Exhibit 10.1

 

[Dealer Header]

 

[Dealer Address]

 

[__________], 2019

 

To: Granite Construction Incorporated
585 West Beach Street
Watsonville, California 95706
Attention:             [Title of contact]
Telephone No.:    [____________]
Facsimile No.:       [____________]

 

Re: [Base][Additional] Call Option Transaction

 

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

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “Equity Definitions”), as published by the International Swaps
and Derivatives Association, Inc. (“ISDA”) are incorporated into this
Confirmation. In the event of any inconsistency between the Equity Definitions
and this Confirmation, this Confirmation shall govern. Certain defined terms
used herein are based on terms that are defined in the Offering Memorandum dated
[__________], 2019 (the “Offering Memorandum”) relating to the [__]% Convertible
Senior Notes due 2024 (as originally issued by Counterparty, the “Convertible
Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible
Note”) issued by Counterparty in an aggregate initial principal amount of USD
[200,000,000] (as increased by [up to]1 an aggregate principal amount of USD
[30,000,000] [if and to the extent that]2 [pursuant to the exercise by]3 the
Initial Purchasers (as defined herein) [exercise]4 [of]5 their [over-allotment]
option to purchase additional Convertible Notes pursuant to the Purchase
Agreement (as defined herein)) pursuant to an Indenture [to be]6 dated
[__________], 2019 (the “Indenture”), between Counterparty and Wilmington Trust,
National Association, as trustee (the “Trustee”). In the event of any
inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture which are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein will conform to the descriptions thereof in the
Offering Memorandum. If any such definitions in the Indenture or any such
sections of the Indenture differ from the descriptions thereof in the Offering
Memorandum, the descriptions thereof in the Offering Memorandum will govern for
purposes of this Confirmation. The parties further acknowledge that the
Indenture section numbers used herein are based on the [draft of the Indenture
last reviewed by Dealer and Counterparty as of the date of this Confirmation,
and if any such section numbers are changed in the Indenture as executed, the
parties will amend this Confirmation in good faith to preserve the intent of the
parties]7[Indenture as executed]8. Subject to the foregoing, 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 or supplemented following such date
(other than any amendment or supplement (x) pursuant to Section 10.01(l) of the
Indenture that, as reasonably determined by the Calculation Agent in good faith,
conforms the Indenture to the

 

 

 

1 Include in the Base Call Option Confirmation.

2 Include in the Base Call Option Confirmation.

3 Include in the Additional Call Option Confirmation.

4 Include in the Base Call Option Confirmation.

5 Include in the Additional Call Option Confirmation.

6 Insert if Indenture is not completed at the time of the Confirmation.

7 Include in the Base Call Option Confirmation. Include in the Additional Call
Option Confirmation if it is executed before closing of the base deal.

8 Include in the Additional Call Option Confirmation, but only if the Additional
Call Option Confirmation is executed after closing of the base deal.

 

description of Convertible Notes in the Offering Memorandum or (y) pursuant to
Section 14.07 of the Indenture, subject, in the case of this clause (y), to the
second paragraph under “Method of Adjustment” in Section ‎3), any such amendment
or supplement will be disregarded for purposes of this Confirmation (other than
as provided in Section 9(j)(ii) below) unless the parties agree otherwise in
writing.

 

 

 

 

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

 

1.            This Confirmation evidences a complete and binding agreement
between Dealer and Counterparty as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of, and be
subject to an agreement in the form of the 2002 ISDA Master Agreement (the
“Agreement”) as if Dealer and Counterparty had executed an agreement in such
form on the date hereof (but without any Schedule except for the election (i) of
the laws of the State of New York as the governing law (without reference to
choice of law doctrine) [, (ii) of an executed guarantee of [_________]
(“Guarantor”) dated as of the Trade Date in substantially the form attached
hereto as Annex A as a Credit Support Document, (iii) that the designation of
Guarantor as Credit Support Provider in relation to Dealer]9 and (iv)(a) that
the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply
to [Dealer/Dealer’s Parent] with a “Threshold Amount” of three percent of the
shareholders’ equity of Dealer; provided that “Specified Indebtedness” shall not
include obligations in respect of deposits received in the ordinary course of
Dealer’s banking business, (b) that the phrase “or becoming capable at such time
of being declared” shall be deleted from clause (1) of such Section 5(a)(vi),
and (c) that the following language shall be added to the end thereof:
“Notwithstanding the foregoing, a default under subsection (2) hereof shall not
constitute an Event of Default if (x) the default was caused solely by error or
omission of an administrative or operational nature; (y) funds were available to
enable the party to make the payment when due; and (z) the payment is made
within two Local Business Days of such party’s receipt of written notice of its
failure to pay.”). In the event of any inconsistency between provisions of the
Agreement and this Confirmation, this Confirmation will prevail for the purpose
of the Transaction to which this Confirmation relates. The parties hereby agree
that no transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement and, if there exists any ISDA Master
Agreement between Dealer and Counterparty or any confirmation or other agreement
between Dealer and Counterparty pursuant to which an ISDA Master Agreement is
deemed to exist between Dealer and Counterparty, then notwithstanding anything
to the contrary in such ISDA Master Agreement, such confirmation or agreement or
any other agreement to which Dealer and Counterparty are parties, the
Transaction shall not be considered a transaction under, or otherwise governed
by, such existing or deemed ISDA Master Agreement.

 

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

 

General Terms.

 

Trade Date: [__________], 2019     Effective Date: The second Exchange Business
Day immediately prior to the Premium Payment Date     Option Style: “Modified
American”, as described under “Procedures for Exercise” below     Option Type:
Call     Buyer:Counterparty    Seller:Dealer    Shares:The common stock of
Counterparty, par value USD 0.01 per share (Exchange symbol “GVA”).

 

 

 

9 Requested if Dealer is not the highest rated entity in the group; typically
from the Parent.

 

2

 

 

Number of Options: [_______]10. For the avoidance of doubt, the Number of
Options shall be reduced by any Options exercised by Counterparty. In no event
will the Number of Options be less than zero.     Applicable Percentage: [__]%  
  Option Entitlement: A number equal to the product of the Applicable Percentage
and [______]11.     Strike Price: USD [______]     Premium:USD [______]   
Premium Payment Date: [__________], 2019     Exchange:The New York Stock
Exchange    Related Exchange(s): All Exchanges; provided that Section 1.26 of
the Equity Definitions shall be amended to add the words “United States” before
the word “exchange” in the tenth line of such section.     Excluded Provisions:
Section 14.04(h) and Section 14.03 of the Indenture.

 

Procedures for Exercise.

 

Conversion Date: With respect to any conversion of a Convertible Note, the date
on which the Holder (as such term is defined in the Indenture) of such
Convertible Note satisfies all of the requirements for conversion thereof as set
forth in Section 14.02(b) of the Indenture; provided that in no event shall a
Conversion Date be deemed to occur hereunder (and no Option shall be exercised
or deemed to be exercised hereunder) with respect to any surrender of a
Convertible Note for conversion in respect of which Counterparty (x) has elected
to designate a financial institution for exchange in lieu of conversion of such
Convertible Note pursuant to Section 14.12 of the Indenture and (y) has not
delivered to Dealer a related Notice of Exercise.     Free Convertibility Date:
May 1, 2024     Expiration Time: The Valuation Time     Expiration Date:
November 1, 2024, subject to earlier exercise.     Multiple Exercise:
Applicable, as described under “Automatic Exercise” below.

 

 

 

10 For the Base Call Option Confirmation, this is equal to the number of
Convertible Notes in principal amount of $1,000 initially issued on the closing
date for the Convertible Notes. For the Additional Call Option Confirmation,
this is equal to the number of additional Convertible Notes in principal amount
of $1,000.

