [ ]     Prepayment Date:  
[         ]     Reference Price Adjustment Amount: USD [ ]     First Optional
Termination Date: [         ]     Scheduled Termination Date: [         ]

 

 Annex A-1 

[tv520977_ex10-1img1.jpg] 

 

Initial Share Number: [         ] Shares; provided that if, in connection with
the Transaction, Citibank is unable to borrow or otherwise acquire a number of
Shares equal to the Initial Share Number for delivery to Counterparty on the
Initial Settlement Date in connection with establishing a commercially
reasonable Hedge Position in a commercially reasonable manner, the Initial Share
Number shall be reduced to such number of Shares that Citibank is able to so
borrow or otherwise acquire; provided further that if the Initial Shares are
reduced as provided in the preceding proviso, then Citibank shall use
commercially reasonable efforts to borrow or otherwise acquire an additional
number of Shares equal to the shortfall in the Initial Shares delivered on the
Initial Share Delivery Date and shall deliver such additional Shares as promptly
as practicable, and all Shares so delivered shall be considered Initial Shares.
All Shares delivered to Counterparty in respect of the Transaction pursuant to
this paragraph shall be the “Initial Shares” for purposes of “Number of Shares
to be Delivered” in the Master Confirmation.     Initial Settlement Date:
[         ]     Ordinary Dividend: USD [__]     Scheduled Ex-Dividend Date:
[         ]     Additional Relevant Days: [         ]     Termination Price: USD
[ ]     Reserved Shares: [         ]

 

Please indicate your acknowledgment of the above by signing and returning to us
a copy of this Supplemental Confirmation.

 

 Annex A-2 

[tv520977_ex10-1img1.jpg] 

 

  Very truly yours,       CITIBANK, N.A.         By:              Name:  
Authorized Representative

 

Acknowledged:       STONERIDGE, INC.         By:            Name:   Title:  

 

[Signature Page to Supplemental Confirmation] 

 

 

[tv520977_ex10-1img1.jpg] 

 

ANNEX B

 

Counterparty Settlement Provisions

 

1.           The following Counterparty Settlement Provisions shall apply to the
extent indicated under the Master Confirmation:

 

Settlement Currency: USD     Settlement Method Election: Applicable; provided
that (i) Section 7.1 of the Equity Definitions is hereby amended by deleting the
word “Physical” in the sixth line thereof and replacing it with the words “Net
Share” and (ii) the Electing Party may make a settlement method election only if
the Electing Party represents and warrants to Citibank in writing on the date it
notifies Citibank of its election that, as of such date, the Electing Party is
not aware of any material non-public information concerning Counterparty or the
Shares and is electing the settlement method in good faith and not as part of a
plan or scheme to evade compliance with the federal securities laws.    
Electing Party: Counterparty     Settlement Method Election Date: The earlier of
(i) the Scheduled Termination Date and (ii) the second Exchange Business Day
immediately following the First Optional Termination Date (in which case the
election under Section 7.1 of the Equity Definitions shall be made no later than
10 minutes prior to the open of trading on the Exchange on such second Exchange
Business Day), as the case may be.     Default Settlement Method: Cash
Settlement     Forward Cash Settlement Amount: The Number of Shares to be
Delivered multiplied by the Settlement Price.     Settlement Price: An amount
equal to the sum of the average of the Rule 10b-18 VWAPs for the Exchange
Business Days in the Settlement Period plus a commercially reasonable
commission, subject to Pricing Disruption as specified in the Master
Confirmation, plus interest on such amount during the Settlement Period at the
rate of interest for Counterparty’s long term, unsecured and unsubordinated
indebtedness, as determined by the Calculation Agent.     Settlement Period: A
number of consecutive Scheduled Trading Days selected by Citibank in its
reasonable discretion by reference to the number of Scheduled Trading Days
necessary or advisable to unwind a commercially reasonable Hedge Position in a
commercially reasonable manner, beginning on the Scheduled Trading Day
immediately following the earlier of (i) the Scheduled Termination Date and (ii)
the date Citibank delivers notice of the Pricing Period Termination Date.

 

 Annex B-1 

[tv520977_ex10-1img1.jpg] 

 

Cash Settlement: If Cash Settlement is applicable, then Counterparty shall pay
to Citibank the absolute value of the Forward Cash Settlement Amount on the Cash
Settlement Payment Date.     Cash Settlement  Payment Date: The date one
Settlement Cycle following the last day of the Settlement Period.     Net Share
Settlement Procedures: If Net Share Settlement is applicable, Net Share
Settlement shall be made in accordance with paragraphs 2 through 7 below.  

