Exhibit 10.1

Opening Transaction

 

To:   

Standard Pacific Corp.

15326 Alton Parkway

Irvine, California 92618

From:   

Bank of America, N.A.

c/o Banc of America Securities LLC

Equities Legal Department

9 West 57th Street, 40th Floor

New York, NY 10019

Re:    Capped Convertible Bond Hedge Transaction Ref. No:    NY-31697 Date:   
September 25, 2007

Dear Sir(s):

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between Bank of America, N.A.
(“Dealer”) and Standard Pacific Corp. (“Counterparty”). This communication
constitutes a “Confirmation” as referred to in the ISDA Master Agreement
specified below.

1. This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000
Definitions”) and the definitions and provisions of the 2002 ISDA Equity
Derivatives Definitions (the “Equity Definitions”, and together with the 2000
Definitions, the “Definitions”), in each case as published by the International
Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any
inconsistency between the 2000 Definitions and the Equity Definitions, the
Equity Definitions will govern. Certain defined terms used herein have the
meanings assigned to them in the Senior Subordinated Indenture dated as of
April 10, 2002, between Counterparty and The Bank of New York Trust Company,
N.A. (as successor in interest to Bank One Trust Company, N.A. and J.P. Morgan
Trust Company, National Association), as trustee (the “Trustee”) (the “Base
Indenture”), as amended and supplemented by a third supplemental indenture to be
dated as of September 24, 2007 between Counterparty and The Bank of New York
Trust Company, N.A., as trustee (the “Supplemental Indenture” and the Base
Indenture as so amended and supplemented, the “Indenture”) relating to the
USD100,000,000 principal amount of 6.00% Convertible Senior Subordinated Notes
due 2012 (the “Convertible Notes”, which term shall include any Additional
Convertible Notes (as defined below)). In the event of any inconsistency between
the terms defined in the Indenture and this Confirmation, this Confirmation
shall govern. For the avoidance of doubt, (i) the Transaction shall be the only
transaction under the Agreement and (ii) references herein to sections of the
Indenture are based on the draft of the Indenture most recently reviewed by the
parties at the time of execution of this Confirmation. If any relevant sections
of the Indenture are changed, added or renumbered between the execution of this
Confirmation and the execution of the Supplemental Indenture, the parties will
amend this Confirmation in good faith to preserve the economic intent of the
parties. The parties further acknowledge that references to the Indenture herein
are references to the Indenture as in effect on the date of its execution and if
the Indenture is amended following its execution, any such amendment will be
disregarded for purposes of this Confirmation unless the parties agree otherwise
in writing. The Transaction is subject to early unwind if the closing of the
Convertible Notes is not consummated for any reason, as set forth below in
Section 8(k).

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

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This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 2002 ISDA Master Agreement as if Dealer and Counterparty had
executed an agreement in such form on the date hereof (but without any
Schedule).

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

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

General Terms:

 

Trade Date:    September 24, 2007 Effective Date:    September 28, 2007 Option
Style:    Modified American, as described under “Procedures for Exercise” below.
Option Type:    Call Seller:    Dealer Buyer:    Counterparty Shares:    The
Common Stock of Counterparty, par value USD 0.01 per share (Ticker Symbol:
“SPF”). Number of Options:    The number of Convertible Notes in denominations
of USD1,000 principal amount issued by Counterparty on the closing date for the
initial issuance of the Convertible Notes; provided that the Number of Options
shall be automatically increased as of the date of exercise by Credit Suisse
Securities (USA) LLC, as representative of the Underwriters (as defined in the
Underwriting Agreement), of their option pursuant to Section 2 of the
Underwriting Agreement dated as of September 24, 2007, among Counterparty and
Credit Suisse Securities (USA) LLC, Banc of America Securities LLC and J.P.
Morgan Securities Inc., as Underwriters (the “Underwriting Agreement”) by the
number of Convertible Notes in denominations of USD1,000 principal amount issued
pursuant to such exercise (such Convertible Notes, the “Additional Convertible
Notes”). For the avoidance of doubt, the Number of Options outstanding shall be
reduced by each exercise of Options hereunder. Option Entitlement:    As of any
date, a number of Shares per Option equal to the “Conversion Rate” (as defined
in the Indenture), but without regard to any adjustments to the Conversion Rate
pursuant to Sections 10.03 or 10.04(g) of the Supplemental Indenture) as of such
date. Strike Price:    As of any date, an amount in USD, rounded to the nearest
cent (with 0.5 cents being rounded upwards), equal to USD1,000 divided by the
Option Entitlement as of such date.