11 Insert the initial Conversion Rate for the Convertible Notes.

 

3

 

 

Automatic Exercise: Notwithstanding Section 3.4 of the Equity Definitions, on
each Conversion Date in respect of which a Notice of Conversion that is
effective as to Counterparty has been delivered by the relevant converting
Holder, a number of Options equal to [(i)] the number of Convertible Notes in
denominations of USD 1,000 as to which such Conversion Date has occurred [minus
(ii) the number of Options that are or are deemed to be automatically exercised
on such Conversion Date under the Base Call Option Transaction Confirmation
letter agreement dated [__________], 2019 between Dealer and Counterparty (the
“Base Call Option Confirmation”),]12 shall be deemed to be automatically
exercised; provided that such Options shall be exercised or deemed exercised
only if Counterparty or the Trustee (or other agent of Counterparty previously
identified as such to Dealer by Counterparty in writing) has provided a Notice
of Exercise to Dealer in accordance with “Notice of Exercise” below. If the
Trustee (or any other such agent) provides any Notice of Exercise to Dealer,
Dealer shall be entitled to rely on the accuracy of such Notice of Exercise
without any independent investigation, and the contents of such Notice of
Exercise shall be binding on Counterparty.       Notwithstanding the foregoing,
in no event shall the number of Options that are exercised or deemed exercised
hereunder exceed the Number of Options.     Notice of Exercise: Notwithstanding
anything to the contrary in the Equity Definitions or under “Automatic Exercise”
above, in order to exercise any Options, Counterparty or the Trustee (or other
agent of Counterparty previously identified as such to Dealer by Counterparty in
writing) must notify Dealer in writing before 5:00 p.m. (New York City time) on
the Scheduled Valid Day immediately preceding the scheduled first day of the
Settlement Averaging Period for the Options being exercised (the “Exercise
Notice Deadline”) of (i) the number of such Options, (ii) the scheduled first
day of the Settlement Averaging Period and the scheduled Settlement Date,
(iii) the Relevant Settlement Method for such Options, and (iv) if the
settlement method for the related Convertible Notes is not Settlement in Shares
or Settlement in Cash (each as defined below), the fixed amount of cash per
Convertible Note that Counterparty has elected to deliver to Holders (as such
term is defined in the Indenture) of the related Convertible Notes (the
“Specified Cash Amount”); provided that notwithstanding the foregoing, such
notice (and the related exercise of Options) shall be effective if given after
the Exercise Notice Deadline, but prior to 4:00 p.m. (New York City time) on the
fifth Scheduled Valid Day following the Exercise Notice Deadline, in which event
the Calculation Agent shall have the right to adjust the delivery obligation
under this Confirmation as appropriate to reflect the commercially reasonable
additional costs (including, but not limited to, additional costs related to
hedging mismatches and market losses assuming that Dealer maintains a
commercially reasonable hedge position) and reasonable expenses incurred by
Dealer in connection with its (or any of its affiliates’) commercially
reasonable hedging activities related to this Transaction (including the
unwinding of any commercially reasonable hedge position) as a result of Dealer
not having received such notice on or prior to the Exercise Notice Deadline; and
provided further that in respect of any Options relating to Convertible Notes
with a Conversion Date occurring on or after the Free Convertibility Date,
(A) such notice may be given on or prior to the second Scheduled Valid Day
immediately preceding the Expiration Date and need only specify the information
required in clause (i) above, and (B) if the Relevant Settlement Method for such
Options is (x) Net Share Settlement and the Specified Cash Amount is not USD
1,000, (y) Cash Settlement or (z) Combination Settlement, Dealer shall have
received a separate notice (the “Notice of Final Settlement Method”) in respect
of all such Convertible Notes before 5:00 p.m. (New York City time) on the Free
Convertibility Date specifying the information required in clauses (iii) and
(iv) above. If the Trustee (or any other such agent) provides such notice to
Dealer, Dealer shall be entitled to rely on the accuracy of any such notice
without any independent investigation, and the contents of such notice shall be
binding on Counterparty. Counterparty acknowledges its responsibilities under
applicable securities laws, and in particular Section 9 and Section 10(b) of the
Exchange Act (as defined below) and the rules and regulations thereunder, in
respect of any election of a settlement method with respect to the Convertible
Notes.

 

 

 

12 Include for Additional Call Option Confirmation only.

 

4

 

 

Valuation Time: At the close of trading of the regular trading session on the
Exchange; provided that if the principal trading session is extended past the
close of the regular trading session for such Exchange, the Calculation Agent
shall determine the Valuation Time in good faith and in a commercially
reasonable manner.     Market Disruption Event: Section 6.3(a) of the Equity
Definitions is hereby replaced in its entirety by the following:       “‘Market
Disruption Event’ means, in respect of a Share, (i) a failure by the primary
United States national or regional securities exchange or market on which the
Shares are listed or admitted for trading to open for trading during its regular
trading session or (ii) the occurrence or existence prior to 1:00 p.m. (New York
City time) on any Scheduled Valid Day for the Shares for more than one half-hour
period in the aggregate during regular trading hours of any suspension or
limitation imposed on trading (by reason of movements in price exceeding limits
permitted by the relevant stock exchange or otherwise) in the Shares or in any
options contracts or futures contracts relating to the Shares.”

 

5

 

 

Settlement Terms.

 

Settlement Method: For any Option, Net Share Settlement; provided that if the
Relevant Settlement Method set forth below for such Option is not Net Share
Settlement, then the Settlement Method for such Option shall be such Relevant
Settlement Method, but only if Counterparty or Trustee (or other agent of
Counterparty previously identified as such to Dealer by Counterparty in writing)
shall have notified Dealer of the Relevant Settlement Method in the Notice of
Exercise or Notice of Final Settlement Method, as applicable, for such Option.
If the Trustee (or any other such agent) provides any such notice, Dealer shall
be entitled to rely on the accuracy of such notice without any independent
investigation, and the contents of such notice shall be binding on Counterparty.
    Relevant Settlement Method: In respect of any Option:       (i)        if
Counterparty has elected to settle its conversion obligations in respect of the
related Convertible Note (A) entirely in Shares pursuant to
Section 14.02(a)(iv)(A) of the Indenture (together with cash in lieu of
fractional Shares) (such settlement method, “Settlement in Shares”), (B) in a
combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of the
Indenture with a Specified Cash Amount less than USD 1,000 (such settlement
method, “Low Cash Combination Settlement”) or (C) in a combination of cash and
Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified
Cash Amount equal to USD 1,000, then, in each case, the Relevant Settlement
Method for such Option shall be Net Share Settlement;       (ii)       if
Counterparty has elected to settle its conversion obligations in respect of the
related Convertible Note in a combination of cash and Shares pursuant to
Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount greater
than USD 1,000, then the Relevant Settlement Method for such Option shall be
Combination Settlement; and       (iii)      if Counterparty has elected to
settle its conversion obligations in respect of the related Convertible Note
entirely in cash pursuant to Section 14.02(a)(iv)(B) of the Indenture (such
settlement method, “Settlement in Cash”), then the Relevant Settlement Method
for such Option shall be Cash Settlement.     Net Share Settlement: If Net Share
Settlement is applicable to any Option exercised or deemed exercised hereunder,
Dealer will deliver to Counterparty, on the relevant Settlement Date for each
such Option, a number of Shares (the “Net Share Settlement Amount”) equal to the
sum, for each Valid Day during the Settlement Averaging Period for each such
Option, of (i) (a) the Daily Option Value for such Valid Day, divided by (b) the
Relevant Price on such Valid Day, divided by (ii) the number of Valid Days in
the Settlement Averaging Period; provided that in no event shall the Net Share
Settlement Amount for any Option exceed a number of Shares equal to the
Applicable Limit for such Option divided by the Applicable Limit Price on the
Settlement Date for such Option.       Dealer will pay cash in lieu of
delivering any fractional Shares to be delivered with respect to any Net Share
Settlement Amount valued at the Relevant Price for the last Valid Day of the
Settlement Averaging Period.

 

6

 

 

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

 

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

 

  provided that in no event shall the sum of (x) the Combination Settlement Cash
Amount for any Option and (y) the Combination Settlement Share Amount for such
Option multiplied by the Applicable Limit Price on the Settlement Date for such
Option, exceed the Applicable Limit for such Option.       Dealer will pay cash
in lieu of delivering any fractional Shares to be delivered with respect to any
Combination Settlement Share Amount valued at the Relevant Price for the last
Valid Day of the Settlement Averaging Period.