 

2.           Net Share Settlement shall be made by delivery on the Cash
Settlement Payment Date of a number of Shares satisfying the conditions set
forth in paragraph 3 below (the “Registered Settlement Shares”), or a number of
Shares not satisfying such conditions (the “Unregistered Settlement Shares”), in
either case with a value equal to 101% (in the case of Registered Settlement
Shares) or 105% (in the case of Unregistered Settlement Shares) of the absolute
value of the Forward Cash Settlement Amount (which value shall, in the case of
Unregistered Settlement Shares, take into account a commercially reasonable
illiquidity discount), in each case as determined by the Calculation Agent.
Notwithstanding Counterparty’s election of Net Share Settlement, if all of the
conditions for delivery of either Registered Settlement Shares or Unregistered
Settlement Shares have not been met, Cash Settlement shall be applicable in
accordance with paragraph 1 above.

 

3.           Counterparty may only deliver Registered Settlement Shares pursuant
to paragraph 2 above if:

 

(a)          a registration statement covering public resale of the Registered
Settlement Shares by Citibank (the “Registration Statement”) shall have been
filed with the Securities and Exchange Commission under the Securities Act and
been declared or otherwise become effective on or prior to the date of delivery,
and no stop order shall be in effect with respect to the Registration Statement;
a printed prospectus relating to the Registered Settlement Shares (including,
without limitation, any prospectus supplement thereto, the “Prospectus”) shall
have been delivered to Citibank, in such quantities as Citibank shall reasonably
have requested, on or prior to the date of delivery;

 

(b)          the form and content of the Registration Statement and the
Prospectus (including, without limitation, any sections describing the plan of
distribution) shall be satisfactory to Citibank;

 

(c)          as of or prior to the date of delivery, Citibank and its agents
shall have been afforded a reasonable opportunity to conduct a due diligence
investigation with respect to Counterparty customary in scope for underwritten
offerings of equity securities and the results of such investigation shall be
satisfactory to Citibank, in its discretion; and

 

 Annex B-2 

[tv520977_ex10-1img1.jpg] 

 

(d)          as of the date of delivery, an agreement (the “Underwriting
Agreement”) shall have been entered into with Citibank in connection with the
public resale of the Registered Settlement Shares by Citibank substantially
similar to underwriting agreements customary for underwritten offerings of
equity securities, in form and substance satisfactory to Citibank, which
Underwriting Agreement shall include, without limitation, provisions
substantially similar to those contained in such underwriting agreements
relating, without limitation, to the indemnification of, and contribution in
connection with the liability of, Citibank and its affiliates and the provision
of customary opinions, accountants’ comfort letters and lawyers’ negative
assurance letters.

 

4.           If Counterparty delivers Unregistered Settlement Shares pursuant to
paragraph 2 above:

 

(a)          all Unregistered Settlement Shares shall be delivered to Citibank
(or any affiliate of Citibank designated by Citibank) pursuant to the exemption
from the registration requirements of the Securities Act provided by Section
4(a)(2) thereof;

 

(b)          as of or prior to the date of delivery, Citibank and any potential
purchaser of any such shares from Citibank (or any affiliate of Citibank
designated by Citibank) identified by Citibank shall be afforded a commercially
reasonable opportunity to conduct a due diligence investigation with respect to
Counterparty customary in scope for private placements of equity securities for
companies of similar size (including, without limitation, the right to have made
available to them for inspection all financial and other records, pertinent
corporate documents and other information reasonably requested by them) and the
results of such investigation shall be satisfactory to Citibank or such
potential purchaser, as the case may be, in its discretion;

 

(c)          as of the date of delivery, Counterparty shall enter into an
agreement (a “Private Placement Agreement”) with Citibank (or any affiliate of
Citibank designated by Citibank) in connection with the private placement of
such shares by Counterparty to Citibank (or any such affiliate) and the private
resale of such shares by Citibank (or any such affiliate), substantially similar
to private placement purchase agreements customary for private placements of
equity securities for companies of similar size, in form and substance
commercially reasonably satisfactory to Citibank, which Private Placement
Agreement shall include, without limitation, provisions substantially similar to
those contained in such private placement purchase agreements relating, without
limitation, to the indemnification of, and contribution in connection with the
liability of, Citibank and its affiliates and the provision of customary
opinions, accountants’ comfort letters and lawyers’ negative assurance letters,
and shall provide for the payment by Counterparty of all fees and expenses in
connection with such resale, including, without limitation, all fees and
expenses of counsel for Citibank, and shall contain representations, warranties,
covenants and agreements of Counterparty reasonably necessary or advisable to
establish and maintain the availability of an exemption from the registration
requirements of the Securities Act for such resales; and

 

(d)          in connection with the private placement of such shares by
Counterparty to Citibank (or any such affiliate) and the private resale of such
shares by Citibank (or any such affiliate), Counterparty shall, if so requested
by Citibank, prepare, in cooperation with Citibank, a private placement
memorandum in form and substance reasonably satisfactory to Citibank.

 

5.           Citibank, itself or through an affiliate (the “Selling Agent”) or
any underwriter(s), will sell all, or such lesser portion as may be required
hereunder, of the Registered Settlement Shares or Unregistered Settlement Shares
and any Makewhole Shares (as defined below) (together, the “Settlement Shares”)
delivered by Counterparty to Citibank pursuant to paragraph 6 below commencing
on the Cash Settlement Payment Date and continuing until the date on which the
aggregate Net Proceeds (as such term is defined below) of such sales, as
determined by Citibank in a commercially reasonable manner, is equal to the
absolute value of the Forward Cash Settlement Amount (such date, the “Final
Resale Date”). If the proceeds of any sale(s) made by Citibank, the Selling
Agent or any underwriter(s), net of any commercially reasonable fees and
commissions (including, without limitation, underwriting or placement fees)
customary for similar transactions under the circumstances at the time of the
offering, together with carrying charges and expenses incurred in connection
with the offer and sale of the Shares (including, without limitation, the
covering of any over-allotment or short position (syndicate or otherwise)) (the
“Net Proceeds”) exceed the absolute value of the Forward Cash Settlement Amount,
Citibank will refund, in USD or in Shares, at the election of the Counterparty,
such excess to Counterparty on the date that is three (3) Currency Business Days
following the Final Resale Date, and, if any portion of the Settlement Shares
remains unsold, Citibank shall return to Counterparty on that date such unsold
Shares.

 

 Annex B-3 

[tv520977_ex10-1img1.jpg] 

 

6.           If the Calculation Agent determines that the Net Proceeds received
from the sale of the Registered Settlement Shares or Unregistered Settlement
Shares or any Makewhole Shares, if any, pursuant to this paragraph 6 are less
than the absolute value of the Forward Cash Settlement Amount (the amount in USD
by which the Net Proceeds are less than the absolute value of the Forward Cash
Settlement Amount being the “Shortfall” and the date on which such determination
is made, the “Deficiency Determination Date”), Counterparty shall on the
Exchange Business Day next succeeding the Deficiency Determination Date (the
“Makewhole Notice Date”) deliver to Citibank, through the Selling Agent, a
notice of Counterparty’s election that Counterparty shall either (i) pay an
amount in cash equal to the Shortfall on the day that is one (1) Currency
Business Day after the Makewhole Notice Date, or (ii) deliver additional Shares.
If Counterparty elects to deliver to Citibank additional Shares, then
Counterparty shall deliver additional Shares in compliance with the terms and
conditions of paragraph 3 or paragraph 4 above, as the case may be (the
“Makewhole Shares”), on the first Clearance System Business Day which is also an
Exchange Business Day following the Makewhole Notice Date in such number as the
Calculation Agent reasonably believes would have a market value on that Exchange
Business Day equal to the Shortfall. Such Makewhole Shares shall be sold by
Citibank in accordance with the provisions above; provided that if the sum of
the Net Proceeds from the sale of the originally delivered Shares and the Net
Proceeds from the sale of any Makewhole Shares is less than the absolute value
of the Forward Cash Settlement Amount then Counterparty shall, at its election,
either make such cash payment or deliver to Citibank further Makewhole Shares
until such Shortfall has been reduced to zero.

 

7.           Notwithstanding the foregoing, in no event shall the aggregate
number of Settlement Shares and Makewhole Shares be greater than the Reserved
Shares minus the amount of any Shares actually delivered by Counterparty under
any other Transaction(s) under this Master Confirmation (the result of such
calculation, the “Capped Number”). Counterparty represents and warrants (which
shall be deemed to be repeated on each day that a Transaction is outstanding)
that the Capped Number is equal to or less than the number of Shares determined
according to the following formula:

 

A – B

 

Where A = the number of authorized but unissued shares of the Counterparty that
are not reserved for future issuance on the date of the determination of the
Capped Number; and       B = the maximum number of Shares required to be
delivered to third parties if Counterparty elected Net Share Settlement of all
transactions in the Shares (other than Transactions in the Shares under this
Master Confirmation) with all third parties that are then currently outstanding
and unexercised.

 

“Reserved Shares”, for each Transaction, shall be set forth in the related
Supplemental Confirmation.

 

If at any time, as a result of this paragraph 7, Counterparty fails to deliver
to Citibank any Settlement Shares, Counterparty shall, to the extent that
Counterparty has at such time authorized but unissued Shares not reserved for
other purposes, promptly notify Citibank thereof and deliver to Citibank a
number of Shares not previously delivered as a result of this paragraph 7.
Counterparty agrees to use its best efforts to cause the number of authorized
but unissued Shares to be increased, if necessary, to an amount sufficient to
permit Counterparty to fulfill its obligation to deliver any Settlement Shares.

 

 Annex B-4