 

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Cap Price:    USD10.85 Number of Shares:    The product of the Number of
Options, the Option Entitlement and the Applicable Percentage. Applicable
Percentage:    80% Premium:    USD7,296,000 (Premium per Option USD72.96);
provided that if the Number of Options is increased pursuant to the proviso to
the definition of “Number of Options” above, an additional Premium equal to the
product of the number of Options by which the Number of Options is so increased
and the Premium per Option shall be paid on the Additional Premium Payment Date.
Premium Payment Date:    The Effective Date Additional Premium Payment Date:   
The closing date for the purchase and sale of the Additional Convertible Notes.
Exchange:    The New York Stock Exchange Related Exchange:    All Exchanges

Procedures for Exercise:

 

Exercise Date:    Each Conversion Date. Conversion Date:    Each “Conversion
Date” (as defined in the Indenture) occurring during the Exercise Period for
Convertible Notes submitted for conversion in accordance with the terms of the
Indenture that are not Excluded Convertible Notes (such Convertible Notes that
are not Excluded Convertible Notes, each in denominations of USD1,000 principal
amount, the “Relevant Convertible Notes” for such Conversion Date). Excluded
Convertible Notes:    Convertible Notes submitted for conversion with a
Conversion Date prior to the 35th “Scheduled Trading Day” (as defined in the
Indenture) immediately preceding the “Maturity Date” (as defined in the
Indenture). Exercise Period:    The period from and excluding the Effective Date
to and including the Expiration Date. Expiration Date:    The earlier of (i) the
last day on which any Convertible Notes remain outstanding and (ii) the second
Scheduled Trading Day immediately preceding the Maturity Date. Automatic
Exercise on    Conversion Dates:    On each Conversion Date, a number of Options
equal to the number of Relevant Convertible Notes for such Conversion Date in
denominations of USD1,000 principal amount shall be automatically exercised,
subject to “Notice of Exercise” below. Notice Deadline:    In respect of any
exercise of Options hereunder on any Conversion Date, the Scheduled Trading Day
following such Conversion Date. Notice of Exercise:    Notwithstanding anything
to the contrary in the Equity Definitions, Dealer shall have no obligation to
make any payment or delivery in respect of any exercise of

 

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   Options hereunder unless Counterparty or the Trustee notifies Dealer in
writing prior to 5:00 PM, New York City time, on the Notice Deadline in respect
of such exercise of (i) the number of Options being exercised on such Exercise
Date, (ii) the scheduled settlement date under the Indenture for the Relevant
Convertible Notes for the related Conversion Date, (iii) whether such Relevant
Convertible Notes will be settled by Counterparty by delivery of cash, Shares or
a combination of cash and Shares and, if such a combination, the “Fixed Cash
Amount” (as defined in the Indenture) and (iv) the first Scheduled Trading Day
of the Settlement Period for such Relevant Convertible Notes. For the avoidance
of doubt, if Dealer fails to receive notice when due in respect of any exercise
of Options hereunder, Dealer’s obligation to make any payment or delivery in
respect of such exercise shall be permanently extinguished, and late notice
shall not cure such failure. 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 Cash Election (as defined below) with respect to the
Convertible Notes. Dealer’s Telephone Number and Telex and/or Facsimile Number
and Contact Details for purpose of Giving Notice:   

To:   Bank of America, N.A.

  

         c/o Banc of America Securities LLC

         Equities Legal Department

         9 West 57th Street, 40th Floor

         New York, NY 10019

   Attn:               John Servidio    Telephone:     (212) 583-8373   
Facsimile:      (212) 230-8610

Settlement Terms:

 

Settlement Date:    For any Exercise Date, the settlement date for the Shares
and/or cash to be delivered in respect of the Relevant Convertible Notes for the
relevant Conversion Date under the terms of the Indenture; provided that the
Settlement Date shall not be prior to the latest of (i) the date one Settlement
Cycle following the final day of the Settlement Period for such Relevant
Convertible Notes, (ii) the Exchange Business Day immediately following the date
on which Counterparty or the Trustee gives notice to Dealer of such Settlement
Date prior to 5:00 PM, New York City time and (iii) the Exchange Business Day
immediately following the date Counterparty or the Trustee provides the Notice
of Delivery Obligation prior to 5:00 PM, New York City time. Delivery
Obligation:    In lieu of the obligations set forth in Sections 8.1 and 9.1 of
the Equity Definitions, and subject to “Notice of Exercise” above, in respect of
any Exercise Date,

 

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   Dealer will deliver to Counterparty on the related Settlement Date a number
of Shares and/or an amount of cash equal to the product of (x) the Applicable
Percentage and (y) the aggregate number of Shares, that Counterparty would be
obligated to deliver to the holder(s) of the Relevant Convertible Notes for such
Conversion Date pursuant to clause (3)(ii) of the last paragraph of Section
10.02(b) of the Supplemental Indenture if any, and/or the aggregate amount of
cash, if any, in excess of USD1,000 per Convertible Note (in denominations of
USD1,000) that Counterparty would be obligated to deliver to holder(s) pursuant
to clause (2) or clause (3)(i), as applicable, of Section 10.02(b) of the
Supplemental Indenture (except that such aggregate number of Shares shall be
determined without taking into consideration any rounding pursuant to Section
10.02(i) of the Supplemental Indenture and shall be rounded down to the nearest
whole number) if Counterparty had elected to satisfy its conversion obligation
in respect of such Relevant Convertible Notes by the Convertible Note Settlement
Method, notwithstanding any different actual election by Counterparty with
respect to the settlement of such Relevant Convertible Notes (such Shares and/or
cash required to be delivered under such section, collectively, the “Convertible
Obligation”); provided that (i) if the Convertible Obligation exceeds the Capped
Convertible Obligation, then the Delivery Obligation shall be the Capped
Convertible Obligation; (ii) the Convertible Obligation (and for the avoidance
of doubt, the Capped Convertible Obligation) shall be determined excluding any
Shares and/or cash that Counterparty would be so obligated to deliver to
holder(s) of the Relevant Convertible Notes as a direct or indirect result of
any adjustments to the Conversion Rate pursuant to Section 10.04(g) of the
Supplemental Indenture and any interest payment that Counterparty is (or would
have been) obligated to deliver to holder(s) of the Relevant Convertible Notes
for such Conversion Date; and (iii) that if such exercise relates to the
conversion of Relevant Convertible Notes in connection with which holders
thereof would be so entitled to receive additional Shares and/or cash pursuant
to the adjustments to the Conversion Rate set forth in Section 10.03 of the
Supplemental Indenture, then the Delivery Obligation for such Exercise Date
shall include such additional Shares and/or cash, except that such Delivery
Obligation shall be capped so that the value of such Delivery Obligation (with
the value of any Shares included in the Delivery Obligation determined by the
Calculation Agent using the “VWAP” (as defined in the Indenture) on the last day
of the relevant Settlement Period) does not exceed the amount as determined by
the Calculation Agent that would be payable by Dealer pursuant to Section 6 of
the Agreement if such Conversion Date were an Early Termination Date resulting
from an Additional Termination Event with respect to which the Transaction
(except that, for purposes of determining such amount, (x) the Number