 

7

 

 

Cash Settlement: If Cash Settlement is applicable to any Option exercised or
deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions,
Dealer will pay to Counterparty, on the relevant Settlement Date for each such
Option, an amount of cash (the “Cash Settlement Amount”) equal to the sum, for
each Valid Day during the Settlement Averaging Period for such Option, of
(i) the Daily Option Value for such Valid Day, divided by (ii) the number of
Valid Days in the Settlement Averaging Period; provided that in no event shall
the Cash Settlement Amount for any Option exceed the Applicable Limit for such
Option.     Daily Option Value: For any Valid Day, an amount equal to (i) the
Option Entitlement on such Valid Day, multiplied by (ii) the Relevant Price on
such Valid Day less the Strike Price on such Valid Day; provided that if the
calculation contained in clause (ii) above results in a negative number, the
Daily Option Value for such Valid Day shall be deemed to be zero. In no event
will the Daily Option Value be less than zero.     Make-Whole Adjustment:
Notwithstanding anything to the contrary herein, in respect of any exercise of
Options relating to a conversion of Convertible Notes in connection with a
Make-Whole Fundamental Change (as defined in the Indenture) or a Notice of
Redemption, in each case, for which additional Shares will be added to the
“Conversion Rate” (as defined in the Indenture) as determined pursuant to
Section 14.03 of the Indenture, the Daily Option Value shall be calculated as if
the Option Entitlement included the Applicable Percentage of the number of such
additional Shares as determined with reference to the adjustment set forth in
such Section 14.03 of the Indenture; provided that if the sum of (i) the product
of (a) the number of Shares (if any) deliverable by Dealer to Counterparty per
exercised Option and (b) the Applicable Limit Price on the Settlement Date and
(ii) the amount of cash (if any) payable by Dealer to Counterparty per exercised
Option would otherwise exceed the amount per Option, as determined by the
Calculation Agent, that would be payable by Dealer under Section 6 of the
Agreement if (x) the relevant Conversion Date were an Early Termination Date
resulting from an Additional Termination Event with respect to which the
Transaction was the sole Affected Transaction and Counterparty was the sole
Affected Party and (y) Section 14.03 of the Indenture were deleted, then each
Daily Option Value shall be proportionately reduced to the extent necessary to
eliminate such excess.     Applicable Limit: For any Option, an amount of cash
equal to the Applicable Percentage multiplied by the excess of (i) the aggregate
of (A) the amount of cash, if any, paid to the Holder of the related Convertible
Note upon conversion of such Convertible Note and (B) the number of Shares, if
any, delivered to the Holder of the related Convertible Note upon conversion of
such Convertible Note multiplied by the Applicable Limit Price on the Settlement
Date for such Option, over (ii) USD 1,000.

 

8

 

 

Applicable Limit Price: On any day, the opening price as displayed under the
heading “Op” on Bloomberg page GVA <equity> (or any successor thereto).    
Valid Day: A day on which (i) there is no Market Disruption Event and
(ii) trading in the Shares generally occurs on the Exchange or, if the Shares
are not then listed on the Exchange, on the principal other national or regional
securities exchange on which the Shares are then listed or, if the Shares are
not then listed on a United States national or regional securities exchange, on
the principal other United States market on which the Shares are then listed or
admitted for trading. If the Shares are not so listed or admitted for trading,
“Valid Day” means a Business Day.     Scheduled Valid Day: A day that is
scheduled to be a Valid Day on the principal United States national or regional
securities exchange or market on which the Shares are listed or admitted for
trading. If the Shares are not so listed or admitted for trading, “Scheduled
Valid Day” means a Business Day.     Business Day: Any day other than a
Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is
authorized or required by law or executive order to close or be closed.    
Relevant Price: On any Valid Day, the per Share volume-weighted average price as
displayed under the heading “Bloomberg VWAP” on Bloomberg page GVA <equity> AQR
(or its equivalent successor if such page is not available) in respect of the
period from the scheduled opening time of the Exchange to the Scheduled Closing
Time of the Exchange on such Valid Day (or if such volume-weighted average price
is unavailable at such time, the market value of one Share on such Valid Day, as
determined by the Calculation Agent in a good faith and commercially reasonable
manner using, if practicable, a volume-weighted average method). The Relevant
Price will be determined without regard to after-hours trading or any other
trading outside of the regular trading session trading hours.     Settlement
Averaging Period: For any Option:

 

(i)if the related Conversion Date occurs prior to the Free Convertibility Date,
the 45 consecutive Valid Days commencing on, and including, the second Valid Day
following such Conversion Date; provided that if the Notice of Exercise for such
Option specifies that Settlement in Shares or Low Cash Combination Settlement
applies to the related Convertible Note, the Settlement Averaging Period shall
be the 90 consecutive Valid Day period commencing on, and including, the second
Valid Day immediately following such Conversion Date;

 

9

 

 

(ii)if the related Conversion Date occurs on or following the Free
Convertibility Date, the 45 consecutive Valid Days commencing on, and including,
the 46th Scheduled Valid Day immediately prior to the Expiration Date; provided
that if the Notice of Exercise or Notice of Final Settlement Method, as
applicable, for such Option specifies that Settlement in Shares or Low Cash
Combination Settlement applies to the related Convertible Note, the Settlement
Averaging Period shall be the 90 consecutive Valid Days commencing on, and
including, the 91st Scheduled Valid Day immediately prior to the Expiration
Date.        

 

Settlement Date: For any Option, the second Business Day immediately following
the final Valid Day of the Settlement Averaging Period for such Option.    
Settlement Currency: USD     Other Applicable Provisions: The provisions of
Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity Definitions will be
applicable, except that all references in such provisions to
“Physically-settled” shall be read as references to “Share Settled”. “Share
Settled” in relation to any Option means that Net Share Settlement or
Combination Settlement is applicable to that Option.     Representation and
Agreement: Notwithstanding anything to the contrary in the Equity Definitions
(including, but not limited to, Section 9.11 thereof), the parties acknowledge
that (i) any Shares delivered to Counterparty shall be, upon delivery, subject
to restrictions and limitations arising from Counterparty’s status as issuer of
the Shares under applicable securities laws, (ii) Dealer may deliver any Shares
required to be delivered hereunder in certificated form in lieu of delivery
through the Clearance System and (iii) any Shares delivered to Counterparty may
be “restricted securities” (as defined in Rule 144 under the Securities Act of
1933, as amended (the “Securities Act”)).

 

3.            Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

Potential Adjustment Events: Notwithstanding Section 11.2(e) of the Equity
Definitions, a “Potential Adjustment Event” means an occurrence of any event or
condition, as set forth in any Dilution Adjustment Provision, that would result
in an adjustment under the Indenture to the “Conversion Rate” or the composition
of a “unit of Reference Property” or to any “Last Reported Sale Price”, “Daily
VWAP,” “Daily Conversion Value” or “Daily Settlement Amount” (each as defined in
the Indenture). For the avoidance of doubt, Dealer shall not have any delivery
or payment obligation hereunder, and no adjustment shall be made to the terms of
the Transaction, on account of (x) any distribution of cash, property or
securities by Counterparty to holders of the Convertible Notes (upon conversion
or otherwise) or (y) any other transaction in which holders of the Convertible
Notes are entitled to participate, in each case, in lieu of an adjustment under
the Indenture of the type referred to in the immediately preceding sentence
(including, without limitation, pursuant to the fourth sentence of the first
paragraph of Section 14.04(c) of the Indenture or the fifth sentence of
Section 14.04(d) of the Indenture.

