Exhibit 10.1

Opening Transaction

 

To:    SunPower Corporation From:   

Wachovia Bank, National Association

375 Park Avenue

New York, NY 10152

Re:    Convertible Debenture Hedge Transaction Ref. No:    6845019 Date:   
April 28, 2009

 

 

Dear Sir(s):

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between Wachovia Bank, National
Association (“Dealer”) represented by Wachovia Capital Markets, LLC (“Agent”) as
its agent, and SunPower Corporation (“Counterparty”). This communication
constitutes a “Confirmation” as referred to in the Agreement specified below.

1. This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000
Definitions”) and the definitions and provisions of the 2002 ISDA Equity
Derivatives Definitions (the “Equity Definitions”, and together with the 2000
Definitions, the “Definitions”), in each case as published by the International
Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any
inconsistency between the 2000 Definitions and the Equity Definitions, the
Equity Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Base Indenture, dated as of February 7, 2007,
between Counterparty and Wells Fargo Bank, National Association, as trustee (the
“Base Indenture”), as supplemented by the Third Supplemental Indenture, to be
dated as of May 4, 2009 (the “ Third Supplemental Indenture”, and, together with
the Base Indenture, the “Indenture” ) relating to the USD 200,000,000 principal
amount of 4.75% senior convertible debentures due 2014 (the “Convertible
Debentures”). In the event of any inconsistency between the terms defined in the
Indenture and this Confirmation, this Confirmation shall govern. The Transaction
shall be the only transaction under the Agreement. References herein to sections
of the Indenture are based on the draft of the Indenture most recently reviewed
by the parties at the time of execution of this Confirmation. If any relevant
sections of the Indenture are changed, added or renumbered between the execution
of this Confirmation and the execution of the Indenture, the parties will amend
this Confirmation in good faith to preserve the economic intent of the parties
based on the draft of the Indenture so reviewed. The parties further acknowledge
that references to the Indenture herein are references to the Indenture as in
effect on the date of its execution and if the Indenture is amended following
its execution, any such amendment will be disregarded for purposes of this
Confirmation unless the parties agree otherwise in writing. The Transaction is
subject to early unwind if the closing of the Convertible Debentures is not
consummated for any reason, as set forth below in Section 8(j).

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

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This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 1992 ISDA Master Agreement (Multicurrency – Cross Border) as
published by ISDA as if Dealer and Counterparty had executed an agreement in
such form on the date hereof (but without any Schedule except for (i) the
election of Loss and Second Method and US Dollars (“USD”) as the Termination
Currency, (ii) the replacement of the word “third” in the last line of
Section 5(a)(i) with the word “first”, (iii) the election that the “Cross
Default” provisions of Section 5(a)(vi) shall apply to the Counterparty and
Dealer, each with a “Threshold Amount” of USD 25 million and 2% of Wells Fargo
Bank, National Association’s shareholders’ equity, respectively), (iv) the
deletion of the phrase “, or becoming capable at such time of being declared,”
in the seventh line of Section 5(a)(vi) of the Agreement and (v) the election
that “Credit Event Upon Merger” under Section 5(b)(iv) shall apply to the
Counterparty and Dealer).

All provisions contained in, or incorporated by reference to, the Agreement will
govern this Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern.

2. The Transaction constitutes a Share Option Transaction for purposes of the
Equity Definitions. The terms of the particular Transaction to which this
Confirmation relates are as follows:

 

General Terms:   Trade Date:    April 28, 2009  

Effective Date:

   May 4, 2009  

Option Style:

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

Option Type:

   Call  

Seller:

   Dealer  

Buyer:

   Counterparty  

Shares:

   The Class A Common Stock of Counterparty, par value USD0.001 per share
(Ticker Symbol: “SPWRA”).  

Number of Options:

   The number of Convertible Debentures in denominations of USD1,000 principal
amount issued by Counterparty on the closing date for the initial issuance of
the Convertible Debentures. For the avoidance of doubt, the Number of Options
outstanding shall be reduced by each exercise of Options hereunder.  

Option Entitlement:

   As of any date, a number of Shares per Option equal to the “Conversion Rate”
(as defined in the Indenture, but without regard to any adjustments to the
Conversion Rate pursuant to Section 8.04(b) or 8.05(h) of the Third Supplemental
Indenture) as of such date.  

Strike Price:

  

As of any date, an amount in USD, rounded to the nearest cent (with 0.5 cents
being rounded upwards), equal to USD1,000 divided by the Option Entitlement as
of such date.

 

Number of Shares:

  

The product of the Number of Options, the Applicable Percentage and the Option
Entitlement.

 

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       Applicable Percentage:    20%   Premium:    USD 16,928,000   Premium
Payment Date:    The Effective Date   Exchange:    Nasdaq Global Select Market  
Related Exchange:    All Exchanges Procedures for Exercise:      Exercise Date:
   Each Conversion Date.   Conversion Date:    Each “Conversion Date” (as
defined in the Indenture) occurring during the Exercise Period for Convertible
Debentures that are not Relevant Convertible Debentures under, and as defined
in, the confirmation between the parties hereto regarding the Additional
Convertible Note Hedge Transaction dated as of the date hereof (Ref. No.
6845019) (the “Additional Convertible Note Hedge Transaction Confirmation”)
(such Convertible Debentures, each in denominations of USD1,000 principal
amount, the “Relevant Convertible Debentures” for such Conversion Date). For
purposes of determining whether any Convertible Debentures will be Relevant
Convertible Debentures hereunder or under the Additional Convertible Note Hedge
Transaction, Convertible Debentures that are converted pursuant to the Indenture
shall be allocated first to the Additional Convertible Note Hedge Transaction
Confirmation until all Options thereunder (and as defined therein) are
exercised.   Exercise Period:    The period from and excluding the Trade Date to
and including the Expiration Date.   Expiration Date:    The earlier of (i) the
last day on which any Convertible Debentures remain outstanding and (ii) the
“Business Day” (as defined in the Indenture) immediately preceding the “Maturity
Date” (as defined in the Indenture).   Automatic Exercise on Conversion Dates:
   On each Conversion Date, a number of Options equal to the number of Relevant
Convertible Debentures for such Conversion Date in denominations of USD1,000
principal amount shall be automatically exercised, subject to “Notice of
Exercise” below.   Notice Deadline:    In respect of any exercise of Options
hereunder, the Business Day immediately following the relevant Conversion Date.
  Notice of Exercise:    Notwithstanding anything to the contrary in the Equity
Definitions, Dealer shall have no obligation to make any payment or delivery in
respect of any exercise of Options hereunder unless Counterparty notifies Dealer
in writing prior to 5:00 PM,

 

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         New York City time, on the Notice Deadline in respect of such exercise
of (i) the number of Options being exercised on such Exercise Date, (ii) the
scheduled settlement date under the Indenture for the Relevant Convertible
Debentures for the related Conversion Date and (iii) the number of Shares
comprising the Convertible Obligation (as defined below). For the avoidance of
doubt, if Counterparty fails to give such notice when due in respect of any
exercise of Options hereunder, Dealer’s obligation to make any payment or
delivery in respect of such exercise shall be permanently extinguished, and late
notice shall not cure such failure.  