 

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   of Options shall be deemed to be equal to the number of Options exercised on
such Exercise Date and (y) such amount payable will be determined as if Section
10.03 of the Supplemental Indenture were deleted) was the sole Affected
Transaction and Counterparty was the sole Affected Party (determined without
regard to Section 8(c) of this Confirmation), it being understood that the cap
described in this clause (iii) is in addition to, and cumulative with, the
provisions of clause (ii) of this sentence. For the avoidance of doubt, if the
“Daily Conversion Value” (as defined in the Indenture) for each of the
Settlement Period Trading Days (as defined in the Indenture) occurring in the
relevant Settlement Period is less than or equal to USD33.3334, Dealer will have
no delivery obligation hereunder in respect of the related Exercise Date.
Notwithstanding the foregoing, and in addition to the caps described in the
preceding sentence, in all events the Delivery Obligation shall be capped so
that the value of the Delivery Obligation does not exceed the value of the
Convertible Obligation (with the Convertible Obligation determined based on the
actual settlement method elected by Counterparty with respect to such Relevant
Convertible Notes instead of the Convertible Note Settlement Method and with the
value of any Shares included in the either the Delivery Obligation or such
Convertible Obligation determined by the Calculation Agent using the VWAP on the
last day of the relevant Settlement Period). Convertible Note Settlement Method:
   For any Relevant Convertible Notes, if Counterparty has notified Dealer in
the related Notice of Exercise that it has elected to satisfy its conversion
obligation in respect of such Relevant Convertible Notes in cash or in a
combination of cash and Shares in accordance with Section 10.02(b) of the
Supplemental Indenture (a “Cash Election”) with a Fixed Cash Amount of at least
USD1,000, the Convertible Note Settlement Method shall be the settlement method
actually so elected by Counterparty in respect of such Relevant Convertible
Notes; otherwise, the Convertible Note Settlement Method shall assume
Counterparty had made a Cash Election with respect to such Relevant Convertible
Notes with a Fixed Cash Amount of USD1,000 per Relevant Convertible Bond. Capped
Convertible Obligation:    In respect of any Exercise Date occurring on a
Conversion Date, the Convertible Obligation that would apply if the VWAP for
each “Settlement Period Trading Day” (as defined in the Indenture) in the
Settlement Period were the lesser of (i) the Cap Price and (ii) the actual VWAP
for such Settlement Period Trading Day. Notice of Delivery Obligation:    No
later than the Exchange Business Day immediately following the last day of the
relevant Settlement Period), Counterparty or the Trustee shall give Dealer
notice of the final number of Shares and/or cash comprising the relevant
Convertible Obligation; provided that, with respect to any Exercise Date
occurring during the period starting on the 35th

 

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   Scheduled Trading Day immediately preceding the Maturity Date and ending on
the Maturity Date, Counterparty or the Trustee may provide Dealer with a single
notice of the aggregate number of Shares and/or cash comprising the Convertible
Obligations for all Exercise Dates occurring during such period (it being
understood, for the avoidance of doubt, that the requirement to deliver such
notice shall not limit the notice obligations with respect to “Notice of
Exercise” or Dealer’s obligations with respect to “Delivery Obligation”, each as
set forth above, in any way). Other Applicable Provisions:    To the extent
Dealer is obligated to deliver Shares hereunder, the provisions of Sections
9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions will be
applicable as if “Physical Settlement” applied to the Transaction; provided that
the Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified by excluding any representations therein relating
to restrictions, obligations, limitations or requirements under applicable
securities laws that exist as a result of the fact that Buyer is the issuer of
the Shares. Restricted Certificated Shares:    Notwithstanding anything to the
contrary in the Equity Definitions, Dealer may, in whole or in part, deliver
Shares in certificated form representing the Number of Shares to be Delivered to
Counterparty in lieu of delivery through the Clearance System.