 

10

 

 

Method of Adjustment: Calculation Agent Adjustment, which means that,
notwithstanding Section 11.2(c) of the Equity Definitions (and, for the
avoidance of doubt, in lieu of any adjustments pursuant to such Section), upon
any Potential Adjustment Event, the Calculation Agent shall make a corresponding
adjustment in respect of any adjustment to the Convertible Notes under the
Indenture to any one or more of the Strike Price, Number of Options, Option
Entitlement and any other variable relevant to the exercise, settlement or
payment for the Transaction as determined by reference to the Dilution
Adjustment Provisions, to the extent an adjustment is required under the
Indenture.       Notwithstanding the foregoing and “Consequences of Merger
Events / Tender Offers” below:

 

    (i)if the Calculation Agent in good faith and in a commercially reasonable
manner disagrees with any adjustment pursuant to the terms of the Indenture that
is the basis of any adjustment hereunder and that involves an exercise of
discretion by Counterparty or its board of directors (including, without
limitation, pursuant to Section 14.05 of the Indenture, Section 14.07 of the
Indenture or any supplemental indenture entered into thereunder or in connection
with any proportional adjustment or the determination of the fair value of any
securities, property, rights or other assets), then in each such case, the
Calculation Agent will determine the adjustment to be made to any one or more of
the Strike Price, Number of Options, Option Entitlement and any other variable
relevant to the exercise, settlement or payment for the Transaction in a
commercially reasonable manner; provided that, notwithstanding the foregoing, if
any Potential Adjustment Event occurs during the Settlement Averaging Period but
no adjustment was made to any Convertible Note under the Indenture because the
relevant Holder (as such term is defined in the Indenture) was deemed to be a
record owner of the underlying Shares on the related Conversion Date, then the
Calculation Agent shall make an adjustment, as determined by it in good faith
and in a commercially reasonable manner, to the terms hereof in order to account
for such Potential Adjustment Event;

 

11

 

 

(ii)in connection with any Potential Adjustment Event as a result of an event or
condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of
the Indenture where, in either case, the period for determining “Y” (as such
term is used in Section 14.04(b) of the Indenture) or “SP0” (as such term is
used in Section 14.04(c) of the Indenture), as the case may be, begins before
Counterparty has publicly announced the event or condition giving rise to such
Potential Adjustment Event, then the Calculation Agent shall have the right to
adjust any variable relevant to the exercise, settlement or payment for the
Transaction as appropriate to reflect the commercially reasonable costs
documented in writing in reasonable detail (including, but not limited to,
hedging mismatches and market losses customary in this context for transactions
of this type) and commercially reasonable expenses incurred by Dealer in
connection with its hedging activities customary in this context for
transactions of this type (subject to the requirements set forth under Hedging
Adjustments below) as a result of such event or condition not having been
publicly announced prior to the beginning of such period; and     (iii)if any
Potential Adjustment Event is declared by Counterparty and (a) the event or
condition giving rise to such Potential Adjustment Event is subsequently
amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined
in the Indenture) is otherwise not adjusted at the time or in the manner
contemplated by the relevant Dilution Adjustment Provision based on such
declaration or (c) the “Conversion Rate” (as defined in the Indenture) is
adjusted as a result of such Potential Adjustment Event and subsequently
re-adjusted (each of clauses (a), (b) and (c), a “Potential Adjustment Event
Change”) then, in each case, but without duplication, the Calculation Agent
shall have the right to adjust any variable relevant to the exercise, settlement
or payment for the Transaction as appropriate to reflect the commercially
reasonable costs documented in writing in reasonable detail (including, but not
limited to, hedging mismatches and market losses customary in this context for
transactions of this type) and commercially reasonable expenses incurred by
Dealer in connection with its hedging activities (subject to the requirements
set forth under Hedging Adjustments below) as a result of such Potential
Adjustment Event Change.

 

12

 

 

Dilution Adjustment Provisions: Sections 14.04(a), (b), (c), (d) and (e) and
Section 14.05 of the Indenture.    

 

Extraordinary Events applicable to the Transaction:

 

Merger Events: Applicable; provided that notwithstanding Section 12.1(b) of the
Equity Definitions, a “Merger Event” means the occurrence of any event or
condition set forth in Section 14.07(a) of the Indenture.     Tender Offers:
Applicable; provided that notwithstanding Section 12.1(d) of the Equity
Definitions, a “Tender Offer” means the occurrence of any event or condition set
forth in Section 14.04(e) of the Indenture.     Consequences of Merger Events /
  Tender Offers: Notwithstanding Section 12.2 and Section 12.3 of the Equity
Definitions, upon the occurrence of a Merger Event or a Tender Offer, the
Calculation Agent shall make a corresponding adjustment in respect of any
adjustment required to be made under the Indenture to any one or more of the
nature of the Shares (in the case of a Merger Event), Strike Price, Number of
Options, Option Entitlement and any other variable relevant to the exercise,
settlement or payment for the Transaction (as determined by the Calculation
Agent acting in good faith and in a commercially reasonable manner by reference
to the relevant provisions of the Indenture), subject to the second paragraph
under “Method of Adjustment”; provided, however, that such adjustment shall be
made without regard to any adjustment to the Conversion Rate pursuant to any
Excluded Provision; provided further that if, with respect to a Merger Event or
a Tender Offer, (i) the consideration for the Shares includes (or, at the option
of a holder of Shares, may include) shares of an entity or person that is not a
corporation or is not organized under the laws of the United States, any State
thereof or the District of Columbia or (ii) the Counterparty to the Transaction
following such Merger Event or Tender Offer will not be a corporation organized
under the laws of the United States, any State thereof or the District of
Columbia, then, in either case, Cancellation and Payment (Calculation Agent
Determination) may apply at Dealer’s sole election.

 

13

 

 

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

 

 

Additional Disruption Events:

 

Change in Law: Applicable; provided that Section 12.9(a)(ii) of the Equity
Definitions is hereby amended by (i) replacing the phrase “the interpretation”
in the third line thereof with the phrase “, or public announcement of, the
formal or informal interpretation”, (ii) replacing the word “Shares” where it
appears in clause (X) thereof with the words “Hedge Position” and
(iii) 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, effectiveness or
promulgation of new regulations authorized or mandated by existing statute)”.  
  Failure to Deliver: Applicable     Hedging Disruption: Applicable; provided
that:

 

    (i)Section 12.9(a)(v) of the Equity Definitions is hereby amended by
(a) inserting the following words at the end of clause (A) thereof: “in the
manner contemplated by the Hedging Party on the Trade Date” and (b) inserting
the following two phrases at the end of such Section:       “For the avoidance
of doubt, the term “equity price risk” shall be deemed to include, but shall not
be limited to, stock price and volatility risk. And, for the further avoidance
of doubt, any such transactions or assets referred to in phrases (A) or
(B) above must be available on commercially reasonable pricing terms.”; and    
(ii)Section 12.9(b)(iii) of the Equity Definitions is hereby amended by
inserting in the third line thereof, after the words “to terminate the
Transaction”, the words “or a portion of the Transaction affected by such
Hedging Disruption”.

 

    Increased Cost of Hedging: Not Applicable     Hedging Party: For all
applicable Additional Disruption Events, Dealer.

 

14

 

 

Determining Party: For all applicable Extraordinary Events, Dealer. All
calculations by Determining Party shall be made in good faith and in a
commercially reasonable manner. Following any calculation by Determining Party
hereunder, upon written request by Counterparty, Determining Party will provide
to Counterparty by email to the email address provided by Counterparty in such
written request a report (in a commonly used file format for the storage and
manipulation of financial data) displaying in reasonable detail the basis for
such calculation; provided, however, that in no event will Determining Party be
obligated to share with Counterparty any proprietary or confidential data or
information or any proprietary or confidential models used by it.    
Non-Reliance:Applicable    Agreements and Acknowledgments   Regarding Hedging
Activities: Applicable     Hedging Adjustment: For the avoidance of doubt,
whenever the Calculation Agent is permitted to make an adjustment pursuant to
the terms of this Confirmation or the Equity Definitions to take into account
the effect of an event (other than an adjustment made by reference to the
Indenture), the Calculation Agent shall make such adjustment, if any, by
reference to the effect of such event on Dealer assuming that Dealer maintains a
commercially reasonable hedge position.     Additional Acknowledgments:
Applicable

 

 

4.            Calculation Agent. Dealer; provided that following the occurrence
and during the continuance of an Event of Default of the type described in
Section 5(a)(vii) of the Agreement with respect to which Dealer is the sole
Defaulting Party, if the Calculation Agent fails to timely make any calculation,
adjustment or determination required to be made by the Calculation Agent
hereunder or to perform any obligation of the Calculation Agent hereunder and
such failure continues for five Exchange Business Days following notice to the
Calculation Agent by Counterparty of such failure, Counterparty shall have the
right to designate a nationally recognized third-party dealer in
over-the-counter corporate equity derivatives to act, during the period
commencing on the first date the Calculation Agent fails to timely make such
calculation, adjustment or determination or to perform such obligation, as the
case may be, and ending on the earlier of the Early Termination Date with
respect to such Event of Default and the date on which such Event of Default is
no longer continuing, as the Calculation Agent. All calculations and
determinations by the Calculation Agent shall be made in good faith and in a
commercially reasonable manner. Following any calculation by the Calculation
Agent hereunder, upon written request by Counterparty, the Calculation Agent
shall provide to Counterparty by email to the email address provided by
Counterparty in such written request a report (in a commonly used file format
for the storage and manipulation of financial data) displaying in reasonable
detail the basis for such calculation; provided, however, that in no event will
Dealer be obligated to share with Counterparty any proprietary or confidential
data or information or any proprietary or confidential models used by it.