Dealer’s Telephone Number and Telex and/or Facsimile Number and Contact Details
for purpose of Giving Notice:

  

To:     Wachovia Capital Markets, LLC

    

 201 South College Street, 6th Floor

 Charlotte, NC 28288-0601

 Attention: Equity Derivatives

    

Telephone:             (704) 715-8086

Facsimile:              (704) 383-8425

 

With a copy to:

 

Mark Kohn or Head Trader

Telephone: (212) 214-6089

Facsimile: (212) 214-8914

Settlement Terms:      Settlement Date:    For any Exercise Date, the settlement
date for the Shares to be delivered in respect of the Relevant Convertible
Debentures for the Conversion Date occurring on such Exercise Date under the
terms of the Indenture; provided that the Settlement Date shall not be prior to
the later of (i) the date one Settlement Cycle following the last Valuation Date
for such Exercise Date and (ii) the Exchange Business Day immediately following
the date on which Counterparty gives notice to Dealer of such Settlement Date
prior to 5:00 PM, New York City time.   Delivery Obligation:    In lieu of the
obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and
subject to “Notice of Exercise” above, in respect of any Exercise Date, Dealer
will deliver to Counterparty on the related Settlement Date the Net Share
Settlement Amount for such Exercise Date.   Net Share Settlement Amount:    For
any Exercise Date, a number of Shares equal to the product of (i) the Applicable
Percentage, (ii) the sum of the Daily Settlement Amounts for all Valuation Dates
for such Exercise Date and (iii) the Number of Options exercised on such
Exercise Date;

 

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         provided that in no event shall the Net Share Settlement Amount exceed
the product of the Applicable Percentage and the excess of (A) the aggregate
number of Shares that Counterparty is obligated to deliver to the holder(s) of
the Relevant Convertible Debentures for the Conversion Date occurring on such
Exercise Date (the “Convertible Obligation”) over (B) the product of (I) the
Number of Options exercised on such Exercise Date and (II) USD1,000 divided by
the Relevant Price of the Shares on the final Valuation Date for such Exercise
Date.   Valuation Dates:    For each Exercise Date, if such Exercise Date occurs
prior to March 14, 2014 (the “Early Conversion Date”), each of the number of
consecutive Exchange Business Days commencing on and including the second
Scheduled Trading Day following such Exercise Date equal to the Number of Early
Conversion Valuation Dates, and, if such Exercise Date occurs on or after the
Early Conversion Date, each of the number of consecutive Exchange Business Days
commencing on and including March 18, 2014 equal to the Number of Final
Conversion Valuation Dates; provided that if any such day is a Disrupted Day,
then the Calculation Agent shall determine if such day is a Disrupted Day in
whole or in part, and if such day is a Disrupted Day in whole, such day shall
not be considered an Exchange Business Day for purposes of determining the
Valuation Dates, and if such day is a Disrupted Day in part, then (i) the
Exchange Business Day immediately following the last scheduled Valuation Date
for such Exercise Date shall also be a Valuation Date for such Exercise Date,
(ii) the VWAP Price for such Disrupted Day shall be determined by the
Calculation Agent based on transactions in the Shares on the Exchange on such
Disrupted Day effected before the relevant Market Disruption Event occurred
and/or after the relevant Market Disruption Event ended and (iii) the
Calculation Agent shall adjust the Daily Settlement Amounts as appropriate to
take into account the duration of such Market Disruption Event; and provided
further that if the final Valuation Date for any Exercise Date has not occurred
as of the Final Disruption Date for such Exercise Date, the Final Disruption
Date shall be the final Valuation Date for such Exercise Date, in which case the
Calculation Agent shall determine the Daily Settlement Amount for such Valuation
Date in a commercially reasonable manner. “Final Disruption Date” means, for any
Exercise Date, the date ten Scheduled Trading Days following the date that would
be the final Valuation Date for such Exercise Date if no Disrupted Day occurred
following such Exercise Date. Any day on which the Exchange is

 

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         scheduled to close prior to its normal closing time shall be considered
a Disrupted Day in whole. Section 6.6. of the Equity Definitions shall not apply
to any Valuation Date.   Daily Settlement Amount:    For any Valuation Date for
any Exercise Date, (i) the amount, if any, by which (x) the Daily Value for such
Valuation Date exceeds (y) USD1,000 divided by the Number of Valuation Dates for
such Exercise Date, divided by (ii) the VWAP Price on such Valuation Date.  
Daily Value:    For any Valuation Date for any Exercise Date, (i) the product of
the Option Entitlement and the VWAP Price on such Valuation Date divided by (ii)
the Number of Valuation Dates for such Exercise Date.   Number of Valuation
Dates:    For any Exercise Date that occurs prior to the Early Conversion Date,
the Number of Early Conversion Valuation Dates, and, for any Exercise Date that
occurs on or after the Early Conversion Date, the Number of Final Conversion
Valuation Dates.  

Number of Early Conversion

Valuation Dates:

   10  

Number of Final Conversion

Valuation Dates:

   20   VWAP Price:    For any Valuation Date, the volume weighted average price
per Share on the Exchange for the regular trading session (including any
extensions thereof) of the Exchange on such Valuation Date (without regard to
pre-open or after hours trading outside of such regular trading session), as
published by Bloomberg at 4:15 p.m. New York City time (or 15 minutes following
the end of any extension of the regular trading session) on such Valuation Date,
on Bloomberg page “SPWRA.UQ <Equity> AQR” (or any successor thereto) (or if such
published volume weighted average price is unavailable or is manifestly
incorrect, the market value of one Share on such Valuation Date, as determined
by the Calculation Agent using a volume weighted method).   Market Disruption
Events:    The first sentence of Section 6.3(a) of the Equity Definitions is
hereby amended (A) by deleting the words “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” in the third, fourth and fifth
lines thereof, and (B) by replacing the words “or (iii) an Early Closure.” by
“(iii) an Early Closure, or (iv) a Regulatory Disruption.”          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.