Adjustments:

 

Method of Adjustment:    Notwithstanding Section 11.2 of the Equity Definitions,
upon the occurrence of any event or condition set forth in paragraphs (a), (b),
(c), (d) or (e) of Section 10.04 of the Supplemental Indenture, the Calculation
Agent shall make the corresponding adjustment in respect of any one or more of
the Number of Options, the Option Entitlement and any other variable relevant to
the exercise, settlement or payment of the Transaction, to the extent an
analogous adjustment is made under the Indenture, and may adjust the Cap Price
as the Calculation Agent determines appropriate to account for the economic
effect on the Transaction of such event (including adjustments to account for
changes in volatility, expected dividends, stock loan rate or liquidity relevant
to the Shares or to the Transaction), which may, but need not, be determined by
reference to the adjustment(s) made in respect of such event by an options
exchange to options on the relevant Shares traded on such options exchange, and
determine the effective date of that adjustment; provided that the Cap Price
shall not be so adjusted so that it is less than the Strike Price. As promptly
as reasonably practicable upon the occurrence of any “Adjustment Event” (as
defined in the Indenture) Counterparty shall notify the Calculation Agent of
such Adjustment Event; and once the adjustments to be made to the terms of the
Indenture and the Convertible Notes in respect of such Adjustment Event have
been determined, Counterparty shall as promptly as reasonably practicable notify
the Calculation Agent in writing of the details of such adjustments.

 

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Extraordinary Events:

 

Merger Events:    Notwithstanding Section 12.1(b) of the Equity Definitions, a
“Merger Event” means the occurrence of any event or condition set forth in
Section 10.05 of the Supplemental Indenture or Section 5.01 of the Base
Indenture. Consequences of Merger Events:    Notwithstanding Section 12.2 of the
Equity Definitions, upon the occurrence of a Merger Event, the Calculation Agent
shall make the corresponding adjustment in respect of any adjustment under the
Indenture to any one or more of the nature of the Shares, the Number of Options,
the Option Entitlement and any other variable relevant to the exercise,
settlement or payment for the Transaction, to the extent an analogous adjustment
is made under the Indenture in respect of such Merger Event, and may adjust the
Cap Price as the Calculation Agent determines appropriate to account for the
economic effect on the Transaction of such event (including adjustments to
account for changes in volatility, expected dividends, stock loan rate or
liquidity relevant to the Shares or to the Transaction), which may, but need
not, be determined by reference to the adjustment(s) made in respect of such
event by an options exchange to options on the relevant Shares traded on such
options exchange, and determine the effective date of that adjustment; provided
that the Cap Price shall not be so adjusted so that it is less than the Strike
Price; and provided further that such adjustment shall be made without regard to
any adjustment to the Conversion Rate for the issuance of additional Shares as
set forth in Sections 10.03 or 10.04(g) of the Supplemental Indenture; and
provided further that, notwithstanding the foregoing, with respect to a Merger
Event, if the consideration for the Shares includes (or, at the option of a
holder of Shares, may include) shares of an entity or person not organized under
the laws of the United States, any State thereof or the District of Columbia and
the Calculation Agent determines that no adjustment that it could make to the
Cap Price pursuant to this sentence would produce a commercially reasonable
result in light of the impact of such Merger Event on Dealer’s ability to
preserve its hedging in respect of the Transaction (including hedge adjustment
and hedge unwind activity), Cancellation and Payment (Calculation Agent
Determination) shall apply. Notice of Merger Consideration:    In connection
with any Merger Event that causes the Shares to be converted into the right to
receive more than a single type of consideration (determined based in part upon
any form of stockholder election), Counterparty shall reasonably promptly (but
in any event no later than the later of the Merger Date and the date on which
the merger consideration is known to Counterparty) notify the Calculation Agent
of (i) the weighted average of the types and amounts of consideration received
or to be received by the holders

 

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   of Shares entitled to receive cash, securities or other property or assets
with respect to or in exchange for such Shares in any Merger Event who
affirmatively make such an election and (ii) the details of the adjustment made
under the Indenture in respect of such Merger Event. Nationalization, Insolvency
or Delisting:    Cancellation and Payment (Calculation Agent Determination);
provided that in addition to the provisions of Section 12.6(a)(iii) of the
Equity Definitions, it will also constitute a Delisting if the Exchange is
located in the United States and the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or their
respective successors); if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation system, such exchange or quotation
system shall thereafter be deemed to be the Exchange. Additional Disruption
Events:   

(a)    Change in Law:

   Applicable

(b)    Insolvency Filing:

   Applicable Determining Party:    Dealer Non-Reliance:    Applicable
Agreements and Acknowledgments    Regarding Hedging Activities:    Applicable
Additional Acknowledgments:    Applicable 3. Calculation Agent:    Dealer

4. Account Details:

Dealer Payment Instructions:

Bank of America, N.A.

New York, NY

SWIFT: BOFAUS3N

Bank Routing: 026-009-593

Account Name: Bank of America

Account No. : 0012333-34172

Counterparty Payment Instructions:

To be provided by Counterparty.

5. Offices:

The Office of Dealer for the Transaction is:

Bank of America, N.A.

c/o Banc of America Securities LLC

Equities Legal Department

9 West 57th Street, 40th Floor

New York, NY 10019

 

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The Office of Counterparty for the Transaction is:

15326 Alton Parkway

Irvine, California 92618

6. Notices: For purposes of this Confirmation:

 

  (a) Address for notices or communications to Counterparty:

 

To:  

Standard Pacific Corp.

15326 Alton Parkway

Irvine, California 92618

Attn:   Andrew Parnes Telephone:   (949) 789-1616 Facsimile:   (949) 789-1608
With a copy to:  

Standard Pacific Corp.