 

5.            Account Details.

 

(a)Account for payments to Counterparty:

 

Bank: [____________]

 

ABA#: [____________]

 

Acct No.: [____________]

 

Beneficiary: [____________]

 

Ref: [____________]

 

15

 

 

 

Account for delivery of Shares to Counterparty:

 

[____________]

 

(b)Account for payments to Dealer:

 

Bank:[____________]

ABA#:[____________]

Acct No.:[____________]

Beneficiary:[____________]

Ref:[____________]

 

[____________]

 

6.            Offices.

 

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

 

(b)The Office of Dealer for the Transaction is: [____________]

 

[Dealer’s Office Address]

 

7.            Notices.

 

(a)Address for notices or communications to Counterparty:

 

Granite Construction Incorporated
585 West Beach Street
Watsonville, California 95706

Attention: [Title of contact] Telephone No.: [____________] Facsimile No.:
[____________]

 

(b)Address for notices or communications to Dealer:

 

Attention:   [____________] Title:   [____________] Telephone No:  
[____________] Email: [____________]

 

8.            Representations, Warranties and Covenants.

 

I.            Representations, Warranties and Covenants of Counterparty. Each of
the representations and warranties of Counterparty set forth in Section 1 of the
Purchase Agreement (the “Purchase Agreement”) dated as of [__________], 2019,
among Counterparty, BofA Securities, Inc. and BNP Paribas Securities Corp., as
representatives of the Initial Purchasers party thereto (the “Initial
Purchasers”), are true and correct and are hereby deemed to be repeated to
Dealer as if set forth herein. Counterparty hereby further represents and
warrants to Dealer on the date hereof and on and as of the Premium Payment Date
that:

 

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

 

16

 

 

(b)Neither the execution and delivery of this Confirmation nor the incurrence or
performance of obligations of Counterparty hereunder will conflict with or
result in a breach of (1) the certificate of incorporation or by-laws (or any
equivalent documents) of Counterparty, or (2) any applicable law or regulation,
or (3) any order, writ, injunction or decree of any court or governmental
authority or agency, or (4) any agreement or instrument to which Counterparty or
any of its subsidiaries is a party or by which Counterparty or any of its
subsidiaries is bound or to which Counterparty or any of its subsidiaries is
subject, or constitute a default under, or result in the creation of any lien
under, any such agreement or instrument, except, in the case of clauses
(2) through (4), as would not reasonably be expected to result in a material
adverse effect on Counterparty, Counterparty’s ability to fulfil its obligations
hereunder, Dealer or Dealer’s rights and obligations hereunder.

 

(c)No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the
execution, delivery or performance by Counterparty of this Confirmation, except
such as have been obtained or made and such as may be required under the
Securities Act or state securities laws and except as the failure to obtain such
consent, authorization or order or filing would not reasonably be expected to
result in a material adverse effect on Counterparty, Counterparty’s ability to
perform its obligations hereunder, Dealer or Dealer’s rights and obligations
hereunder.

 

(d)Counterparty is not and, after consummation of 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.

 

(e)Counterparty is not, on the date hereof, in possession of any material
non-public information with respect to Counterparty or the Shares.

 

(f)To Counterparty’s knowledge, no U.S. state or local law, rule, regulation or
regulatory order applicable to the Shares would give rise to any reporting,
consent, registration or other requirement (including without limitation a
requirement to obtain prior approval from any person or entity) as a result of
Dealer or its affiliates owning or holding (however defined) Shares, other than
any regulation that Dealer would be subject to solely as a result of it being a
regulated entity under various applicable laws, including U.S. securities laws
and FINRA regulations.

 

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

 

II.Representations, Warranties and Covenants of Counterparty and Dealer.
Counterparty and Dealer hereby represent and warrant to Dealer and Counterparty,
respectively, on the date hereof and on and as of the Premium Payment Date that:

 

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

 

(b)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, by virtue of Section 4(a)(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.

 

17

 

 

9.            Other Provisions.

 

(a)Opinions. On the Premium Payment Date, Counterparty shall deliver to Dealer
an opinion of counsel, dated as of the Premium Payment Date, with respect to the
matters set forth in Sections ‎8(a) through ‎(c) of this Confirmation. Delivery
of such opinion to Dealer shall be a condition precedent for the purpose of
Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer
under Section 2(a)(i) of the Agreement.

 

(b)Repurchase Notices. 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
number of outstanding Shares as determined on such day is (i) less than [__]13
million (in the case of the first such notice) or (ii) thereafter more than
[__]14 million less than the number of Shares included in the immediately
preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless
Dealer and its affiliates and their respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an “Indemnified
Person”) from and against any and all losses (including losses relating to
Dealer’s hedging activities as a consequence of becoming, or of the risk of
becoming, a Section 16 “insider”, including without limitation, any forbearance
from hedging activities or cessation of hedging activities and any losses in
connection therewith with respect to the Transaction), claims, damages,
judgments, liabilities and expenses (including reasonable attorney’s fees),
joint or several, which an Indemnified Person may become subject to, as a result
of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day
and in the manner specified in this paragraph, and to reimburse, within 30 days,
upon written request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating, preparing for,
providing testimony or other evidence in connection with or defending any of the
foregoing. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
the Indemnified Person as a result of Counterparty’s failure to provide Dealer
with a Repurchase Notice in accordance with this paragraph, such Indemnified
Person shall promptly notify Counterparty in writing, and Counterparty, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the reasonable fees
and expenses of such counsel related to such proceeding. Counterparty shall not
be liable for any settlement of any proceeding contemplated by this paragraph
that is effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, Counterparty agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Counterparty shall not, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding contemplated by this paragraph that is in respect of
which any Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such proceeding on terms reasonably
satisfactory to such Indemnified Person. If the indemnification provided for in
this paragraph is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
Counterparty hereunder, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities. The remedies
provided for in this paragraph ‎(b) are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any Indemnified Person at
law or in equity. The indemnity and contribution agreements contained in this
paragraph shall remain operative and in full force and effect regardless of the
termination of the Transaction.

 

 

 

13 Insert the number of Shares outstanding (after giving effect to the
repurchase of Shares by Issuer on the Premium Payment Date) that would cause
Dealer’s current position in the Shares underlying the Transaction (including
the number of Shares underlying any additional transaction if the greenshoe is
exercised in full, and any Shares under pre-existing call option transactions
with Counterparty) to increase by 0.5%. To be based on Dealer with highest
applicable percentage.

14 Insert the number of Shares that, if repurchased, would cause Dealer’s
current position in the Shares underlying the Transaction (including the number
of Shares underlying any additional transaction if the greenshoe is exercised in
full, and any Shares under pre-existing call option transactions with
Counterparty) to increase by a further 0.5% from the threshold for the first
Repurchase Notice. To be based on Dealer with highest applicable percentage.

 

18

 

 

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

 

(d)No Manipulation. Counterparty is not entering into the Transaction to create
actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to manipulate the price of the Shares
(or any security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.

 

(e)Transfer or Assignment.