 

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  Regulatory Disruption:    Any event that Dealer, in its discretion, determines
makes it appropriate with regard to any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by Dealer, and including without limitation Rule 10b-18, Rule 10b-5,
Regulation 13D-G and Regulation 14E under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and Regulation M), for Dealer to refrain from
or decrease any market activity in connection with the Transaction. Dealer shall
notify Counterparty as soon as reasonably practicable that a Regulatory
Disruption has occurred and the Valuation Dates affected by it.  

Other Applicable Provisions:

   To the extent Dealer is obligated to deliver Shares hereunder, the provisions
of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions will
be applicable as if “Physical Settlement” applied to the Transaction; provided
that the Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified by excluding any representations therein relating
to restrictions, obligations, limitations or requirements under applicable
securities laws that exist as a result of the fact that Buyer is the issuer of
the Shares.   Restricted Certificated Shares:    Notwithstanding anything to the
contrary in the Equity Definitions, Dealer may, in whole or in part, deliver
Shares in certificated form representing the Number of Shares to be Delivered to
Counterparty in lieu of delivery through the Clearance System. Adjustments:     
  Method of Adjustment:    Notwithstanding Section 11.2 of the Equity
Definitions, upon the occurrence of any event or condition set forth in Section
8.05(a), 8.05(b), 8.05(c), 8.05(d), 8.05(e) or 8.05(f) of the Third Supplemental
Indenture (an “Adjustment Event”), the Calculation Agent shall make the
corresponding adjustment in respect of any one or more of the Number of Options,
the Option Entitlement and any other variable relevant to the exercise,
settlement or payment of the Transaction, to the extent an analogous adjustment
is made under the Indenture. Immediately upon the occurrence of any Adjustment
Event, Counterparty shall notify the Calculation Agent of such Adjustment Event;
and once the adjustments to be made to the terms of the Indenture and the
Relevant Convertible Debentures in respect of such Adjustment Event have been
determined, Counterparty shall immediately notify the Calculation Agent in
writing of the details of such adjustments.

 

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Extraordinary Events:   Merger Events:    Notwithstanding Section 12.1(b) of the
Equity Definitions, a “Merger Event” means the occurrence of any event or
condition set forth in Section 5.1 or 5.2 of the Base Indenture or Section 8.06
of the Third Supplemental Indenture.      Consequences of Merger Events:
Notwithstanding Sections 12.2 of the Equity Definitions, upon the occurrence of
a Merger Event, the Calculation Agent shall make the corresponding adjustment in
respect of any adjustment under the Indenture to any one or more of the nature
of the Shares, the Number of Options, the Option Entitlement and any other
variable relevant to the exercise, settlement or payment for the Transaction, to
the extent an analogous adjustment is made under the Indenture in respect of
such Merger Event; provided that such adjustment shall be made without regard to
any adjustment to the Conversion Rate for the issuance of additional Shares as
set forth in Section 8.04(b) or 8.05(h) of the Third Supplemental Indenture.  
Notice of Merger Consideration:    Upon the occurrence of a Merger Event that
causes the Shares to be converted into the right to receive more than a single
type of consideration (determined based in part upon any form of stockholder
election), Counterparty shall reasonably promptly (but in any event prior to the
relevant merger date) notify the Calculation Agent of (i) the weighted average
of the types and amounts of consideration received by the holders of Shares
entitled to receive cash, securities or other property or assets with respect to
or in exchange for such Shares in any Merger Event who affirmatively make such
an election and (ii) the details of the adjustment made under the Indenture in
respect of such Merger Event.   Nationalization, Insolvency or Delisting:   
Cancellation and Payment (Calculation Agent Determination); provided that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Exchange is located in the United States
and the Shares are not immediately re-listed, re-traded or re-quoted on any of
the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global
Select Market or the NASDAQ Global Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any such
exchange or quotation system, such exchange or quotation system shall thereafter
be deemed to be the Exchange.   Additional Disruption Events:        (a) Change
in Law:    Applicable; provided that Section 12.9a(ii) of the Equity Definitions
is hereby amended (i) by the

 

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     replacement of the word “Shares” with “Hedge Positions”; (ii) by adding the
phrase “or public announcement of” immediately after the phrase “due to the
promulgation of or” in the third line thereof and adding the phrase “formal or
informal” before the word “interpretation” in the same line; and (iii)
immediately following the word “Transaction” in clause (X) thereof, adding the
phrase “in the manner contemplated by the Hedging Party on the Trade Date”.    

(b) Insolvency Filing:

   Applicable    

(c) Hedging Disruption:

   Applicable    

(d) Increased Cost of Hedging:

   Applicable; provided that Section 12.9(a)(vi) of the Equity Definitions is
hereby amended by adding the parenthetical “(including without limitation the
volatility risk)” after the word “risk” in the fifth line thereof.   Hedging
Party:    Dealer   Determining Party:    Dealer   Non-Reliance:    Applicable  

Agreements and Acknowledgments

Regarding Hedging Activities:

   Applicable        Failure to Deliver:    Applicable   Additional
Acknowledgments:    Applicable   3. Calculation Agent:    Dealer. Upon request,
the Calculation Agent shall provide to either party hereto (and any advisers to
such party as requested) a reasonably detailed explanation of any calculation or
determination hereunder. The Calculation Agent shall provide notice to the
parties of any calculation or determination hereunder as soon as commercially
reasonably practicable following making such calculation or determination. Each
party shall have the right to bring to the attention of the Calculation Agent
any facts that such party feels may result in an adjustment or determination
hereunder.   4. Account Details:        Dealer Payment Instructions:         
ABA: 053-000-219          Wachovia Bank, National Association Charlotte, NC     
    Account No.: 04659360009768          Attn: Equity Derivatives       
Counterparty Payment Instructions:          To be provided by Counterparty.   