15326 Alton Parkway

Irvine, CA 92618

Attn:   Clay Halvorsen Telephone:   (949) 789-1618 Facsimile:   (949) 789-1608

 

  (b) Address for notices or communications to Dealer:

 

To:   Bank of America, N.A.  

c/o Banc of America Securities LLC

Equities Legal Department

9 West 57th Street, 40th Floor

New York, NY 10019

Attn:   John Servidio Telephone:   (212) 583-8373 Facsimile:   (212) 230-8610

7. Representations, Warranties and Agreements:

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

(i) On the Trade Date, (A) Counterparty is not aware of any material nonpublic
information regarding Counterparty or the Shares and (B) all reports and other
documents filed by Counterparty with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
when considered as a whole (with the more recent such reports and documents
deemed to amend inconsistent statements contained in any earlier such reports
and documents), do not contain any untrue statement of a material fact or any
omission of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading.

(ii) On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated
purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”))
shall directly or indirectly (including, without limitation, by means of any
cash-settled or other derivative instrument other than the Transaction)
purchase, offer to purchase, place any bid or limit order that would effect a
purchase of, or commence any tender offer relating to, any Shares (or an
equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share) or any security convertible into or
exchangeable or exercisable for Shares.

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

 

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

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

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

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

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

(ix) The representations and warranties of Counterparty set forth in Section 3
of the Agreement and Section 1 of the Underwriting Agreement are true and
correct as of the Trade Date, the Effective Date and the Additional Premium
Payment Date and are hereby deemed to be repeated to Dealer as of such dates as
if set forth herein.

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

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

(d) Counterparty agrees and acknowledges that Dealer has represented to it that
it is a “financial institution,” “swap participant” and “financial participant”
within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the
United States Code (the “Bankruptcy Code”). The parties hereto further agree and
acknowledge (A) that this Confirmation is intended to be (i) a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code,
with respect to which each payment and delivery hereunder is a “settlement
payment,” as such term is defined in Section 741(8) of the Bankruptcy Code, and
(ii) a “swap agreement,” as such term is defined in Section 101(53B) of the
Bankruptcy Code, with respect to which each payment and delivery hereunder is a
“transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code,
and (B) that Dealer is intended 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.

 

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

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

8. Other Provisions:

(a) Right to Extend. Dealer may postpone any Settlement Date or any other date
of valuation or delivery by Dealer, with respect to some or all of the relevant
Options (in which event the Calculation Agent shall make appropriate adjustments
to the Delivery Obligation), to the extent Dealer determines, in its
commercially reasonable discretion, that such extension is reasonably necessary
or appropriate (i) to preserve Dealer’s hedging or hedge unwind activity
hereunder in light of existing liquidity conditions in the cash market or the
stock borrow market or other relevant market or (ii) to enable Dealer to effect
purchases of Shares in connection with its hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Dealer were Counterparty or an
affiliated purchaser of Counterparty, be in compliance with applicable legal,
regulatory or self-regulatory requirements or with related compliance policies
and procedures applicable to Dealer; provided that in the case of clause (i), no
such postponement shall be for more than 10 Exchange Business Days.

(b) Additional Termination Events. The occurrence of (i) an acceleration of the
Convertible Notes after an event of default with respect to Counterparty under
the terms of the Convertible Notes as set forth in Section 6.01 of the Base
Indenture, (ii) an Amendment Event or (iii) an Excluded Conversion Event shall
be an Additional Termination Event with respect to which the Transaction is the
sole Affected Transaction and Counterparty is the sole Affected Party, and
Dealer shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement; provided that in the case of an
Excluded Conversion Event the Transaction shall be subject to termination only
in respect of a number of Options equal to the number of Convertible Notes that
cease to be outstanding in connection with or as a result of such Excluded
Conversion Event. For the avoidance of doubt, in determining the amount payable
in respect of such Affected Transaction pursuant to Section 6 of the Agreement
in connection with an Excluded Conversion Event, the Calculation Agent shall
assume that (x) the relevant Excluded Convertible Notes shall not have been
converted and remain outstanding, and (y) in the case of an Induced Conversion,
any adjustments, agreements, additional payments, deliveries or acquisitions by
or on behalf of Counterparty or any affiliate of Counterparty in connection
therewith had not occurred.

“Excluded Conversion Event” means any conversion of any Excluded Convertible
Notes.

“Induced Conversion” means a conversion of an Excluded Convertible Note (A) in
connection with (x) an adjustment to the Conversion Rate effected by
Counterparty (whether pursuant to Section 10.04(g) of the Supplemental Indenture
or otherwise) that is not required under the terms of the Indenture or (y) an
agreement by Counterparty with the holder(s) of such Convertible Notes whereby,
in the case of either (x) or (y), the holder(s) of such Convertible Notes
receive upon conversion or pursuant to such agreement, as the case may be, a
payment of cash or delivery of Shares or any other property or item of value
that was not required under the terms of the Indenture or (B) after having been
acquired from a holder of Convertible Notes by or on behalf of Counterparty or
any of its affiliates other than pursuant to a conversion by such Holder and
thereafter converted by or on behalf of Counterparty or any affiliate of
Counterparty.