 

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

 

(A)With respect to any Transfer Options, Counterparty shall not be released from
its notice and indemnification obligations pursuant to Section ‎9(b) or any
obligations under Section ‎9(o) or ‎9(t) of this Confirmation;

 

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

 

(C)Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, an
undertaking with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Dealer, will not expose Dealer to
material risks under applicable securities laws) and execution of any
documentation and delivery of legal opinions with respect to securities laws and
other matters by such third party and Counterparty, as are requested and
reasonably satisfactory to Dealer;

 

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

 

19

 

 

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

 

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

 

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

 

(ii)Dealer may, without Counterparty’s consent, transfer or assign all or any
part of its rights or obligations under the Transaction (A) to any affiliate of
Dealer (1) that has a long-term issuer rating that is equal to or better than
Dealer’s credit rating at the time of such transfer or assignment, or (2) whose
obligations hereunder will be guaranteed, pursuant to the terms of a customary
guarantee in a form used by Dealer generally for similar transactions, by Dealer
or Dealer’s ultimate parent, or (B) to any other third party with a long-term
issuer rating equal to or better than the lesser of (1) the credit rating of
Dealer at the time of the transfer and (2) A- by Standard and Poor’s Rating
Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc.
(“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an
equivalent rating or better by a substitute rating agency mutually agreed by
Counterparty and Dealer; provided that either (1) the transferee or assignee is
a “dealer in securities” within the meaning of Section 475(c)(1) of the Tax Code
or (2) the transfer does not result in a deemed exchange by Counterparty within
the meaning of Section 1001 of the Tax Code. After such transfer or assignment,
(1) Counterparty will not, as a result of such transfer or assignment, receive
from the transferee or assignee an amount less than the amount that Counterparty
would have received from Dealer in the absence of such transfer or assignment
(and, for the avoidance of doubt, as a condition to any transfer or assignment
contemplated by this paragraph, such transferee or assignee shall agree to pay
such additional amounts, if any, as necessary to result in Counterparty’s
receiving the amount that Counterparty would have received from Dealer in the
absence of such transfer or assignment), and (2) Dealer shall cause any
transferee or assignee to make such Payee Tax Representations to make any
necessary determination pursuant to clause (1) of this sentence. If at any time
at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Option Equity
Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share
Limit (if any applies) (any such condition described in clauses (A), (B) or (C),
an “Excess Ownership Position”), Dealer, acting in good faith, is unable after
using its commercially reasonable efforts to effect a transfer or assignment of
Options to a third party on pricing terms reasonably acceptable to Dealer and
within a time period reasonably acceptable to Dealer such that no Excess
Ownership Position exists, then Dealer may designate any Exchange Business Day
as an Early Termination Date with respect to a portion of the Transaction (the
“Terminated Portion”), such that following such partial termination no Excess
Ownership Position exists. In the event that Dealer so designates an Early
Termination Date with respect to a portion of the Transaction, a payment shall
be made pursuant to Section 6 of the Agreement as if (1) an Early Termination
Date had been designated in respect of a Transaction having terms identical to
the Transaction and a Number of Options equal to the number of Options
underlying the Terminated Portion, (2) Counterparty were the sole Affected Party
with respect to such partial termination and (3) the Terminated Portion were the
sole Affected Transaction (and, for the avoidance of doubt, the provisions of
Section ‎9(m) shall apply to any amount that is payable by Dealer to
Counterparty pursuant to this sentence as if Counterparty was not the Affected
Party). The “Section 16 Percentage” as of any day is the fraction, expressed as
a percentage, (A) the numerator of which is the number of Shares that Dealer and
any of its affiliates or any other person subject to aggregation with Dealer for
purposes of the “beneficial ownership” test under Section 13 of the Exchange
Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of
which Dealer is or may be deemed to be a part beneficially owns (within the
meaning of Section 13 of the Exchange Act), without duplication, on such day
(or, to the extent that for any reason the equivalent calculation under
Section 16 of the Exchange Act and the rules and regulations thereunder results
in a higher number, such higher number) and (B) the denominator of which is the
number of Shares outstanding on such day. The “Option Equity Percentage” as of
any day is the fraction, expressed as a percentage, (A) the numerator of which
is the sum of (1) the product of the Number of Options and the Option
Entitlement and (2) the aggregate number of Shares underlying any other call
option transaction sold by Dealer to Counterparty, and (B) the denominator of
which is the number of Shares outstanding. The “Share Amount” as of any day is
the number of Shares that Dealer and any person whose ownership position would
be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”)
under any law, rule, regulation, regulatory order or organizational documents or
contracts of Counterparty that are, in each case, applicable to ownership of
Shares (“Applicable Restrictions”), owns, beneficially owns, constructively
owns, controls, holds the power to vote or otherwise meets a relevant definition
of ownership under any Applicable Restriction, as determined by Dealer in its
reasonable discretion. The “Applicable Share Limit” means a number of Shares
equal to (A) the minimum number of Shares that could give rise to reporting or
registration obligations or other requirements (including obtaining prior
approval from any person or entity) of a Dealer Person (except for any filing
requirements on Form 13F, Schedule 13D or Schedule 13G under the Exchange Act,
in each case, as in effect on the Trade Date), or could result in an adverse
effect on a Dealer Person, under any Applicable Restriction, as determined by
Dealer in its reasonable discretion, minus (B) 1% of the number of Shares
outstanding.

 

20

 

 

(iii)Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or
other securities, or make or receive any payment in cash, to or from
Counterparty, Dealer may designate any of its affiliates (each, a “Dealer
Designated Affiliate”) to purchase, sell, receive or deliver such Shares or
other securities, or to make or receive such payment in cash, and otherwise to
perform Dealer’s obligations in respect of the Transaction and any such designee
may assume such obligations; provided that such Dealer Designated Affiliate
shall comply with the provisions of this Confirmation in the same manner as
Dealer would have been required to comply. Dealer shall be discharged of its
obligations to Counterparty to the extent of any such performance.

 

(f)Staggered Settlement. If upon advice of counsel with respect to applicable
legal and regulatory requirements, including any requirements relating to
Dealer’s hedging activities hereunder that would be customarily applicable to
transactions of this type by Dealer, Dealer reasonably determines that it would
not be practicable or advisable to deliver, or to acquire Shares to deliver, any
or all of the Shares to be delivered by Dealer on any Settlement Date for the
Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement
Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more
dates (each, a “Staggered Settlement Date”) as follows:

 

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

 

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

 

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

 

21

 

 

(g)[Reserved.]

 

(h)[Insert relevant Dealer agency language, if any.]

 

(i)Dividends. If at any time during the period from and including the Effective
Date, to but excluding the Expiration Date, (i) an ex-dividend date for a
regular quarterly cash dividend occurs with respect to the Shares (an
“Ex-Dividend Date”), and that dividend is less than the Regular Dividend on a
per Share basis or (ii) if no Ex-Dividend Date for a regular quarterly cash
dividend occurs with respect to the Shares in any quarterly dividend period of
Counterparty, then the Calculation Agent will make a corresponding adjustment in
good faith and in a commercially reasonable manner to any one or more of the
Strike Price, Number of Options, Option Entitlement and/or any other variable
relevant to the exercise, settlement or payment for the Transaction to preserve
the fair value of the Options after taking into account such dividend or lack
thereof. “Regular Dividend” shall mean USD 0.13 per Share per quarter. Upon any
adjustment to the Initial Dividend Threshold (as defined in the Indenture) for
the Convertible Notes pursuant to the Indenture, the Calculation Agent will make
a corresponding adjustment to the Regular Dividend for the Transaction.

 

(j)Additional Termination Events.

 

(i)Notwithstanding anything to the contrary in this Confirmation if an event of
default with respect to Counterparty occurs under the terms of the Convertible
Notes as set forth in Section 6.01 of the Indenture, then such event of default
shall constitute an Additional Termination Event applicable to the Transaction
and, with respect to such Additional Termination Event, (A) Counterparty shall
be deemed to be the sole Affected Party, (B) the Transaction shall be the sole
Affected Transaction and (C) Dealer shall be the party entitled to designate an
Early Termination Date pursuant to Section 6(b) of the Agreement.