 

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  5. Offices:           The Office of Dealer for the Transaction is:            

Wachovia Bank, National Association

375 Park Avenue

New York, NY 10152

    The Office of Counterparty for the Transaction is:       SunPower
Corporation          3939 N. First Street          San Jose, CA 95134      6.
Notices: For purposes of this Confirmation:   (a)     Address for notices or
communications to Counterparty:       To:    SunPower Corporation         

3939 N. First Street

San Jose, CA 95134

      Attn:    Dennis Arriola/CFO       Telephone:    (408) 240-5574      
Facsimile:    (408) 240-5404       With a copy to:             Attn:    Bruce
Ledesma/GC       Facsimile:    (510) 540-0552   (b)     Address for notices or
communications to Dealer:       To:    Wachovia Capital Markets, LLC         

201 South College Street, 6th Floor

Charlotte, NC 28288-0602

      Telephone No:    (704) 715-8086       Facsimile:    (704) 383-0601      
With a copy to:             Attn:    Mark Kohn or Head Trader       Telephone
No:    (212) 214-6089       Facsimile:    (212) 214-8914

7. Representations, Warranties and Agreements:

(a) In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Counterparty represents and warrants to and for the
benefit of, and agrees with, Dealer as follows:

(i) On the Trade Date, (A) none of Counterparty and its officers and directors
is aware of any material nonpublic information regarding Counterparty or the
Shares and (B) all reports and other documents filed by Counterparty with the
Securities and Exchange Commission pursuant to the Exchange Act when considered
as a whole (with the more recent such reports and documents deemed to amend
inconsistent statements contained in any earlier such reports and documents), do
not contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading.

(ii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”))
shall directly or indirectly (including, without limitation, by means of any
cash-settled or other derivative instrument other than the Transaction)
purchase, offer to purchase, place any bid or limit order that

 

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would effect a purchase of, or commence any tender offer relating to, any Shares
(or an equivalent interest, including a unit of beneficial interest in a trust
or limited partnership or a depository share) or any security convertible into
or exchangeable or exercisable for Shares.

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

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

(v) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution
of Counterparty’s board of directors authorizing the Transaction and such other
certificate or certificates as Dealer shall reasonably request.

(vi) Counterparty is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares) or to otherwise violate the Exchange Act.

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

(viii) On each of the Trade Date and the Premium Payment Date, Counterparty is
not “insolvent” (as such term is defined under Section 101(32) of the U.S.
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”))
and Counterparty would be able to purchase the Shares hereunder in compliance
with the laws of the jurisdiction of Counterparty’s incorporation.

(ix) The representations and warranties of Counterparty set forth in Section 3
of the Agreement and Section 2 of the Underwriting Agreement dated as of
April 28, 2009 between Counterparty and Credit Suisse Securities (USA) LLC and
Deutsche Bank Securities Inc., as representatives of the Underwriters party
thereto (the “Underwriting Agreement”) are true and correct as of the Trade Date
and the Effective Date and are hereby deemed to be repeated to Dealer as if set
forth herein.

(b) Each of Dealer and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in Section 1a(12) of the U.S.
Commodity Exchange Act, as amended.

(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of
Section 4(2) thereof. Accordingly, Counterparty represents and warrants to
Dealer that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment
and its investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated
under the Securities Act, (iii) it is entering into the Transaction for its own
account and without a view to the distribution or resale thereof, (iv) the
assignment, transfer or other disposition of the Transaction has not been and
will not be registered under the Securities Act and is restricted under this
Confirmation, the Securities Act and state securities laws, and (v) its
financial condition is such that it has no need for liquidity with respect to
its investment in the Transaction and no need to dispose of any portion thereof
to satisfy any existing or contemplated undertaking or indebtedness and is
capable of assessing the merits of and understanding (on its own behalf or
through independent professional advice), and understands and accepts, the
terms, conditions and risks of the Transaction.

(d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a
“financial institution,” “swap participant” and “financial participant” within
the meaning of Sections 101(22),

 

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101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy
Code”). The parties hereto further agree and acknowledge (A) that this
Confirmation is (i) a “securities contract,” as such term is defined in
Section 741(7) of the Bankruptcy Code, with respect to which each payment and
delivery hereunder is a “settlement payment,” as such term is defined in
Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,” as such term
is defined in Section 101(53B) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “transfer,” as such term is defined in
Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the
protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17),
546(e), 546(g), 555 and 560 of the Bankruptcy Code.

(e) Each party acknowledges and agrees to be bound by the Conduct Rules of the
National Association of Securities Dealers, Inc. applicable to transactions in
options, and further agrees not to violate the position and exercise limits set
forth therein.

(f) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the
Trade Date and reasonably acceptable to Dealer in form and substance, with
respect to the matters set forth in Section 3(a) of the Agreement.

8. Other Provisions:

(a) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If Dealer shall owe Counterparty any amount pursuant to
“Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the
Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “Payment
Obligation”), Counterparty shall have the right, in its sole discretion, to
require Dealer to satisfy any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable telephonic notice to
Dealer, confirmed in writing within one Scheduled Trading Day, between the hours
of 9:00 A.M. and 4:00 P.M. New York City time on the relevant merger date,
announcement date, Early Termination Date or date of cancellation or termination
in respect of an Additional Disruption Event (“Notice of Share Termination”);
provided that if Counterparty does not elect to require Dealer to satisfy its
Payment Obligation by the Share Termination Alternative, Dealer shall have the
right, in its sole discretion, to elect to satisfy its Payment Obligation by the
Share Termination Alternative, notwithstanding Counterparty’s failure to elect
or election to the contrary; and provided further that Counterparty shall not
have the right to so elect (but, for the avoidance of doubt, Dealer shall have
the right to so elect) in the event of (i) an Insolvency, a Nationalization or a
merger event, in each case, in which the consideration or proceeds to be paid to
holders of Shares consists solely of cash or (ii) an Event of Default in which
Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party, which Event of Default or Termination Event
resulted from an event or events within Counterparty’s control. Upon such Notice
of Share Termination, the following provisions shall apply on the Scheduled
Trading Day immediately following the relevant merger date, announcement date,
Early Termination Date or date of cancellation or termination in respect of an
Additional Disruption Event, as applicable:

 

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

 

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Share Termination Unit Price:    The value of property contained in one Share
Termination Delivery Unit on the date such Share Termination Delivery Units are
to be delivered as Share Termination Delivery Property, as determined by the
Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Dealer at the time of notification of the
Payment Obligation. Share Termination Delivery Unit:    In the case of a
Termination Event, Event of Default, Delisting or Additional Disruption Event,
one Share or, in the case of an Insolvency, Nationalization, Merger Event, one
Share or a unit consisting of the number or amount of each type of property
received by a holder of one Share (without consideration of any requirement to
pay cash or other consideration in lieu of fractional amounts of any securities)
in such Insolvency, Nationalization, Merger Event. If such Insolvency,
Nationalization, Merger Event involves a choice of consideration to be received
by holders, such holder shall be deemed to have elected to receive the maximum
possible amount of cash. Other applicable provisions:    If Share Termination
Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 of
the Equity Definitions will be applicable as if “Physical Settlement” applied to
the Transaction, except that all references to “Shares” shall be read as
references to “Share Termination Delivery Units”; provided that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Buyer is the issuer of any Share
Termination Delivery Units (or any part thereof).

(b) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good
faith reasonable judgment of Dealer in accordance with the advice of outside
counsel, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose of
hedging its obligations pursuant to the Transaction cannot be sold in the U.S.
public market by Dealer without registration under the Securities Act,
Counterparty shall, at its election: (i) in order to allow Dealer to sell the
Hedge Shares in a registered offering, make available to Dealer an effective
registration statement under the Securities Act to cover the resale of such
Hedge Shares and (A) enter into an agreement, in form and substance satisfactory
to Dealer, substantially in the form of an underwriting agreement for a
registered offering, (B) provide accountant’s “comfort” letters in customary
form for registered offerings of equity securities, (C) provide disclosure
opinions of nationally recognized outside counsel to Counterparty reasonably
acceptable to Dealer, (D) provide other customary opinions, certificates and
closing documents customary in form for registered offerings of equity
securities and (E) afford Dealer a reasonable opportunity to conduct a “due
diligence” investigation with respect to Counterparty customary in scope for
underwritten offerings of equity securities; provided, however, that if Dealer,
in its sole reasonable discretion, is not satisfied with access to due diligence
materials, the results of its due diligence investigation, or the procedures and
documentation for the registered offering referred to above, then clause (ii) or
clause (iii) of this Section 8(b) shall apply at the election of Counterparty;
(ii) in order to allow Dealer to sell the Hedge Shares in a private placement,
to enter into a private placement agreement substantially similar to private
placement purchase agreements customary for private placements of equity
securities, in form and substance satisfactory to Dealer, including customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Dealer, due diligence rights (for Dealer or any
designated buyer of the Hedge Shares from Dealer), opinions and certificates and
such other documentation as is customary for private placements agreements, all
reasonably acceptable to Dealer (in which case, the Calculation Agent shall make
any adjustments to the terms of the Transaction that are necessary, in its
reasonable judgment, to compensate Dealer for any discount from the public
market price of the Shares incurred on the sale of Hedge Shares in a private
placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on
such Exchange Business Days, and in the amounts, requested by Dealer. For the
avoidance of doubt, under no circumstances shall Counterparty be obligated to
make the election described in clause (iii) of the preceding sentence.

 

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(c) Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any repurchase of Shares, promptly give Dealer a written notice of such
repurchase (a “Repurchase Notice”) on such day if, following such repurchase,
the Notice Percentage as determined on such day is (i) greater than 6% and
(ii) greater by 0.5% than the Notice Percentage included in the immediately
preceding Repurchase Notice (or, in the case of the first such Repurchase
Notice, greater than the Notice Percentage as of the date hereof). The “Notice
Percentage” as of any day is the fraction, expressed as a percentage, the
numerator of which is the Number of Shares and the denominator of which is the
number of Shares outstanding on such day. In the event that Counterparty fails
to provide Dealer with a Repurchase Notice on the day and in the manner
specified in this Section 8(c) then Counterparty agrees to indemnify and hold
harmless Dealer, its affiliates and their respective directors, officers,
employees, agents and controlling persons (Dealer and each such person being an
“Indemnified Party”) from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject under applicable securities laws, including
without limitation, Section 16 of the Exchange Act, relating to or arising out
of such failure. If for any reason the foregoing indemnification is unavailable
to any Indemnified Party or insufficient to hold harmless any Indemnified Party,
then Counterparty shall contribute, to the maximum extent permitted by law, to
the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage or liability. In addition, Counterparty will reimburse any
Indemnified Party for all expenses (including reasonable counsel fees and
expenses) as they are incurred (after notice to Counterparty) in connection with
the investigation of, preparation for or defense or settlement of any pending or
threatened claim or any action, suit or proceeding arising therefrom, whether or
not such Indemnified Party is a party thereto and whether or not such claim,
action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction
contemplated by this Confirmation and any assignment and delegation of the
Transaction made pursuant to this Confirmation or the Agreement shall inure to
the benefit of any permitted assignee of Dealer.

(d) Additional Termination Events. (i) The occurrence of (A) an event of default
with respect to Counterparty under the terms of the Convertible Debentures as
set forth in Section 6.01 of the Third Supplemental Indenture or (B) an
Amendment Event shall be an Additional Termination Event with respect to which
the Transaction is the sole Affected Transaction and Counterparty is the sole
Affected Party, and Dealer shall be the party entitled to designate an Early
Termination Date pursuant to Section 6(b) of the Agreement.

“Amendment Event” means that Counterparty amends, modifies, supplements or
obtains a waiver in respect of any term of the Indenture or the Convertible
Debentures governing the principal amount, coupon, maturity, repurchase
obligation of Counterparty, redemption right of Counterparty, any term relating
to conversion of the Convertible Debentures (including changes to the conversion
price, conversion settlement dates or conversion conditions), or any term that
would require consent of the holders of not less than 100% of the principal
amount of the Convertible Debentures to amend, in each case without the prior
consent of Dealer.

(ii) If at any time the senior unsecured debt of Dealer is rated Baa1 or lower
by Moody’s Investor Services, Inc. (“Moody’s”) or BBB+ or lower by Standard and
Poor’s Rating Services (“S&P”) (a “Ratings Downgrade”), then an Additional
Termination Event, with Counterparty as the sole Affected Party, the Transaction
as the sole Affected Transaction and Counterparty as the party entitled to
designated an Early Termination Date, shall occur on the date three Exchange
Business Days following the occurrence of such Ratings Downgrade (the “Downgrade
Deadline”) unless, on or prior to the Downgrade Deadline, either (i) Dealer has
agreed to provide collateral to Counterparty on a mark-to-market basis to secure
Dealer’s obligations hereunder on terms commercially reasonably acceptable to
Counterparty and Dealer or (ii) Dealer shall have transferred and assigned its
obligations hereunder to a person with (or whose obligations hereunder are fully
and unconditionally guaranteed by a person with) a credit rating of A2 or higher
from Moody’s and A or higher from S&P (and Counterparty agrees that it will not
object to any such transfer and assignment). In the case of clause (i), eligible
collateral shall include cash, cash equivalents and equity securities of
Counterparty, including without limitation Shares and any warrants issued by
Counterparty, and any other collateral reasonably acceptable to Counterparty,
and the Calculation Agent shall make all determinations of exposure and
collateral value.

 

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(e) Right to Extend. Dealer may postpone any Settlement Date or any other date
of valuation or delivery by Dealer to a date no later than the Final Disruption
Date to an Exercise Date occurring on the Expiration Date, in the case of a date
of valuation, or the date one Settlement Cycle following the Final Disruption
Date applicable to an Exercise Date occurring on the Expiration Date, in the
case of a date of delivery, with respect to some or all of the relevant Options
(in which event the Calculation Agent shall make appropriate adjustments to the
Delivery Obligation), if Dealer determines, in its reasonable discretion, that
such extension is reasonably necessary or appropriate to preserve Dealer’s
hedging or hedge unwind activity hereunder in light of existing liquidity
conditions in the cash market or the stock borrow market or other relevant
market or to enable Dealer to effect purchases of Shares in connection with its
hedging, hedge unwind or settlement activity hereunder in a manner that would,
if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Dealer.

(f) Staggered Settlement. Dealer may, by notice to Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on
one 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, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to the date one Settlement
Cycle following the Final Disruption Date applicable to an Exercise Date
occurring on the Expiration Date, but not prior to the date that precedes such
Settlement Date by the Number of Valuation Dates for the related Exercise Date)
or delivery times and how it will allocate the Shares it is required to deliver
under “Delivery Obligation” (above) among the Staggered Settlement Dates or
delivery times; and

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

(g) Transfer and Assignment. Either party may transfer any of its rights or
obligations under the Transaction with the prior written consent of the
non-transferring party, such consent not to be unreasonably withheld; provided
that Dealer may transfer or assign without any consent of Counterparty its
rights and obligations hereunder, in whole or in part, to any person with (or
whose obligations hereunder are fully and unconditionally guaranteed by a person
with) a credit rating of “A” or higher from Standard and Poor’s Rating Services
or “A2” or higher from Moody’s Investor Services, Inc.; provided further that at
any time at which (1) the Equity Percentage exceeds 8%, (2) Dealer, Dealer Group
(as defined below) or any person whose ownership position would be aggregated
with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a
“Dealer Person”) under Section 203 of the Delaware General Corporation Law (the
“DGCL Takeover Statute”) or any state or federal bank holding company or banking
laws, or other federal, state or local regulations or regulatory orders
applicable to ownership of Shares (“Applicable Laws”), owns, beneficially owns,
constructively owns, controls, holds the power to vote or otherwise meets a
relevant definition of ownership in excess of a number of Shares equal to
(x) the number of Shares that would give rise to reporting or registration
obligations or other requirements (including obtaining prior approval by a state
or federal regulator) of a Dealer Person under Applicable Laws (including,
without limitation, “interested stockholder” or “acquiring person” status under
the DGCL Takeover Statute) and with respect to which such requirements have not
been met or the relevant approval has not been received minus (y) 2% of the
number of Shares outstanding on the date of determination (either such condition
described in clause (1) or (2), an “Excess Ownership Position”), or (3) a
Hedging Disruption has occurred and is continuing, if Dealer, in its discretion,
is unable to effect a transfer or assignment to a third party in accordance with
the requirements set forth above after using its commercially reasonable efforts
on pricing terms reasonably acceptable to Dealer such that an Excess Ownership
Position or a Hedging Disruption, as the case may be, no longer exists, Dealer
may designate any Scheduled Trading Day as an Early Termination Date with
respect to a portion (the “Terminated Portion”) of the Transaction, such that
such Excess Ownership Position or Hedging Disruption, as the case may be, no
longer exists. In the event that Dealer so designates an Early Termination Date
with respect to a portion of the Transaction, a payment or delivery shall be
made pursuant to Section 6 of the Agreement and Section 8(a) of this
Confirmation as if (i) an Early Termination Date had been designated in respect
of a Transaction having terms identical to the Terminated Portion of the
Transaction, (ii) Counterparty shall be the sole Affected Party with respect to
such partial termination and (iii) such portion of the Transaction

 

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shall be the only Terminated Transaction. The “Equity Percentage” as of any day
is the fraction, expressed as a percentage, (A) the numerator of which is the
number of Shares that Dealer and any of its affiliates subject to aggregation
with Dealer for purposes of the “beneficial ownership” test under Section 13 of
the Exchange Act and all persons who may form a “group” (within the meaning of
Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively, “Dealer
Group”) “beneficially own” (within the meaning of Section 13 of the Exchange
Act) without duplication on such day and (B) the denominator of which is the
number of Shares outstanding on such day.

(h) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior
to the claims of common stockholders in the event of Counterparty’s bankruptcy.
For the avoidance of doubt, the parties agree that the preceding sentence shall
not apply at any time other than during Counterparty’s bankruptcy to any claim
arising as a result of a breach by Counterparty of any of its obligations under
this Confirmation or the Agreement. For the avoidance of doubt, the parties
acknowledge that this Confirmation is not secured by any collateral that would
otherwise secure the obligations of Counterparty herein under or pursuant to any
other agreement.

(i) Netting and Set-off.

(i) If on any date cash would otherwise be payable or Shares or other property
would otherwise be deliverable hereunder or pursuant to the Agreement or
pursuant to any other agreement between the parties by Counterparty to Dealer
and cash would otherwise be payable or Shares or other property would otherwise
be deliverable hereunder or pursuant to the Agreement or pursuant to any other
agreement between the parties by Dealer to Counterparty and the type of property
required to be paid or delivered by each such party on such date is the same,
then, on such date, each such party’s obligation to make such payment or
delivery will be automatically satisfied and discharged and, if the aggregate
amount that would otherwise have been payable or deliverable by one such party
exceeds the aggregate amount that would otherwise have been payable or
deliverable by the other such party, replaced by an obligation of the party by
whom the larger aggregate amount would have been payable or deliverable to pay
or deliver to the other party the excess of the larger aggregate amount over the
smaller aggregate amount.

(ii) In addition to and without limiting any rights of set-off that a party
hereto may have as a matter of law, pursuant to contract or otherwise, upon the
occurrence of an Early Termination Date, Dealer shall have the right to
terminate, liquidate and otherwise close out the Transaction and to set off any
obligation or right that Dealer or any affiliate of Dealer may have to or
against Counterparty hereunder or under the Agreement against any right or
obligation Dealer or any of its affiliates may have against or to Counterparty,
including without limitation any right to receive a payment or delivery pursuant
to any provision of the Agreement or hereunder. In the case of a set-off of any
obligation to release, deliver or pay assets against any right to receive assets
of the same type, such obligation and right shall be set off in kind. In the
case of a set-off of any obligation to release, deliver or pay assets against
any right to receive assets of any other type, the value of each of such
obligation and such right shall be determined by the Calculation Agent and the
result of such set-off shall be that the net obligor shall pay or deliver to the
other party an amount of cash or assets, at the net obligor’s option, with a
value (determined, in the case of a delivery of assets, by the Calculation
Agent) equal to that of the net obligation. In determining the value of any
obligation to release or deliver Shares or any right to receive Shares, the
value at any time of such obligation or right shall be determined by reference
to the market value of the Shares at such time, as determined by the Calculation
Agent. If an obligation or right is unascertained at the time of any such
set-off, the Calculation Agent may in good faith estimate the amount or value of
such obligation or right, in which case set-off will be effected in respect of
that estimate, and the relevant party shall account to the other party at the
time such obligation or right is ascertained.

(iii) Notwithstanding any provision of the Agreement (including without
limitation Section 6(f) thereof) and this Confirmation (including without
limitation this Section 8(i)) or any other agreement between the parties to the
contrary, (A) Counterparty shall not net or set off its obligations under the
Transaction, if any, against its rights against Dealer under any other
transaction or instrument, (B) Dealer may net and set off any rights of Dealer
against Counterparty arising under the Transaction only against obligations of
Dealer to Counterparty arising under any

 

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transaction or instrument if such transaction or instrument does not convey
rights to Dealer senior to the claims of common stockholders in the event of
Counterparty’s bankruptcy and (C) in the event of bankruptcy or liquidation of
Counterparty, neither party shall have the right to set off any obligation that
it may have to the other party under the Transaction against any obligation such
other party may have to it under the Agreement, this Confirmation or any other
agreement between the parties hereto, by operation of law or otherwise. Dealer
will give notice to Counterparty of any netting or set off effected under this
provision.

(j) Early Unwind. In the event the sale by Counterparty of the Convertible
Debentures is not consummated with the Underwriters (as defined in the
Underwriting Agreement) pursuant to the Underwriting Agreement for any reason by
the close of business in New York on May 4, 2009 (or such later date as agreed
upon by the parties, which in no event shall be later than May 11, 2009) (May 4,
2009 or such later date being the “Early Unwind Date”), the Transaction shall
automatically terminate (the “Early Unwind”), on the Early Unwind Date and
(i) the Transaction and all of the respective rights and obligations of Dealer
and Counterparty thereunder shall be cancelled and terminated and
(ii) Counterparty shall deliver to Dealer, other than in cases involving a
breach of the Underwriting Agreement by the Underwriters, either an amount in
cash equal to the aggregate amount of costs and expenses relating to the
unwinding of Dealer’s hedging activities in respect of the Transaction
(including market losses incurred in reselling any Shares purchased by Dealer or
its affiliates in connection with such hedging activities, unless Counterparty
agrees to purchase any such Shares at the cost at which Dealer purchased such
Shares), but after giving effect to any gains experienced by Dealer (such net
amount, the “Cash Amount”) or, at the election of Counterparty, Shares with a
value (as reasonably determined by the Calculation Agent) equal to the Cash
Amount. Following such termination, cancellation and payment, each party shall
be released and discharged by the other party from and agrees not to make any
claim against the other party with respect to any obligations or liabilities of
either party arising out of and to be performed in connection with the
Transaction either prior to or after the Early Unwind Date. If Counterparty
elects to deliver Shares pursuant to this paragraph, the following provisions
shall apply:

(i) At the election of Counterparty by notice to Dealer within one Exchange
Business Day after the Early Unwind Date, either (A) all Shares delivered by
Counterparty to Dealer shall be, at the time of such delivery, covered by an
effective registration statement of Counterparty for immediate resale by Dealer
(such registration statement and the corresponding prospectus (the “Prospectus”)
(including, without limitation, any sections describing the plan of
distribution) in form and content commercially reasonably satisfactory to
Dealer) or (B) Counterparty shall deliver additional Shares, so that the value
of such Shares, as determined by the Calculation Agent to reflect an appropriate
liquidity discount, equals the Cash Amount.

(ii) If Counterparty makes the election described in clause (i)(A) above:

(A) Dealer (or an affiliate of Dealer designated by Dealer) shall be afforded a
reasonable opportunity to conduct a due diligence investigation with respect to
Counterparty that is customary in scope for underwritten offerings of equity
securities and that yields results that are commercially reasonably satisfactory
to Dealer or such affiliate, as the case may be, in its discretion; and

(B) Dealer (or an affiliate of Dealer designated by Dealer) and Counterparty
shall enter into an agreement (a “Registration Agreement”) on commercially
reasonable terms in connection with the public resale of such Shares by Dealer
or such affiliate substantially similar to underwriting agreements customary for
underwritten offerings of equity securities (and in particular on terms
reasonably similar to these contained in the Underwriting Agreement), in form
and substance reasonably satisfactory to Dealer or such affiliate and
Counterparty, which Registration Agreement shall include, without limitation,
provisions substantially similar to those contained in such underwriting
agreements relating to the indemnification of, and contribution in connection
with the liability of, Dealer and its affiliates and Counterparty, shall provide
for the payment by Counterparty of all expenses in connection with such resale,
including all registration costs and all reasonable fees and expenses of counsel
for Dealer, and shall provide for the delivery of accountants’ “comfort letters”
to Dealer or such affiliate with respect to the financial statements and certain
financial information contained in or incorporated by reference into the
Prospectus.

 

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(iii) If Counterparty makes the election described in clause (i)(B) above:

(A) Dealer (or an affiliate of Dealer designated by Dealer) and any potential
institutional purchaser of any such Shares from Dealer or such affiliate
identified by Dealer shall be afforded a commercially reasonable opportunity to
conduct a due diligence investigation in compliance with applicable law with
respect to Counterparty customary in scope for private placements of equity
securities (including, without limitation, the right to have made available to
them for inspection such financial and other records, pertinent corporate
documents and other information reasonably requested by them), subject to
execution by such recipients of customary confidentiality agreements reasonably
acceptable to Counterparty;

(B) Dealer (or an affiliate of Dealer designated by Dealer) and Counterparty
shall enter into an agreement (a “Private Placement Agreement”) on commercially
reasonable terms in connection with the private placement of such Shares by
Counterparty to Dealer or such affiliate and the private resale of such shares
by Dealer or such affiliate, substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance reasonably satisfactory to Dealer and Counterparty, which Private
Placement Agreement shall include, without limitation, provisions substantially
similar to those contained in such private placement purchase agreements
relating to the indemnification of, and contribution in connection with the
liability of, Dealer and its affiliates and Counterparty, shall provide for the
payment by Counterparty of all expenses in connection with such resale,
including all reasonable fees and expenses of counsel for Dealer, shall contain
customary representations, warranties 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 shall use commercially reasonable efforts to provide for the
delivery of accountants’ “comfort letters” to Dealer or such affiliate with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the offering memorandum prepared for the
resale of such Shares;

(C) Counterparty agrees that any Shares so delivered to Dealer, (i) subject to
applicable securities laws, may be transferred by and among Dealer and its
affiliates, and Counterparty shall effect such transfer without any further
action by Dealer and (ii) after the minimum “holding period” within the meaning
of Rule 144(d) under the Securities Act has elapsed with respect to such Shares,
Counterparty shall promptly remove, or cause the transfer agent for such Shares
or securities to remove, any legends referring to any such restrictions or
requirements from such Shares or securities upon delivery by Dealer (or such
affiliate of Dealer) to Counterparty or such transfer agent of seller’s and
broker’s representation letters customarily delivered in connection with resales
of restricted securities pursuant to Rule 144 under the Securities Act, without
any further requirement for the delivery of any certificate, consent, agreement,
opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Dealer (or such affiliate of
Dealer);

(D) Counterparty shall not take (and shall cause any such affiliate not to
take), or cause to be taken, any action that would make unavailable either the
exemption pursuant to Section 4(2) of the Securities Act for the sale by
Counterparty to Dealer (or any affiliate designated by Dealer) of the Shares or
the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for
resales of the Shares by Dealer (or any such affiliate of Dealer); and

(E) Dealer or its affiliate may sell (which sale shall be made in a commercially
reasonable manner) such Shares during a period (the “Resale Period”) commencing
on the Exchange Business Day following delivery of such Shares and

 

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ending on the Exchange Business Day on which Dealer completes the sale of all
such Shares or a sufficient number of Shares so that the realized net proceeds
of such sales exceed the Cash Amount. If any of such delivered Shares remain
after such realized net proceeds exceed the Cash Amount, Dealer shall return
such remaining Shares to Counterparty. If the Cash Amount exceeds the realized
net proceeds from such resale, Counterparty shall transfer to Dealer by the open
of the regular trading session on the Exchange on the Exchange Trading Day
immediately following the last day of the Resale Period the amount of such
excess (the “Additional Amount”) in cash or in a number of additional Shares
(“Make-whole Shares”) in an amount that, based on the Relevant Price on the last
day of the Resale Period (as if such day was the “Valuation Date” for purposes
of computing such Relevant Price), has a dollar value equal to the Additional
Amount. The Resale Period shall continue to enable the sale of the Make-whole
Shares in the manner contemplated by this paragraph. This provision shall be
applied successively until the Additional Amount is equal to zero.

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

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

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

(n) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY
WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON
BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THE TRANSACTION OR THE ACTIONS OF COUNTERPARTY OF ITS AFFILIATES OR
DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

(o) Submission to Jurisdiction. Each party hereby irrevocably and
unconditionally submits for itself and its property in any legal action or
proceeding by the other party against it relating to the Transaction to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive jurisdiction of the Supreme Court of the State of New
York, sitting in New York County, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof.

(p) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE).

(q) Role of Agent. Wachovia Capital Markets, LLC in its capacity as Agent will
be responsible for (A) effecting this Transaction, (B) issuing all required
confirmations and statements to Dealer and Counterparty, (C) maintaining books
and records relating to this Transaction in accordance with its standard
practices and procedures and in accordance with applicable law and (D) unless
otherwise requested by Counterparty, receiving, delivering, and safeguarding
Counterparty’s funds and any securities in connection with this Transaction, in
accordance with its standard practices and procedures and in accordance with
applicable law.

 

  (i)

Agent is acting in connection with this Transaction solely in its capacity as
Agent for Dealer and Counterparty pursuant to instructions from Dealer and
Counterparty. Agent shall have no responsibility or personal liability to Dealer

 

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or Counterparty arising from any failure by Dealer or Counterparty to pay or
perform any obligations hereunder, or to monitor or enforce compliance by Dealer
or Counterparty with any obligation hereunder, including, without limitation,
any obligations to maintain collateral. Each of Dealer and Counterparty agrees
to proceed solely against the other to collect or recover any securities or
monies owing to it in connection with or as a result of this Transaction. Agent
shall otherwise have no liability in respect of this Transaction, except for its
gross negligence or willful misconduct in performing its duties as Agent.

 

  (ii) Any and all notices, demands, or communications of any kind relating to
this Transaction between Dealer and Counterparty shall be transmitted
exclusively through Agent at the following address:

Wachovia Capital Markets, LLC

201 South College Street, 6th Floor

Charlotte, NC 28288-0601

Facsimile No.: (704) 383-8425

Telephone No.: (704) 715-8086

Attention: Equity Derivatives

 

  (iii) The date and time of the Transaction evidenced hereby will be furnished
by the Agent to Dealer and Counterparty upon written request.

 

  (iv) The Agent will furnish to Counterparty upon written request a statement
as to the source and amount of any remuneration received or to be received by
the Agent in connection with the Transaction evidenced hereby.

 

  (v) Dealer and Counterparty each represents and agrees (A) that this
Transaction is not unsuitable for it in the light of such party’s financial
situation, investment objectives and needs and (B) that it is entering into this
Transaction in reliance upon such tax, accounting, regulatory, legal and
financial advice as it deems necessary and not upon any view expressed by the
other or the Agent.

 

  (vi) Dealer is regulated by The Securities and Futures Authority and has
entered into this Transaction as principal. The time at which this Transaction
was executed will be notified to Counterparty (through the Agent) on request.

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing
this Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy by facsimile to 212-214-5913 (Attention: Equity Division
Documentation Unit, by telephone contact 212-214-6100).

 

Very truly yours,   WACHOVIA CAPITAL MARKETS, LLC,   WACHOVIA BANK, NATIONAL
ASSOCIATION acting solely in its capacity as Agent of Wachovia Bank, National
Association   By: Wachovia Capital Markets, LLC, acting solely in its capacity
as its Agent

 

By:  

/s/ Cathleen Burke

    By:  

/s/ Cathleen Burke

Name:   Cathleen Burke     Name:   Cathleen Burke Title:   Managing Director    
Title:   Managing Director

 

Agreed and Accepted By: SUNPOWER CORPORATION By:  

/s/ Dennis V. Arriola

Name:   Dennis V. Arriola Title:  
Senior Vice President and Chief Financial Officer