“Amendment Event” means that Counterparty amends, modifies, supplements 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 price, conversion
settlement dates or conversion conditions), or any term that would require
consent of the holders of not less than 100% of the principal amount of the
Convertible Notes to amend, in each case without the prior consent of Dealer.

(c) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If Dealer shall owe Counterparty any amount pursuant to
Section 12.2 of the Equity Definitions and “Consequences of Merger Events”
above, or Sections 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in
the event of a Merger Event, Insolvency, or Nationalization, in which the
consideration or proceeds to be paid to holders of Shares consists solely of
cash) or pursuant to Section 6(d)(ii) of the

 

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Agreement (except in the event of an Event of Default in which Counterparty is
the Defaulting Party or a Termination Event in which Counterparty is the
Affected Party, that resulted from an event or events within Counterparty’s
control) (a “Payment Obligation”), Counterparty shall have the right, in its
sole discretion, to require Dealer to satisfy any such Payment Obligation by the
Share Termination Alternative (as defined below) by giving irrevocable
telephonic notice to Dealer, confirmed in writing within one Scheduled Trading
Day, between the hours of 9:00 A.M. and 4:00 P.M. New York City time on the
Merger Date, Announcement Date or Early Termination Date, as applicable (“Notice
of Share Termination”). It is understood and agreed that notwithstanding
anything to the contrary in the Equity Definitions, Counterparty shall have no
obligation hereunder or under the Agreement to make any delivery or payment to
Dealer in connection with any such Early Termination Date or Announcement Date.
Upon such Notice of Share Termination, the following provisions shall apply on
the Scheduled Trading Day immediately following the Merger Date, Announcement
Date or Early Termination Date, as applicable:

 

Share Termination Alternative:    Applicable and means that Dealer shall deliver
to Counterparty the Share Termination Delivery Property on the date on which the
Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of
the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable (the
“Share Termination Payment Date”), in satisfaction of the Payment Obligation.
Share Termination Delivery Property:    A number of Share Termination Delivery
Units, as calculated by the Calculation Agent, equal to the Payment Obligation
divided by the Share Termination Unit Price. The Calculation Agent shall adjust
the Share Termination Delivery Property by replacing any fractional portion of
the aggregate amount of a security therein with an amount of cash equal to the
value of such fractional security based on the values used to calculate the
Share Termination Unit Price. Share Termination Unit Price:    The value of
property contained in one Share Termination Delivery Unit on the Share
Termination Payment Date, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to Dealer and Counterparty promptly after notification of the Payment
Obligation. Share Termination Delivery Unit:    In the case of a Termination
Event, Event of Default or Delisting, one Share or, in the case of an
Insolvency, Nationalization or Merger Event, one Share or a unit consisting of
the number or amount of each type of property received by a holder of one Share
(without consideration of any requirement to pay cash or other consideration in
lieu of fractional amounts of any securities) in such Insolvency,
Nationalization or Merger Event. If such Insolvency, Nationalization or Merger
Event involves a choice of consideration to be received by holders, such holder
shall be deemed to have elected to receive the maximum possible amount of cash.
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 of the Equity Definitions will be applicable as if “Physical
Settlement” applied to the Transaction, except that all references to “Shares”
shall be read as references to “Share Termination Delivery Units”; provided that
the Representation and Agreement contained in Section 9.11 of the Equity
Definitions shall be modified by excluding any representations therein relating
to restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Counterparty is the issuer of any
Share Termination Delivery Units (or any part thereof).

(d) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good
faith reasonable judgment of Dealer, the Shares acquired by Dealer for the
purpose of hedging its obligations pursuant to the Transaction (the “Hedge
Shares”) cannot be sold in the U.S. public market by Dealer without registration
under the Securities Act, Counterparty shall, at its election: (i) in order to
allow Dealer to sell

 

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the Hedge Shares in a registered offering, make available to Dealer an effective
registration statement under the Securities Act to cover the resale of such
Hedge Shares and (A) enter into an agreement, in form and substance satisfactory
to Dealer and Counterparty, each acting in a commercially reasonable manner,
substantially in the form of an underwriting agreement for a registered
offering, (B) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty reasonably acceptable to
Dealer, (D) provide other customary opinions, certificates and closing documents
customary in form for registered offerings of equity securities and (E) afford
Dealer a reasonable opportunity to conduct a “due diligence” investigation with
respect to Counterparty customary in scope for underwritten offerings of equity
securities; provided, however, that if Dealer, in its sole reasonable
discretion, is not satisfied with access to due diligence materials, the results
of its due diligence investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or clause (iii) of this
Section 8(d) shall apply at the election of Counterparty; (ii) in order to allow
Dealer to sell the Hedge Shares in a private placement, to enter into a private
placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance satisfactory to Dealer and Counterparty, each acting in a commercially
reasonable manner, including customary representations, covenants, blue sky and
other governmental filings and/or registrations, indemnities, due diligence
rights (for Dealer or any designated buyer of the Hedge Shares from Dealer
provided that such persons have entered into a confidentiality agreement with
Counterparty in form reasonably acceptable to Counterparty), opinions and
certificates and such other documentation as is customary for private placements
agreements, all reasonably acceptable to Dealer (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that are
necessary, in its reasonable judgment, to compensate Dealer for any discount
from the public market price of the Shares incurred on the sale of Hedge Shares
in a private placement); or (iii) purchase the Hedge Shares from Dealer at the
VWAP Price on such Exchange Business Days, and in the amounts, requested by
Dealer.