 

(ii)Notwithstanding anything to the contrary in this Confirmation, the
occurrence of an Amendment Event shall constitute an Additional Termination
Event applicable to the Transaction and, with respect to such Additional
Termination Event, (A) Counterparty shall be deemed to be the sole Affected
Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer
shall be the party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement. “Amendment Event” means that Counterparty amends,
modifies, supplements, waives or obtains a waiver in respect of any term of the
Indenture or the Convertible Notes governing the principal amount, coupon,
maturity, repurchase obligation of Counterparty, redemption right of
Counterparty, any term relating to conversion of the Convertible Notes
(including changes to the conversion rate, conversion rate adjustment
provisions, 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 Notes to amend (other than, in each case, any
amendment or supplement (x) pursuant to Section 10.01(l) of the Indenture that,
as determined by the Calculation Agent, conforms the Indenture to the
description of Convertible Notes in the Offering Memorandum or (y) pursuant to
Section 14.07 of the Indenture), in each case, without the consent of Dealer.

 

22

 

 

(iii)Promptly (but in any event within ten Exchange Business Days) following any
Repurchase Event (as defined below), Counterparty may notify Dealer of such
Repurchase Event and the aggregate principal amount of Convertible Notes subject
to such Repurchase Event (any such notice, an “Convertible Notes Repurchase
Notice”); provided that no such Convertible Notes Repurchase Notice shall be
effective unless it contains the representation by Counterparty set forth in
Section 8(e) as of the date of such Convertible Notes Repurchase Notice. The
receipt by Dealer from Counterparty of any Convertible Notes Repurchase Notice
shall constitute an Additional Termination Event as provided in this
Section 9(j)(iii). Upon receipt of any such Convertible Notes Repurchase Notice,
Dealer shall promptly designate an Exchange Business Day following receipt of
such Convertible Notes Repurchase Notice (which Exchange Business Day shall be
on or as promptly as reasonably practicable after the related settlement date
for the relevant Repurchase Event) as an Early Termination Date with respect to
the portion of the Transaction corresponding to a number of Options (the
“Repurchase Options”) equal to the lesser of (A) the number of such Convertible
Notes specified in such Convertible Notes Repurchase Notice[, minus the
“Repurchase Options” (as defined in the Base Call Option Confirmation), if any,
that relate to such Convertible Notes specified in such Convertible Notes
Repurchase Notice]15 and (B) the Number of Options as of the date Dealer
designates such Early Termination Date and, as of such date, the Number of
Options shall be reduced by the number of Repurchase Options. Any payment
hereunder with respect to such termination (the “Repurchase Unwind Payment”)
shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to the Transaction and a Number of Options equal to the number of
Repurchase Options, (2) Counterparty were the sole Affected Party with respect
to such Additional Termination Event, (3) no adjustment to the “Conversion Rate”
(as defined in the Indenture) for the Convertible Notes has occurred pursuant to
any Excluded Provision, (4) the relevant Convertible Notes remain outstanding as
if the circumstances related to the Repurchase Event had not occurred, (5) the
relevant Repurchase Event and any conversions, adjustments, agreements,
payments, deliveries or acquisitions by or on behalf of Counterparty leading
thereto had not occurred, and (6) the terminated portion of the Transaction were
the sole Affected Transaction. “Repurchase Event” means that (i) any Convertible
Notes are repurchased (whether pursuant to Section 15.02 of the Indenture or
otherwise) by Issuer, Counterparty or any of Issuer’s subsidiaries, are
cancelled and are no longer Outstanding under the Indenture, (ii) any
Convertible Notes are redeemed pursuant to Section 16.01 of the Indenture by
Issuer and are no longer Outstanding under the Indenture, (iii) any Convertible
Notes are delivered to Issuer or Counterparty in exchange for delivery of any
property or assets of Issuer, Counterparty or any of Issuer’s subsidiaries
(howsoever described), are cancelled and are no longer Outstanding under the
Indenture, (iv) any principal of any Convertible Notes is repaid in full prior
to the final maturity date of the Convertible Notes (other than upon
acceleration of the Convertible Notes pursuant to Section 6.02 of the Indenture)
and such Convertible Notes are cancelled and are no longer Outstanding under the
Indenture, or (v) any Convertible Notes are exchanged by or for the benefit of
the Holders thereof for any other securities of Issuer, Counterparty or any of
Issuer’s affiliates (or any other property, or any combination thereof) pursuant
to any exchange offer or similar transaction and such Convertible Notes are
cancelled and are no longer Outstanding under the Indenture; provided that any
conversion of Convertible Notes by Holders for cash, Shares or a combination
thereof pursuant to the terms of the Indenture shall not constitute a Repurchase
Event. The terms “Outstanding” and “Holders” as used in the immediately
preceding sentence are used as defined in the Indenture.

 

 

 

15 Include in the Additional Call Option Confirmation.

 

23

 

 

(k)Amendments to Equity Definitions.

 

(i)Section 12.6(a)(ii) of the Equity Definitions is hereby amended by
(1) inserting “(1)” immediately following the word “means” in the first line
thereof and (2) inserting immediately prior to the semi-colon at the end of
subsection (B) thereof the following words: “or (2) the occurrence of any of the
events specified in Section 5(a)(vii)(1) through (9) of the ISDA Master
Agreement with respect to that Issuer”.

 

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

 

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

 

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

 

(m)Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If (a) an Early Termination Date (whether as a result of
an Event of Default or a Termination Event) occurs or is designated with respect
to the Transaction or (b) the Transaction is cancelled or terminated upon the
occurrence of an Extraordinary Event (except as a result of (i) a
Nationalization, Insolvency or Merger Event in which the consideration to be
paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender
Offer that is within Counterparty’s control, or (iii) an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty is the Affected Party other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a
Termination Event of the type described in Section 5(b) of the Agreement, in
each case that resulted from an event or events outside Counterparty’s control),
and if Dealer would owe any amount to Counterparty pursuant to
Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to
Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”),
then Dealer shall notify Counterparty as soon as reasonably practicable after
such Payment Obligation is known and shall satisfy the Payment Obligation by the
Share Termination Alternative (as defined below), unless (a) Counterparty gives
irrevocable telephonic notice to Dealer, confirmed in writing within one
Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the
Merger Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination Date or date of
cancellation, as applicable, of its election that the Share Termination
Alternative shall not apply, (b) Counterparty remakes the representation set
forth in Section ‎8(f) as of the date of such election and (c) Dealer agrees, in
its sole discretion, to such election, in which case the provisions of
Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of
Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

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

 

24

 

 

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

 

Share Termination Unit Price: The value of property contained in one Share
Termination Delivery Unit, 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. For the
avoidance of doubt, the parties agree that in determining the Share Termination
Delivery Unit Price the Calculation Agent may consider the purchase price paid
in connection with the purchase of Share Termination Delivery Property if such
price is commercially reasonable.

 

Share Termination Delivery Unit: One Share or, if the Shares have changed into
cash or any other property or the right to receive cash or any other property as
the result of a Nationalization, Insolvency or Merger Event (any such cash or
other property, the “Exchange Property”), a unit consisting of the type and
amount of such Exchange Property received by a holder of one Share (without
consideration of any requirement to pay cash or other consideration in lieu of
fractional amounts of any securities) in such Nationalization, Insolvency or
Merger Event, as determined by the Calculation Agent.

 

Failure to Deliver: Applicable

 

Other applicable provisions: If Share Termination Alternative is applicable, the
provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity
Definitions and the provisions set forth opposite the caption “Representation
and Agreement” in Section ‎2 will be applicable, except that all references in
such provisions to “Physically-settled” shall be read as references to “Share
Termination Settled” and all references to “Shares” shall be read as references
to “Share Termination Delivery Units”. “Share Termination Settled” in relation
to the Transaction means that Share Termination Alternative is applicable to the
Transaction.

 

(n)Waiver of Jury Trial. Each party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any suit,
action or proceeding relating to the Transaction. Each party (i) certifies that
no representative, agent or attorney of either party has represented, expressly
or otherwise, that such other party would not, in the event of such a suit,
action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into the Transaction, as
applicable, by, among other things, the mutual waivers and certifications
provided herein.