(e) Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any repurchase of Shares, promptly give Dealer a written notice of its
Outstanding Shares (as defined below) (a “Repurchase Notice”) on such day if,
following such repurchase, the Outstanding Shares shall have decreased by more
than 1.0% since the immediately preceding Repurchase Notice (or, in the case of
the first such Repurchase Notice, the Outstanding Shares as of the date hereof).
The “Outstanding Shares” on any day is the number of Shares outstanding on such
day. In the event that Counterparty fails to provide Dealer with a Repurchase
Notice on the day and in the manner specified in this Section 8(e), then
Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and
their respective directors, officers, employees, agents and controlling persons
(Dealer and each such person being an “Indemnified Party”) from and against any
and all losses, claims, damages and liabilities (or actions in respect thereof),
joint or several, to which such Indemnified Party may become subject under
applicable securities laws, including without limitation, Section 16 of the
Exchange Act (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), relating to or arising out of such failure. If for
any reason the foregoing indemnification is unavailable to any Indemnified Party
or insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability. In addition, Counterparty will reimburse any Indemnified Party for
all expenses (including reasonable counsel fees and expenses) as they are
incurred (after notice to Counterparty) in connection with the investigation of,
preparation for or defense or settlement of any pending or threatened claim or
any action, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto and whether or not such claim, action, suit
or proceeding is initiated or brought by or on behalf of Counterparty. This
indemnity shall survive the completion of the Transaction contemplated by this
Confirmation and any assignment and delegation of the Transaction made pursuant
to this Confirmation or the Agreement shall inure to the benefit of any
permitted assignee of Dealer.

(f) Transfer and Assignment. Either party may transfer any of its rights or
obligations under the Transaction with the prior written consent of the
non-transferring party, such consent not to be unreasonably withheld. In
addition, Dealer may transfer or assign without any consent of Counterparty its
rights and obligations hereunder (i) in whole or in part to any of its
affiliates with a rating for its long term, unsecured and unsubordinated
indebtedness of A or better by Standard and Poor’s Rating Group, Inc. or its
successor (“S&P”), or A2 or better 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

 

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agreed by Counterparty and Dealer (such minimum ratings, the “Required Rating”),
or (ii) a portion of its rights and obligations hereunder corresponding to the
Terminated Portion (as defined below) to any other person with the Required
Rating; provided further that at any time at which the Equity Percentage exceeds
8.5 % (an “Excess Ownership Position”), if Dealer, in its discretion, is unable
to effect a transfer or assignment of a commercially reasonable portion of the
Transaction to a third party in accordance with the requirements set forth above
after using its commercially reasonable efforts on pricing terms reasonably
acceptable to Dealer such that an Excess Ownership Position, no longer exists,
Dealer may designate any Scheduled Trading Day as an Early Termination Date with
respect to such a portion (the “Terminated Portion”) of the Transaction. In the
event that Dealer so designates an Early Termination Date with respect to a
portion of the Transaction, a payment or delivery shall be made pursuant to
Section 6 of the Agreement and Section 8(c) of this Confirmation as if (i) an
Early Termination Date had been designated in respect of a Transaction having
terms identical to the Terminated Portion of the Transaction, (ii) Counterparty
shall be the sole Affected Party with respect to such partial termination and
(iii) such portion of the Transaction shall be the only Terminated Transaction.
The “Equity Percentage” as of any day is the fraction, expressed as a
percentage, (A) the numerator of which is the number of Shares that Dealer and
any of its affiliates subject to aggregation with Dealer, for purposes of the
“beneficial ownership” test under Section 13 of the Exchange Act (collectively,
“Dealer Group”), beneficially own (within the meaning of Section 13 of the
Exchange Act) on such day and (B) the denominator of which is the number of
Shares outstanding on such day.

(g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on
one or more dates (each, a “Staggered Settlement Date”) or at two or more times
on the Nominal Settlement Date as follows:

(i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement
Date, but not prior to the relevant Conversion Date) or delivery times and how
it will allocate the Shares it is required to deliver under “Delivery
Obligation” (above) among the Staggered Settlement Dates or delivery times; and

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

(h) 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.

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

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

(k) Early Unwind. In the event the sale by Counterparty of the Convertible Notes
is not consummated with the Underwriters pursuant to the Underwriting Agreement
for any reason by the close of business in New York on September 28, 2007 (or
such later date as agreed upon by the parties, which in no event shall be later
than October 5, 2007) (September 28, 2007 or such later date being the “Early
Unwind Date”), the Transaction shall automatically terminate (the “Early
Unwind”), on the Early Unwind Date and (i) the Transaction and all of the
respective rights and obligations of Dealer and Counterparty thereunder shall be
cancelled and terminated and (ii) Counterparty shall deliver to Dealer, in all
circumstances in which the Convertible Notes are not delivered and Counterparty
would be required to reimburse the Underwriters for expenses incurred by them
under Section 14 of the Underwriting Agreement, either an amount in cash equal
to the aggregate amount of costs and expenses relating to the unwinding of
Dealer’s hedging activities in

 

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respect of the Transaction (including market losses incurred in reselling any
Shares purchased by Dealer or its affiliates in connection with such hedging
activities, unless Counterparty agrees to purchase any such Shares at the cost
at which Dealer purchased such Shares) (the “Cash Amount”) or, at the election
of Counterparty, Shares with a value (as reasonably determined by the
Calculation Agent) equal to the Cash Amount. Following such termination,
cancellation and payment, each party shall be released and discharged by the
other party from and agrees not to make any claim against the other party with
respect to any obligations or liabilities of either party arising out of and to
be performed in connection with the Transaction either prior to or after the
Early Unwind Date. Dealer and Counterparty each represent and acknowledge to the
other that upon an Early Unwind and following the payment referred to above, all
obligations with respect to the Transaction shall be deemed fully and finally
discharged. If Counterparty elects to deliver Shares pursuant to this paragraph,
the following provisions shall apply:

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

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

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

(B) Dealer (or an affiliate of Dealer designated by Dealer) and Counterparty
shall enter into an agreement (a “Registration Agreement”) on commercially
reasonable terms in connection with the public resale of such Shares by Dealer
or such affiliate substantially similar to underwriting agreements customary for
underwritten offerings of equity securities (and in particular on terms
reasonably similar to these contained in the underwriting agreement dated as of
September 24, 2007 between Counterparty and Credit Suisse Securities (USA) LLC
relating to Shares), in form and substance reasonably satisfactory to Dealer or
such affiliate and Counterparty, which Registration Agreement shall include,
without limitation, provisions substantially similar to those contained in such
underwriting agreements relating to the indemnification of, and contribution in
connection with the liability of, Dealer and its affiliates and Counterparty,
shall provide for the payment by Counterparty of all expenses in connection with
such resale, including all registration costs and all reasonable fees and
expenses of counsel for Dealer, and shall provide for the delivery of
accountants’ “comfort letters” to Dealer or such affiliate with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Prospectus.

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

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

(B) Dealer (or an affiliate of Dealer designated by Dealer) and Counterparty
shall enter into an agreement (a “Private Placement Agreement”) on commercially
reasonable terms in connection with the private placement of such Shares by
Counterparty to Dealer or such affiliate and the private resale of such shares
by Dealer or such affiliate,

 

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substantially similar to private placement purchase agreements customary for
private placements of equity securities, in form and substance reasonably
satisfactory to Dealer and Counterparty, which Private Placement Agreement shall
include, without limitation, provisions substantially similar to those contained
in such private placement purchase agreements relating to the indemnification
of, and contribution in connection with the liability of, Dealer and its
affiliates and Counterparty, shall provide for the payment by Counterparty of
all expenses in connection with such resale, including all reasonable fees and
expenses of counsel for Dealer, shall contain customary representations,
warranties and agreements of Counterparty reasonably necessary or advisable to
establish and maintain the availability of an exemption from the registration
requirements of the Securities Act for such resales, and shall use commercially
reasonable efforts to provide for the delivery of accountants’ “comfort letters”
to Dealer or such affiliate with respect to the financial statements and certain
financial information contained in or incorporated by reference into the
offering memorandum prepared for the resale of such Shares;

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

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

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

(l) Netting and Set-off.

(i) If on any date cash would otherwise be payable or Shares or other property
would otherwise be deliverable hereunder or pursuant to the Agreement or
pursuant to any other agreement between the parties by Counterparty to Dealer
and cash would otherwise be payable or Shares or other property would otherwise
be deliverable hereunder or pursuant to the Agreement or pursuant to any other
agreement between the parties by Dealer to Counterparty and the type of property
required to be paid or delivered by each such party on such date is the same,
then, on such date, each

 

17

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such party’s obligation to make such payment or delivery will be automatically
satisfied and discharged and, if the aggregate amount that would otherwise have
been payable or deliverable by one such party exceeds the aggregate amount that
would otherwise have been payable or deliverable by the other such party,
replaced by an obligation of the party by whom the larger aggregate amount would
have been payable or deliverable to pay or deliver to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.

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

(iii) Notwithstanding any provision of the Agreement (including without
limitation Section 6(f) thereof) and this Confirmation (including without
limitation this Section 8(l)) or any other agreement between the parties to the
contrary, (A) Counterparty shall not net or set off its obligations under the
Transaction, if any, against its rights against Dealer under any other
transaction or instrument, (B) Dealer may net and set off any rights of Dealer
against Counterparty arising under the Transaction only against obligations of
Dealer to Counterparty arising under any transaction or instrument if such
transaction or instrument does not convey rights to Dealer senior to the claims
of common stockholders in the event of Counterparty’s bankruptcy and (C) in the
event of bankruptcy or liquidation of Counterparty, neither party shall have the
right to set off any obligation that it may have to the other party under the
Transaction against any obligation such other party may have to it under the
Agreement, the Confirmation or any other agreement between the parties hereto,
by operation of law or otherwise. Dealer will give notice to Counterparty of any
netting or set off effected under this provision.

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

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

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

 

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(p) 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.

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing
this Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to John Servidio at Banc of America Securities LLC, 9 West 57th
Street, 40th Floor, New York, NY 10019, Facsimile No. 212-230-8610.

 

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

/s/ David Moran

Name:   David Moran Title:   Managing Director

 

Agreed and Accepted By: STANDARD PACIFIC CORP. By:  

/s/Andrew H. Parnes

Name:   Andrew H. Parnes Title:   Executive Vice President-Finance   And Chief
Financial Officer