 

25

 

 

(o)Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer, based on the advice of counsel, the Shares
(“Hedge Shares”) acquired by Dealer for the purpose of maintaining a
commercially reasonable hedge with respect to 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,
either (i) in order to allow Dealer to sell the Hedge Shares in a registered
offering, make available to Dealer an effective registration statement under the
Securities Act that covers the resale of such Hedge Shares and enter into an
agreement, in form and substance reasonably satisfactory to Dealer,
substantially in the form of an underwriting agreement for a registered
secondary offering for companies of a similar size in a similar industry;
provided, however, that if Dealer, in its sole reasonable discretion, is not
satisfied with access to due diligence materials, the results of its due
diligence investigation, or the procedures and documentation for the registered
offering referred to above, then clause (ii) or clause (iii) of this paragraph
shall apply at the election of Counterparty, (ii) in order to allow Dealer to
sell the Hedge Shares in a private placement, enter into a private placement
agreement substantially similar to private placement purchase agreements
customary for private placements of equity securities of companies of comparable
size, maturity and line of business, in form and substance reasonably
satisfactory to Dealer (in which case, the Calculation Agent shall make any
commercially reasonable 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
then-current market price on such Exchange Business Days, and in the amounts and
at such time(s), requested by Dealer.

 

(p)Tax 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.

 

(q)Right to Extend. Dealer may postpone or add, in whole or in part, any Valid
Day or Valid Days during the Settlement Averaging Period or any other date of
valuation, payment or delivery by Dealer, with respect to some or all of the
Options hereunder, if Dealer reasonably determines, in its discretion, that such
action is reasonably necessary or appropriate to preserve Dealer’s commercially
reasonable hedging or hedge unwind activity hereunder in light of existing
liquidity conditions or to enable Dealer to effect purchases of Shares in
connection with its commercially reasonable 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 (provided that such requirements, policies and
procedures relate to legal or regulatory issues and are generally applicable in
similar situations and are applied in a consistent manner to similar
transactions); provided that in no event shall Dealer have the right to so
postpone or add any Valid Day(s) or any such other date beyond the 90th Valid
Day immediately following the last Valid Day of the relevant Settlement
Averaging Period (determined without regard to this Section 9(q)).

 

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

 

26

 

 

(s)Securities Contract; Swap Agreement. The parties hereto intend for (i) the
Transaction to be a “securities contract” and a “swap agreement” as defined in
the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy
Code”), and the parties hereto to be entitled to the protections afforded by,
among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and
560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction
and to exercise any other remedies upon the occurrence of any Event of Default
under the Agreement with respect to the other party to constitute a “contractual
right” as described in the Bankruptcy Code, and (iii) each payment and delivery
of cash, securities or other property hereunder to constitute a “margin payment”
or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

(t)Notice of Certain Other Events. Counterparty covenants and agrees that:

 

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

 

(ii)(A) Counterparty shall give Dealer commercially reasonable advance (but in
no event less than one Exchange Business Day) written notice of the section or
sections of the Indenture and, if applicable, the formula therein, pursuant to
which any adjustment will be made to the Convertible Notes in connection with
any Potential Adjustment Event, Merger Event or Tender Offer and (B) promptly
following any such adjustment, Counterparty shall give Dealer written notice of
the details of such adjustment.

 

(u)Wall Street Transparency and Accountability Act. In connection with
Section 739 of the Wall Street Transparency and Accountability Act of 2010
(“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any
regulation under the WSTAA, nor any requirement under WSTAA or an amendment made
by WSTAA, shall limit or otherwise impair either party’s otherwise applicable
rights to terminate, renegotiate, modify, amend or supplement this Confirmation
or the Agreement, as applicable, arising from a termination event, force
majeure, illegality, increased costs, regulatory change or similar event under
this Confirmation, the Equity Definitions incorporated herein, or the Agreement
(including, but not limited to, rights arising from Change in Law, Hedging
Disruption, Increased Cost of Hedging, an Excess Ownership Position, or
Illegality (as defined in the Agreement)).

 

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

 

(w)Early Unwind. In the event the sale of the [“Underwritten
Securities”]16[“Option Securities”]17 (as defined in the Purchase Agreement) is
not consummated with the Initial Purchasers for any reason, or Counterparty
fails to deliver to Dealer opinions of counsel as required pursuant to
Section ‎9(a), in each case by 5:00 p.m. (New York City time) on the Premium
Payment Date, or such later date as agreed upon by the parties (the Premium
Payment Date or such later date, the “Early Unwind Date”), the Transaction shall
automatically terminate (the “Early Unwind”) on the Early Unwind Date and
(i) the Transaction and all of the respective rights and obligations of Dealer
and Counterparty under the Transaction shall be cancelled and terminated and
(ii) 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 the other party arising out of and to be performed
in connection with the Transaction either prior to or after the Early Unwind
Date;. Each of Dealer and Counterparty represents and acknowledges to the other
that, upon an Early Unwind, all obligations with respect to the Transaction
shall be deemed fully and finally discharged.

 

 

 

16 Insert for Base Call Option Confirmation.

17 Insert for Additional Call Option Confirmation.

 

27

 

 

(x)Tax Matters

 

(i)Payee Tax Representations:

 

For the purpose of Section 3(f) of the Agreement, Counterparty makes the
following representation to Dealer:

 

Counterparty is a U.S. person (as that term is defined in Section 7701(a)(30) of
the Code and used in Section 1.1441-4(a)(3)(ii) of the United States Treasury
Regulations) for U.S. federal income tax purposes.

 

For the purpose of Section 3(f) of the Agreement, Dealer makes the following
representations to Counterparty:

 

[Dealer is a U.S. person (as that term is defined in Section 7701(a)(30) of the
Code and used in Section 1.1441-4(a)(3)(ii) of the United States Treasury
Regulations) for U.S. federal income tax purposes.]18

 

[Dealer is a corporation for U.S. federal income tax purposes and a “dealer”
within the meaning of Section 1.1001-4(b)(1) of the United States Treasury
Regulations.  Dealer is a “foreign person” (as that term is used in section
1.6041-4(a)(4) of the United States Treasury Regulations) for U.S. federal
income tax purposes and each payment received or to be received by it in
connection with this Confirmation is effectively connected with its conduct of a
trade or business in the United States]19

 

(ii)Tax Documentation. For the purposes of Section 4(a)(i) of the Agreement,
each party shall provide to the other party a valid United States IRS Form W-9
or applicable version of IRS Form W-8 (or successor thereto), (A) on or before
the date of execution of this Confirmation and (B) promptly upon learning that
any such tax form previously provided by it has become obsolete or incorrect.
Additionally, each party shall, promptly upon request by the other party,
provide such other tax forms and documents reasonably requested by the other
party.

 

(iii)Withholding Tax Imposed on Payments to non-U.S. Counterparties under the
Provisions Known as the Foreign Account Tax Compliance Act. “Tax” and
“Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include
any U.S. federal withholding tax imposed or collected pursuant to 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, 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.

 

(iv)HIRE Act. “Tax” and “Indemnifiable Tax,” each as defined in Section 14 of
the Agreement, shall not include any tax imposed on payments treated as
dividends from sources within the United States under Section 871(m) of the Code
or any regulations issued thereunder (a “Section 871(m) Withholding Tax”). For
the avoidance of doubt, a Section 871(m) 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.

 

 

 

18 Insert for BofA Securities, Inc.

19 Insert for BNP Paribas Securities Corp.

 

28

 

 

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

 

(z)Amendments. This Confirmation and the Agreement may not be modified, amended
or supplemented except in a written instrument signed by the Counterparty and
Dealer.

 

(aa)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.

 

(bb)[Insert relevant Dealer QFC Stay Rule language, if any.]

 

29

 

 

Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to Dealer the fully executed Confirmation via
facsimile or e-mail..

 

Very truly yours,

 

[Dealer]   

By:

Authorized Signatory

Name:

 

Accepted and confirmed

as of the Trade Date:

 

Granite Construction Incorporated

 

By:

Authorized Signatory

Name: