Exhibit 10.3

 

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RBC Capital Markets, LLC

3 World Financial Center

200 Vesey Street

New York, NY10281

Telephone: (212) 858-7000

 

 

DATE:

June 14, 2013

 

 

TO:

Janus Capital Group Inc.

ATTENTION:

David Grawemeyer

TELEPHONE:

(303) 336-5053

 

 

FROM:

RBC Capital Markets, LLC

 

as agent for

 

Royal Bank of Canada

TELEPHONE:

(212) 858-7000

FACSIMILE:

(212) 428-3053

 

 

SUBJECT:

Issuer Warrant Transaction

 

 

REFERENCE NUMBER(S):

JNS-E2-C1

 

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 Royal Bank of Canada
(“Dealer”) and Janus Capital Group Inc. (“Issuer”).  The additional terms of the
Transaction are as set forth in the Trade Notification in the form of Schedule A
hereto (the “Trade Notification”), which shall reference this Confirmation and
supplement, form a part of, and be subject to this Confirmation.  This
communication, as supplemented by the Trade Notification, constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

 

Disclosure of Agency Relationship

 

Dealer has appointed, as its agent, its indirect wholly-owned subsidiary, RBC
Capital Markets, LLC (“RBCCM”), for purposes of conducting, on Dealer’s behalf,
a business in privately negotiated transactions in options and other
derivatives.  You hereby are advised that Dealer, the principal and stated
counterparty in such transactions, duly has authorized RBCCM to market,
structure, negotiate, document, price, execute and hedge transactions in
over-the-counter derivative products.

 

1.             This Confirmation and the Trade Notification are subject to, and
incorporate, 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.  For
purposes of the Equity Definitions, each reference herein to a Warrant shall be
deemed to be a reference to a Call Option or an Option, as context requires.

 

This Confirmation, as supplemented by the Trade Notification, evidences a
complete and binding agreement between Dealer and Issuer as to the terms of the
Transaction to which this Confirmation, as supplemented by the Trade
Notification, relates.  This Confirmation and the Trade Notification shall be
subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master
Agreement as if Dealer and Issuer had executed an agreement in such form
(without any Schedule except for (i) the election of US Dollars (“USD”) as the
Termination Currency and (ii) the election that the “Cross Default” provisions
of Section 5(a)(vi) of the Agreement will apply to Dealer and to Counterparty
with (x) the phrase “, or becoming capable at such time of being declared,”
deleted from Section 5(a)(vi)(1) of the Agreement and (y) the “Threshold Amount”
with respect to Dealer being three percent (3%) of shareholders’ equity of Royal
Bank of Canada as of the Trade Date and with respect to Counterparty,  USD 50.0
million).  For the avoidance of doubt, the Transaction shall be the only
transaction under the Agreement.

 

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All provisions contained in, or incorporated by reference in, the Agreement will
govern this Confirmation and the Trade Notification except as expressly modified
herein.  In the event of any inconsistency between this Confirmation, the Trade
Notification and either the Definitions or the Agreement, the following will
prevail for purposes of the Transaction in order of precedence indicated:
(i) the Trade Notification, (ii) this Confirmation, (iii) the Definitions,
(iv) the Agreement (without regard to the Trade Notification and the
Confirmation).  For the avoidance of doubt, except to the extent of an express
conflict, the application of any provision of this Confirmation, the Trade
Notification, the Definitions or the Agreement, shall not be construed to
exclude or limit the application of any other provision of this Confirmation,
the Trade Notification, the Definitions or the Agreement.

 

2.             The Transaction is a Warrant Transaction, which shall be
considered 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:

 

 

 

Trade Date:

June 14, 2013

 

 

Effective Date:

June 14, 2013, or such other date as agreed between the parties, subject to
Section 8(a) below

 

 

Components:

The Transaction will be divided into individual Components, each with the terms
set forth in this Confirmation, and, in particular, with the Number of Warrants
and Expiration Date set forth in this Confirmation. The payments and deliveries
to be made upon settlement of the Transaction will be determined separately for
each Component as if each Component were a separate Transaction under the
Agreement.

 

 

Warrant Style:

European

 

 

Warrant Type:

Call

 

 

Seller:

Issuer

 

 

Buyer:

Dealer

 

 

Shares:

The common stock of Issuer, par value USD0.001 per share (Ticker Symbol: “JNS”).

 

 

Number of Warrants:

For each Component, as provided in Annex A to this Confirmation. For the
avoidance of doubt, the Number of Warrants shall be reduced by any Warrants
exercised or deemed exercised hereunder. In no event will the Number of Warrants
be less than zero.

 

 

Warrant Entitlement:

One Share per Warrant

 

 

Strike Price:

USD $12.601

 

 

 

Notwithstanding anything to the contrary in the Agreement, this Confirmation or
the Definitions, in no event shall the Strike Price be subject to adjustment to
the extent that, after giving effect to such adjustment, the Strike Price would
be less than the Hedge Period Reference Price, except for any adjustment in
connection with stock splits or similar changes to Issuer’s capitalization.

 

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Hedge Period Reference Price:

As specified in the Trade Notification, to be the average of the VWAP Prices for
the Exchange Business Days during the period beginning on the Trade Date and
ending on the day on which Dealer has informed Counterparty that Dealer has
completed all hedging activities and transactions necessary in order to hedge
initially its exposure with respect to the Transaction (the “Hedge Period”).

 

 

Premium:

As specified in the Trade Notification, to be determined by reference to the
table set forth in Schedule B and based on the Hedge Period Reference Price. If
the exact Hedge Period Reference Price does not appear in such table, the
Premium shall be determined by linear interpolation or extrapolation using the
two closest Hedge Period Reference Prices appearing in such table.

 

 

Premium Payment Date:

As specified in the Trade Notification, to be the third Currency Business Day
following the last day of the Hedge Period.

 

 

Exchange:

New York Stock Exchange

 

 

Related Exchanges:

All Exchanges

 

 

Procedures for Exercise:

 

 

 

In respect of any Component:

 

 

 

Expiration Date:

As provided in Annex A to this Confirmation (or, if such date is not a Scheduled
Trading Day, the next following Scheduled Trading Day that is not already an
Expiration Date for another Component); provided that if that date is a
Disrupted Day, the Expiration Date for such Component shall be the first
succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is
not deemed to be an Expiration Date in respect of any other Component of the
Transaction hereunder; and provided further that if the Expiration Date has not
occurred pursuant to the preceding proviso as of the Final Disruption Date,
Dealer may elect in its discretion that the Final Disruption Date shall be the
Expiration Date (irrespective of whether such date is an Expiration Date in
respect of any other Component for the Transaction) and, notwithstanding
anything to the contrary in this Confirmation or the Definitions, the Relevant
Price for such Expiration Date shall be the prevailing market value per Share
determined by the Calculation Agent in a commercially reasonable manner. “Final
Disruption Date” means the eighth Scheduled Trading Day following the Expiration
Date for the Component with the latest Expiration Date, determined without
regard to the provisos to the preceding sentence. Notwithstanding the foregoing
and anything to the contrary in the Equity Definitions, if a Market Disruption
Event occurs on any Expiration Date, the Calculation Agent may determine that
such Expiration Date is a Disrupted Day only in part, in which case (i) the
Calculation Agent shall make adjustments to the Number of Warrants for the
relevant Component for which such day shall be the Expiration Date and shall
designate the Scheduled Trading Day determined in the manner described in the
immediately preceding sentence as the Expiration Date for the remaining Warrants
for such Component, and (ii) the VWAP Price for such Disrupted Day shall be
determined by the Calculation Agent based on transactions in the Shares on such
Disrupted Day taking into account the nature and duration of such Market
Disruption Event on such day. Any Scheduled Trading Day on which, as of the

 

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date hereof, the Exchange is scheduled to close prior to its normal close of
trading shall be deemed not to be a Scheduled Trading Day; if a closure of the
Exchange prior to its normal close of trading on any Scheduled Trading Day is
scheduled following the date hereof, then such Scheduled Trading Day shall be
deemed to be a Disrupted Day in full.  Section 6.6 of the Equity Definitions
shall not apply to any Valuation Date occurring on an Expiration Date.

 

Automatic Exercise:

Applicable; and means that the Number of Warrants for each Component will be
deemed to be automatically exercised at the Expiration Time on the Expiration
Date for such Component unless Dealer notifies Seller (by telephone or in
writing) prior to the Expiration Time on the Expiration Date that it does not
wish Automatic Exercise to occur, in which case Automatic Exercise will not
apply.

 

 

Market Disruption Event:

Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the
words “during the one hour period that ends at the relevant Valuation Time,
Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as
the case may be,” in clause (ii) thereof and (B) by replacing the words “or
(iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a
Regulatory Disruption.”

 

 

 

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the
remainder of the provision following the term “Scheduled Closing Time” in the
fourth line thereof.

 

 

Regulatory Disruption:

Any event that Dealer, in good faith and in its commercially reasonable
discretion, upon advice of counsel, determines makes it appropriate with regard
to any legal, regulatory or self-regulatory requirements or related policies and
procedures, for Dealer to refrain from or decrease any market activity in
connection with the Transaction. Dealer shall notify Issuer as soon as
reasonably practicable that a Regulatory Disruption has occurred and the
Expiration Dates affected by it.

 

 

Settlement Terms:

 

 

 

In respect of any Component:

 

 

 

Settlement Currency:

USD

 

 

Settlement Method Election:

Applicable; provided that (i) references to “Physical Settlement” in Section 7.1
of the Equity Definitions shall be replaced by references to “Net Share
Settlement”; (ii) Issuer may elect Cash Settlement only if Issuer represents and
warrants to Dealer in writing on the date of such election that (A) Issuer is
not in possession of any material non-public information regarding Issuer or the
Shares, (B) Issuer is electing Cash Settlement in good faith and not as part of
a plan or scheme to evade compliance with the federal securities laws, and
(C) the assets of Issuer at their fair valuation exceed the liabilities of
Issuer (including contingent liabilities), and Issuer has the ability to pay its
debts and obligations as such debts mature; and (iii) the same election of
settlement method shall apply to all Expiration Dates hereunder.

 

 

Electing Party:

Issuer

 

 

Settlement Method Election Date:

The third Scheduled Trading Day immediately preceding the scheduled First
Expiration Date.

 

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Default Settlement Method:

Net Share Settlement

 

 

Net Share Settlement:

In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, for each Component, Issuer shall deliver to Dealer on the relevant
Settlement Date a number of Shares equal to the Number of Shares to be Delivered
for such Component to the account specified by Dealer and cash in lieu of any
fractional Share valued at the Relevant Price on the Valuation Date
corresponding to such Settlement Date, subject to the provisions set forth under
“Registration/Private Placement Procedures” below.

 

 

Number of Shares to be Delivered:

In respect of any Exercise Date, subject to the last sentence of Section 9.5 of
the Equity Definitions, the Net Share Settlement Amount divided by the VWAP
Price.

 

 

 

The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no
later than 5:00 P.M. (local time in New York City) on the relevant Settlement
Date.

 

 

Net Share Settlement Amount:

The product of (i) the number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Warrant Entitlement and (iii) the excess, if
any, of the VWAP Price on the relevant Valuation Date over the Strike Price.

 

 

Cash Settlement:

If Cash Settlement is applicable, on the relevant Settlement Date, Issuer shall
pay to Dealer an amount of cash in USD equal to the Net Share Settlement Amount
for such Settlement Date.

 

 

VWAP Price:

For any Valuation Date or Exchange Business Day during the Hedge Period, the
Rule 10b-18 dollar volume weighted average price per Share for such Valuation
Date or Exchange Business Day based on transactions executed during such
Valuation Date or Exchange Business Day, as reported on Bloomberg Page “JNS
<Equity> AQR” (or any successor thereto) or, if such price is not so reported or
is manifestly incorrect, as determined by the Calculation Agent using a volume
weighted method.

 

 

Other Applicable Provisions:

The provisions of Sections 9.1(c), 9.8, 9.9, 9.11 (except that, with respect to
any Private Placement Settlement, 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 arising as a result of the fact
that Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will
be applicable as if “Physical Settlement” applied to the Transaction.

 

 

Dividends:

 

 

 

Extraordinary Dividend:

Any Dividend that has an ex-dividend date occurring on or after the Trade Date
and on or prior to the date on which Issuer satisfies all of its delivery
obligations hereunder.

 

 

Dividend:

Any dividend, other than a Regular Dividend, or distribution on the Shares
(other than any dividend or distribution of the type described in
Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity
Definitions).

 

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Regular Dividend:

A regular quarterly dividend of up to USD 0.07 per Share per quarterly dividend
period of Issuer.

 

 

Adjustments:

 

 

 

Method of Adjustment:

Calculation Agent Adjustment; provided that adjustments may be made to account
for changes in volatility, expected dividends, stock loan rate and liquidity
relative to the relevant Shares.

 

 

Extraordinary Events:

 

 

 

New Shares:

In the definition of New Shares in Section 12.1(i) of the Equity Definitions,
(a) the text in clause (i) thereof shall be deleted in its entirety (including
the word “and” following such clause (i)) and replaced with “publicly quoted,
traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select
Market or The NASDAQ Global Market (or their respective successors).”

 

 

Modified Calculation Agent Adjustment:

If, in respect of any Merger Event to which Modified Calculation Agent
Adjustment applies, the adjustments to be made in accordance with
Section 12.2(e)(i) of the Equity Definitions would result in Issuer being
different from the issuer of the Shares, then with respect to such Merger Event,
as a condition precedent to the adjustments contemplated in
Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected
Shares and the entity that will be the Issuer of the New Shares shall, prior to
the Merger Date, have entered into such documentation containing
representations, warranties and agreements relating to securities law and other
issues as requested by Dealer that Dealer has determined, in its reasonable
discretion, to be reasonably necessary to allow Dealer to continue as a party to
the Transaction, as adjusted under Section 12.2(e)(i) of the Equity Definitions,
and to preserve its hedging or hedge unwind activities in connection with the
Transaction in a manner compliant with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable
to Dealer, and if such conditions are not met or if the Calculation Agent
determines that no adjustment that it could make under Section 12.2(e)(i) of the
Equity Definitions will produce a commercially reasonable result, then the
consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall
apply.

 

 

Announcement Event:

With respect to any Component, if an Announcement Event occurs, the Calculation
Agent will determine the economic effect of the Announcement Event on the
theoretical value of such Component (i) on or after the relevant Announcement
Date and (ii) on the Valuation Date or any earlier date of termination or
cancellation for such Component (in each case, which may include, without
limitation, any actual or expected change in volatility, dividends, correlation,
stock loan rate or liquidity relevant to the Shares or to such Component), if,
in the case of clause (i) or (ii), such economic effect is material, the
Calculation Agent may (x) adjust the terms of such Component to reflect such
economic effect and (y) determine the effective date of such adjustment.
“Announcement Event” shall mean the occurrence of an Announcement Date in
respect of a Merger Event (for the avoidance of doubt, determined without regard
to the language in the definition of “Merger Event” following the definition of
“Reverse Merger” therein) or Tender Offer, notwithstanding the fact that such
Merger Date or Tender Offer Date may not, or may not be anticipated

 

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to, occur on or prior to the Valuation Date for the related Component. The
definition of “Announcement Date” in Section 12.1(l) of the Equity Definitions
shall be amended by (a) replacing the word “leads” in the third line thereof and
in the fifth line thereof with the words “could lead (as determined by the
Calculation Agent)”, (b) deleting the word “firm” in the second and fourth lines
thereof (c) replacing the words “voting shares” in the fifth line thereof with
the word “Shares”, (d) inserting the words “by any entity” after the word
“announcement” in the second and the fourth lines thereof, (e) inserting the
words “or to explore the possibility of engaging in” after the words “engage in”
in the second line thereto, (f) inserting the words “or to explore the
possibility of purchasing or otherwise obtaining” after the word “obtain” in the
fourth line thereto and (g) inserting the words “, and any publicly announced
change or amendment to such an announcement (including the announcement of an
abandonment of such intention)” at the end of clauses (i) and (ii) thereof, .

 

 

Consequences of Merger Events:

 

 

 

(a) Share-for-Share:

Modified Calculation Agent Adjustment

 

 

(b) Share-for-Other:

Cancellation and Payment (Calculation Agent Determination)

 

 

(c) Share-for-Combined:

Cancellation and Payment (Calculation Agent Determination); provided that Dealer
may elect, in its commercially reasonable judgment, Component Adjustment.

 

 

Tender Offer:

Applicable; provided, however, the reference to “10%” in the definition thereof
shall be replaced by a reference to “20%.”

 

 

Consequences of Tender Offers:

 

 

 

(a) Share-for-Share:

Modified Calculation Agent Adjustment

 

 

(b) Share-for-Other:

Modified Calculation Agent Adjustment

 

 

(c) Share-for-Combined:

Modified Calculation Agent Adjustment

 

 

Composition of Combined Consideration:

Notwithstanding anything to the contrary in the Equity Definitions, if the
holder of Shares would have more than one choice with respect to that portion of
the composition of Combined Consideration that is other than New Shares in
respect of any Share-for-Combined Merger Event or Tender Offer, Dealer shall
determine the composition of such Combined Consideration that is other than New
Shares in its sole discretion.

 

 

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
shall also constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, The NASDAQ Global Select Market or The
NASDAQ Global Market (or their respective successors); if the Shares are
immediately re-listed, re-traded or re-quoted on any such exchange or quotation
system, such exchange or quotation system shall thereafter be deemed to be the
Exchange.

 

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Additional Disruption Events:

 

 

 

Change in Law:

Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended (i) by inserting the parenthetical “(including, for the avoidance
of doubt and without limitation, adoption, effectiveness or promulgation of
regulations authorized or mandated by existing statute)” at the end of
clause (A) thereof, (ii) by the replacement of the word “Shares” with “Hedge
Positions” in clause (X) thereof; “(iii) by replacing the phrase “the
interpretation” in the third line thereof with the phrase “, or public
announcement of, the formal or informal interpretation”; provided further that
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 Issuer” in the first sentence of such section.

 

 

 

The parties agree that, for the avoidance of doubt, for purposes of
Section 12.9(a)(ii) of the Equity Definitions, “any applicable law or
regulation” and for purposes of Section 5(b)(i) of the Agreement, “any
applicable law”, shall include the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, any rules and regulations promulgated thereunder and any
similar law or regulation (collectively, the “Wall Street Act”), and the
consequences specified in Section 12.9(b)(i) of the Equity Definitions shall
apply to any Change in Law or Illegality, as the case may be, arising from any
such act, rule or regulation. The foregoing constitutes a specific reservation
for purposes of the Wall Street Act.

 

 

Insolvency Filing:

Applicable

 

 

Loss of Stock Borrow:

Applicable; provided that Sections 12.9(a)(vii) and 12.9(b)(iv) of the Equity
Definitions are amended by deleting the words “at a rate equal to or less than
the Maximum Stock Loan Rate” and replacing it with the words “at a Borrow Cost
equal to or less than the Maximum Stock Loan Rate”.

 

 

Borrow Cost

The cost to borrow the relevant Shares that would be incurred by a third party
market participant borrowing such Shares, as determined by the Calculation Agent
on the relevant date of determination. Such costs shall include (a)  the spread
below FED-FUNDS that would be earned on collateral posted in connection with
such borrowed Shares, net of any costs or fees, and (b) any stock loan borrow
fee that would be payable for such Shares, expressed as fixed rate per annum.

 

 

Maximum Stock Loan Rate:

100 basis points per annum

 

 

Increased Cost of Stock Borrow:

Applicable; provided that (a) Section 12.9(a)(viii) of the Equity Definitions
shall be amended by deleting “rate to borrow Shares” and replacing it with
“Borrow Cost” and (b) Section 12.9(b)(v) of the Equity Definitions shall be
amended by (i) adding the word “or” immediately before the phrase “(B)”,
(ii) deleting subsection (C) in its entirety, (iii) replacing “either party” in
the penultimate sentence with “the Hedging Party”, and (iv) replacing the word
“rate” in clauses (X) and (Y) of the final sentence therein with the words
“Borrow Cost”.

 

 

Initial Stock Loan Rate:

25 basis points per annum

 

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FED FUNDS:

“FED FUNDS” means ,for any day, the rate set forth for such day opposite the
caption “Federal funds”, as such rate is displayed on the page “FedsOpen <Index>
<GO>“ on the BLOOMBERG Professional Service, or any successor page; provided
that if no rate appears for any day on such page, the rate for the immediately
preceding day for which a rate does so appear shall be used for such day.

 

 

Increased Cost of Hedging:

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”.

 

 

Hedging Party:

Dealer for all applicable Potential Adjustment Events and Extraordinary Events

 

 

 

Determining Party:

Dealer for all applicable Extraordinary Events

 

 

Acknowledgements:

 

 

 

Non-Reliance:

Applicable

 

 

Agreements and Acknowledgements

 

 

 

Regarding Hedging Activities:

Applicable

 

 

Additional Acknowledgements:

Applicable

 

 

3.             Calculation Agent:

Dealer, whose judgments, determinations and calculations shall be made in good
faith and in a commercially reasonable manner. Following any determination or
calculation by the Calculation Agent hereunder, upon a request by Counterparty,
the Calculation Agent shall promptly (but in any event within three Scheduled
Trading Days) provide to Counterparty by e-mail to the e-mail address provided
by Counterparty in such 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 determination or calculation (including any assumptions used in
making such determination or calculation), it being understood that the
Calculation Agent shall not be obligated to disclose any proprietary models used
by it for such determination or calculation.

 

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4.             Account Details:

Dealer Payment Instructions:

 

Royal Bank of Canada

 

 

 

ABA: 021000021

 

JP Morgan Chase NY (CHASUS33)

 

A/C Royal Bank of Canada, NY Branch (ROYCUS3X)

 

A/C#: 920-1-033363

 

FFC A/C Name: RBC US Transit

 

Beneficiary A/C: 012692041499

 

 

 

Issuer Payment Instructions:

 

To be provided by Issuer

 

 

 

5.             Offices:

The Office of Dealer for the Transaction is: New York

 

 

 

 

Royal Bank of Canada

 

c/o RBC Capital Markets, LLC

 

3 World Financial Center

 

200 Vesey Street

 

New York, NY 10281

 

 

 

The Office of Issuer for the Transaction is: Not Applicable

 

 

 

6.             Notices:

For purposes of this Confirmation:

 

 

 

 

Address for notices of communications to Issuer:

 

 

 

To:

David Grawemeyer

 

 

151 Detroit Street

 

 

Denver, CO 80206

 

 

David.grawemeyer@janus.com

 

 

303-336-5053

 

 

 

 

 

with a copy to:

 

 

 

 

 

John Groneman

 

 

151 Detroit Street

 

 

Denver, CO 80206

 

 

John.groneman@janus.com

 

 

303-336-7466

 

 

 

 

Any notice or other communication required or permitted to be given to Dealer
(for matters other than operational matters) with respect to this Confirmation
shall be delivered in person or given by facsimile transmission to Dealer at the
following address:

 

 

 

To:

Royal Bank of Canada

 

 

c/o RBC Capital Markets, LLC

 

 

3 World Financial Center

 

 

200 Vesey Street

 

 

New York, NY 10281

 

 

 

 

 

 

 

 

Attn:

Structured Derivatives Documentation

 

 

Telephone:

(212) 858-7000

 

 

Facsimile:

(212) 428-3053

 

 

Email:

SEDDOC@rbccm.com

 

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Any notice or other communication concerning operational matters should be sent
by facsimile to RBC Capital Markets, LLC at the above address; Attention: Back
Office; Phone: (212) 858-7000; Facsimile: (212) 858-7033; Email: geda@rbccm.com

 

7.             Representations, Warranties and Agreements:

 

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

 

(i)            On the Trade Date, and as of the date of any election by Issuer
of the Share Termination Alternative under (and as defined in)
Section 8(a) below, (A) none of Issuer and its officers and directors is aware
of any material nonpublic information regarding Issuer or the Shares and (B) all
reports and other documents filed by Issuer 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)           Without limiting the generality of Section 13.1 of the Equity
Definitions, Issuer acknowledges that Dealer is not making any representations
or warranties or taking any position or expressing any view with respect to the
treatment of the Transaction under ASC Topic 260, Earnings Per Share, ASC Topic
815, Derivatives and Hedging, ASC Topic 480, Distinguishing Liabilities from
Equity and ASC Topic 815-40, Derivatives and Hedging — Contracts in Entity’s Own
Equity (or any successor issue statements), or under any other accounting
guidance.

 

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

 

(iv)          Issuer is not entering into this Confirmation and will not make
any election hereunder for the purpose of creating actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for
Shares) or raising or depressing or otherwise manipulating the price of the
Shares (or any security convertible into or exchangeable for Shares) or
otherwise in violation of the Exchange Act.

 

(v)           Issuer 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.

 

(vi)          On each of the Trade Date and the Premium Payment Date, Issuer is
not, or will not be, “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 Issuer would be able to purchase 10,734,357 Shares in
compliance with the corporate laws of the jurisdiction of its incorporation.

 

(vii)         Issuer shall not take any action to decrease the number of
Available Shares below the Capped Number (each as defined below).

 

(viii)        The representations and warranties of Issuer set forth in
Article III of an Exchange Agreement dated as of June 14, 2013, between the
Issuer and a holder of the Issuer’s 3.25% Convertible Senior Notes due 2014 (the
“Exchange Agreement”)  are true and correct and are hereby deemed to be repeated
to Dealer as if set forth herein.

 

(ix)          Issuer understands no obligations of Dealer to it hereunder will
be entitled to the benefit of deposit insurance and that such obligations will
not be guaranteed by any Affiliate of Dealer or any governmental agency.

 

(x)           During the period starting on the first Expiration Date and ending
on the last Expiration Date (the “Settlement Period”), the Shares or securities
that are convertible into, or exchangeable or exercisable for, Shares will not
be subject to a “restricted period,” as such term is defined in Regulation M
under the Exchange Act (“Regulation M”).

 

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(xi)                              On each day during the Settlement Period,
neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in
Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall directly or indirectly
(including, without limitation, by means of any cash-settled or other derivative
instrument) 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.

 

(xii)                           (a) The Shares of Issuer issuable from time to
time upon exercise of the Warrants (the “Warrant Shares”) have been duly
authorized and, when delivered against payment therefor (which may include Net
Share Settlement in lieu of cash) and otherwise as contemplated by the terms of
the Warrant following the exercise of the Warrant in accordance with the terms
and conditions of the Warrant, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be subject to
any preemptive or similar rights and (b) a number of Warrant Shares equal to the
Capped Number has been accepted for listing or quotation on the Exchange,
subject to notice of issuance.  In addition, Issuer shall ensure that at all
times until its delivery obligations hereunder have been met in full that the
total number of Shares reserved for issuance hereunder is at least equal to the
Capped Number.

 

(xiii)                        Issuer (i) is capable of evaluating investment
risks independently, both in general and with regard to all transactions and
investment strategies involving a security or securities; (ii) will exercise
independent judgment in evaluating the recommendations of any broker-dealer or
its associated persons, unless it has otherwise notified the broker-dealer in
writing; and (iii) has total assets of at least $50 million as of the date
hereof.

 

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

 

(c)                                  Dealer 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, Dealer represents and warrants to Issuer
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, (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 without a view to the distribution or resale
thereof and (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.

 

(d)                                 Issuer agrees and acknowledges that Dealer
is a “financial institution,” “swap participant” and “financial participant”
within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy
Code.  The parties hereto further agree and acknowledge that it is the intent of
the parties that (A) this Confirmation is (i) a “securities contract,” as such
term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder or in connection herewith is a “termination
value,” “payment amount” or “other transfer obligation” within the meaning of
Section 362 of the Bankruptcy Code and a “settlement payment,” within the
meaning of Section 546 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 or in connection herewith is a
“termination value,” “payment amount” or “other transfer obligation” within the
meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is
defined in Section 101(54) of the Bankruptcy Code and a “payment or other
transfer of property” within the meaning of Sections 362 and 546 of the
Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by,
among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e), 546(g),
548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)                                  It is the intent of the parties that, in
respect of Issuer, (a) the Transaction shall constitute a “qualified financial
contract” within the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a
Non-defaulting Party’s rights under Sections 5 and 6 of the Agreement constitute
rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).

 

(f)                                   Issuer shall deliver to Dealer an opinion
of counsel reasonably acceptable to Dealer, dated as of the Trade Date and
reasonably acceptable to Dealer in form and substance, with respect to the
matters set forth in Section 3(a) of the Agreement and clause (a)(xi) above and
such other matters as Dealer may reasonably request.

 

12

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(g)                                  On each anniversary of the Trade
Date, Issuer shall deliver to Dealer an officer’s certificate, signed by an
authorized officer, stating the number of Available Shares (as defined in the
provision titled “Limitation On Delivery of Shares” below).

 

8.                                      Miscellaneous:

 

(a)                                 Alternative Calculations and Issuer Payment
on Early Termination and on Certain Extraordinary Events.  If Issuer shall owe
Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the
Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “Payment
Obligation”), Issuer shall have the right, in its sole discretion, 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, no later than 9:30 A.M. New York City time on
the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or
date of cancellation or termination in respect of an Extraordinary Event, as
applicable (“Notice of Share Termination”); provided that if Issuer does not
elect to satisfy its Payment Obligation by the Share Termination Alternative,
Dealer shall have the right, in its sole discretion, to elect to require Issuer
to satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further that Issuer shall not have the right to so elect (but, for the
avoidance of doubt, Dealer shall have the right to so elect) in the event of
(i) an Insolvency, a Nationalization or a Merger Event, in each case, in which
the consideration or proceeds to be paid to holders of Shares consists solely of
cash or (ii) an Event of Default, a Termination Event or an Extraordinary Event,
in each case, which resulted from an event or events within Issuer’s control. 
Upon such Notice of Share Termination, the following provisions shall apply on
the Scheduled Trading Day immediately following the Merger Date, the Tender
Offer Date, Announcement Date, Early Termination Date or date of cancellation or
termination in respect of an Extraordinary Event, as applicable:

 

Share Termination Alternative:

Applicable and means that Issuer shall deliver to Dealer 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
date such Share Termination Delivery Units are to be delivered as Share
Termination Delivery Property, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to Issuer at the time of notification of the Payment Obligation.

 

 

Share Termination Delivery Unit:

In the case of a Termination Event, Event of Default, Delisting or Additional
Disruption Event, one Share or, in the case of an Insolvency, Nationalization,
Merger Event or Tender Offer, one Share or a unit consisting of the number or
amount of each type of property received by a holder of one Share (without
consideration of any requirement to pay cash or other consideration in lieu of
fractional amounts of any securities) in such Insolvency, Nationalization,
Merger Event or Tender Offer, as applicable. If such Insolvency,
Nationalization, Merger Event or Tender Offer 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

 

13

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Other applicable provisions:

If Share Termination Alternative is applicable, the provisions of Sections 9.8,
9.9, 9.10, 9.11 (except 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 arising as a result of the fact
that Seller is the issuer of the Shares or any portion of the Share Termination
Delivery Units) 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”.

 

(b)                                 Payment by Dealer.  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 of the type described in
Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to
Issuer an amount pursuant to Section 6 of the Agreement, or (ii) Dealer owes to
Issuer an amount pursuant to Article 12 of the Equity Definitions (including,
for the avoidance of doubt, any amount payable in connection with an
Extraordinary Event), such amount shall be deemed to be zero.

 

(c)                                  Additional Termination Events.  The
occurrence of any of the following shall constitute an Additional Termination
Event with respect to which the Transaction shall be the sole Affected
Transaction and Issuer shall be the sole Affected Party and Dealer shall be the
party entitled to designate an Early Termination Date; provided that with
respect to any Additional Termination Event, Dealer may choose to treat part of
the Transaction as the sole Affected Transaction, and, upon the termination of
the Affected Transaction, a Transaction with terms identical to those set forth
herein except with a Number of Warrants equal to the unaffected number of
Warrants shall be treated for all purposes as the Transaction, which shall
remain in full force and effect:

 

(i)                                     Dealer reasonably determines, upon
advice of counsel, that it is necessary to terminate a portion of the
Transaction so that Dealer’s related hedging activities will comply with
applicable securities laws, rules or regulations;

 

(ii)                                  a “person” or “group” within the meaning
of Section 13(d) of the Exchange Act, other than Issuer, its subsidiaries and
its and their employee benefit plans, has become the direct or indirect
“beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the
Issuer’s common equity representing more than 50% of the voting power of
Issuer’s common equity;

 

(iii)                               the consummation of (A) any
recapitalization, reclassification or change of Shares (other than changes
resulting from a subdivision or combination) as a result of which Shares would
be converted into, or exchanged for, stock, other securities, other property or
assets or (B) any share exchange, consolidation or merger of Issuer pursuant to
which Shares will be converted into cash, securities or other property or any
sale, lease or other transfer in one transaction or a series of transactions of
all or substantially all of the consolidated assets of Issuer and its
subsidiaries, taken as a whole, to any person other than one of Issuer’s
subsidiaries, unless holders of all classes of Issuer’s common equity
immediately prior to such transaction that is a share exchange, consolidation or
merger own, directly or indirectly, more than 50% of all classes of common
equity of the continuing or surviving corporation or transferee or the parent
thereof immediately after such event;

 

(iv)                              Issuer’s common stockholders approve any plan
or proposal for the liquidation or dissolution of Issuer; or

 

(v)                                 the Shares cease to be listed on at least
one of the following: The New York Stock Exchange, The NASDAQ Global Select
Market, The NASDAQ Global Market or The NASDAQ Capital Market (or any of their
respective successors).

 

Notwithstanding the foregoing, a transaction set forth in clause
(ii) or (iii) above will not constitute an Additional Termination Event if
(a) at least 90% of the consideration received or to be received by Issuer’s
common stockholders, excluding cash payments for fractional shares, in
connection with such transaction or transactions otherwise constituting an
Additional Termination Event consists of shares of common stock that are listed
or quoted on any of The New York Stock Exchange, The NASDAQ Global Select
Market, The NASDAQ Global Market or

 

14

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The NASDAQ Capital Market (or any of their respective successors) and (b) as a
result of the completion of such transaction or transactions, the “Shares” are
composed of such consideration.

 

(d)                                 Registration/Private Placement Procedures. 
(i)  If, in the reasonable judgment of Dealer, for any reason, any Shares or any
securities of Issuer or its affiliates comprising any Share Termination Delivery
Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered
Securities”) would not be immediately freely transferable by Dealer under
Rule 144 under the Securities Act, then the provisions set forth in this
Section 8(d) shall apply.  At the election of Issuer by notice to Dealer within
one Exchange Business Day after the relevant delivery obligation arises, but in
any event at least one Exchange Business Day prior to the date on which such
delivery obligation is due, either (A) all Delivered Securities delivered by
Issuer to Dealer shall be, at the time of such delivery, covered by an effective
registration statement of Issuer 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) Issuer shall deliver additional Delivered Securities so that the
value of such Delivered Securities, as determined by the Calculation Agent to
reflect an appropriate liquidity discount, equals the value of the number of
Delivered Securities that would otherwise be deliverable if such Delivered
Securities were freely tradeable (without prospectus delivery) upon receipt by
Dealer (such value, the “Freely Tradeable Value”); provided that Issuer may not
make the election described in this clause (B) if, on the date of its election,
it has taken, or caused to be taken, any action that would make unavailable
either the exemption pursuant to Section 4(2) of the Securities Act for the
delivery by Issuer to Dealer (or any Affiliate of Dealer designated by Dealer)
of the Delivered Securities or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Delivered Securities by
Dealer (or any such Affiliate of Dealer).  (For the avoidance of doubt, as used
in this Section 8(d) only, the term “Issuer” shall mean the issuer of the
relevant securities, as the context shall require.)

 

(ii)                                  If Issuer makes the election described in
Section 8(d)(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 Issuer that is customary in scope for underwritten
offerings of equity securities and that yields results that are 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 Issuer shall enter into an agreement (a “Registration Agreement”)
on commercially reasonable terms in connection with the public resale of such
Delivered Securities by Dealer or such Affiliate substantially similar to
underwriting agreements customary for underwritten offerings of equity
securities, in form and substance reasonably satisfactory to Dealer or such
Affiliate and Issuer, 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 Issuer, shall
provide for the payment by Issuer of all expenses in connection with such
resale, including all registration costs and all 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 Issuer makes the election described in
Section 8(d)(i)(B) above:

 

(A)                               Dealer (or an Affiliate of Dealer designated
by Dealer) and any potential institutional purchaser of any such Delivered
Securities 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 Issuer customary in scope for
private placements of equity securities (including, without limitation, the
right to have made available to them for inspection all financial and other
records, pertinent corporate documents and other information reasonably
requested by them);

 

(B)                               Dealer (or an Affiliate of Dealer designated
by Dealer) and Issuer shall enter into an agreement (a “Private Placement
Agreement”) on commercially reasonable terms in connection with the private
placement of such Delivered Securities by Issuer to Dealer or such Affiliate and
the private resale of such shares by Dealer or such Affiliate, substantially
similar to private placement purchase agreements customary for private
placements of equity securities, in form and substance reasonably satisfactory
to Dealer and Issuer, which Private Placement Agreement shall include, without
limitation, provisions

 

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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 Issuer, shall provide for
the payment by Issuer of all expenses in connection with such resale, including
all fees and expenses of counsel for Dealer, shall contain representations,
warranties and agreements of Issuer 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 best 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; and

 

(C)                               Issuer agrees that any Delivered Securities so
delivered to Dealer, (i) may be transferred by and among Dealer and its
Affiliates, and Issuer 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 Delivered
Securities, Issuer 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 Delivered Securities upon delivery by Dealer (or such
Affiliate of Dealer) to Issuer or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Dealer 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)                               Issuer shall not 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 Issuer to Dealer (or any
Affiliate designated by Dealer) of the Shares or Share Termination Delivery
Units, as the case may be, or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Shares or Share
Termination Delivery Units, as the case may be, by Dealer (or any such Affiliate
of Dealer).

 

(iv)                              If Issuer makes the election described in
clause (i)(B) of this paragraph (d), then Dealer or its Affiliate may sell such
Shares or Share Termination Delivery Units, as the case may be, during a period
(the “Resale Period”) commencing on the Exchange Business Day following delivery
of such Shares or Share Termination Delivery Units, as the case may be, and
ending on the Exchange Business Day on which Dealer completes the sale of all
such Shares or Share Termination Delivery Units, as the case may be, or a
sufficient number of Shares or Share Termination Delivery Units, as the case may
be, so that the realized net proceeds of such sales exceed the Freely Tradeable
Value (such amount of the Freely Tradeable Value, the “Required Proceeds”).  If
any of such delivered Shares or Share Termination Delivery Units remain after
such realized net proceeds exceed the Required Proceeds, Dealer shall return
such remaining Shares or Share Termination Delivery Units to Issuer.  If the
Required Proceeds exceed the realized net proceeds from such resale, Issuer
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 or Share Termination Delivery Units, as the case
may be, (“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 Section 8(d)(iv).  This
provision shall be applied successively until the Additional Amount is equal to
zero, subject to Section 8(j).

 

(e)                                  Amendments to Equity Definitions.  The
following amendments shall be made to the Equity Definitions:

 

(i)                                     Section 11.2(a) of the Equity
Definitions is hereby amended by deleting the words “a diluting or concentrative
effect on the theoretical value of the relevant Shares” and replacing them with
the words “an economic effect on the relevant Transaction”.

 

(ii)                                  The first sentence of Section 11.2(c) of
the Equity Definitions, prior to clause (A) thereof, is hereby amended to read
as follows:  ‘(c) If “Calculation Agent Adjustment” is specified as the Method
of Adjustment in the related Confirmation of a Share Option Transaction, then
following the declaration or occurrence of any Potential Adjustment Event, the
Calculation Agent will determine whether such Potential Adjustment Event has an
economic effect on the Transaction and, if so, will (i) make appropriate
adjustment(s), if any, to any one or

 

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more of:’ and, the portion of such sentence immediately preceding
clause (ii) thereof is hereby amended by (x) replacing the words “a diluting or
concentrative” with “an” in the fifth line thereof, (y) deleting the words
“diluting or concentrative effect” in the sixth to last line thereof and
(z) replacing the phrase “(provided that no adjustments will be made to account
solely for changes in volatility, expected dividends, stock loan rate or
liquidity relative to the relevant Shares)” with the phrase “(and, for the
avoidance of doubt, adjustments may be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity relative to the
relevant Shares)”.

 

(iii)                               Section 11.2(e)(vii) of the Equity
Definitions are hereby amended by deleting the words “diluting or concentrative
effect on the theoretical value of the relevant Shares” and replacing them with
the words “an economic effect on the relevant Transaction”.

 

(iv)                              Section 12.1(f) of the Equity Definitions is
hereby amended by the deletion of the parenthetical in clause (i) thereof.

 

(v)                                 For greater certainty, the definition of
“Modified Calculation Agent Adjustment” in Sections 12.2 and 12.3 of the Equity
Definitions shall be amended by adding the following italicized language after
the stipulated parenthetical provision:  “(including adjustments to account for
changes in volatility, expected dividends, stock loan rate or liquidity relevant
to the Shares or to this Transaction) from the Exchange Business Day immediately
preceding the Announcement Date or the Determination Date, as applicable,  to
the first Exchange Business Day immediately following the Merger Date
(Section 12.2) or Tender Offer Date (Section 12.3).”

 

(vi)                              Section 12.9(b)(iv) of the Equity Definitions
is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the
phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in
subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and
(C) replacing the phrase “neither the Non-Hedging Party nor the Lending Party
lends Shares” with the phrase “such Lending Party does not lend Shares” in the
penultimate sentence.

 

(vii)                           Section 12.9(b)(v) of the Equity Definitions is
hereby amended by (A) adding the word “or” immediately before subsection “(B)”
and deleting the comma at the end of subsection (A); and (B)(1) deleting
subsection (C) in its entirety, (2) deleting the word “or” immediately preceding
subsection (C) and (3) replacing in the penultimate sentence the words “either
party” with “the Hedging Party” and (4) deleting clause (X) in the final
sentence.

 

(f)                                   Repurchase Notices.  Issuer shall, on any
day on which Issuer effects any repurchase of Shares, provide Dealer with a
written notice of such repurchase (a “Repurchase Notice”) on such day if,
following such repurchase, the Warrant Equity Percentage (as defined below) is
greater by 0.5% or more than the Warrant Equity Percentage set forth in the
immediately preceding Repurchase Notice (or, in the case of the first such
Repurchase Notice, greater by 0.5% or more than the Warrant Equity Percentage as
of the date hereof).  The “Warrant Equity Percentage” as of any day is the
fraction, expressed as a percentage, of the numerator of which is the Number of
Warrants and the denominator of which is the number of Shares outstanding on
such day.  Issuer agrees to indemnify and hold harmless Dealer, its affiliates
and their respective directors, officers, employees, agents and controlling
persons (Dealer and each such person being an “Indemnified Party”) from and
against any and all losses, claims, damages and liabilities (or actions in
respect thereof), joint or several, to which such Indemnified Party may become
subject under applicable securities laws, including without limitation,
Section 16 of the Exchange Act, relating to or arising out of such failure.  If
for any reason the foregoing indemnification is unavailable to any Indemnified
Party or insufficient to hold harmless any Indemnified Party, then Issuer 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, Issuer will reimburse any Indemnified Party for all
expenses (including reasonable counsel fees and expenses) as they are incurred
(after notice to Issuer) 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 Issuer.  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.

 

(g)                                  Transfer or Assignment.  Dealer may
transfer or assign its rights and obligations hereunder and under the Agreement,
in whole or in part, at any time to any person or entity whatsoever without the
consent of Issuer.  At any time at

 

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which any Ownership Limitation or a Hedging Disruption exists, if Dealer, in its
discretion, is unable to effect a transfer or assignment to a third party after
using its commercially reasonable efforts on pricing terms and within a time
period reasonably acceptable to Dealer such that an Ownership Limitation or a
Hedging Disruption, as the case may be, no longer exists, Dealer may designate
any Scheduled Trading Day as an Early Termination Date with respect to a portion
(the “Terminated Portion”) of the Transaction, such that such Ownership
Limitation or a Hedging Disruption, as the case may be, no longer exists.  In
the event that Dealer so designates an Early Termination Date with respect to a
portion of the Transaction, a payment or delivery shall be made pursuant to
Section 6 of the Agreement or Section 8(a) of this Confirmation as if (i) an
Early Termination Date had been designated in respect of a Transaction having
terms identical to the Terminated Portion of the Transaction, (ii) Issuer 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.

 

(h)                                 Limit on Beneficial Ownership. 
Notwithstanding anything to the contrary in the Agreement or this Confirmation,
in no event shall Dealer be entitled to receive, or shall be deemed to receive,
any Shares in connection with this Transaction if, immediately upon giving
effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would
be equal to or greater than 9.0% of the outstanding Shares, (ii) Dealer, or any
“affiliate” or “associate” of Dealer, would be an “interested stockholder” of
Issuer, as all such terms are defined in Section 203 of the Delaware General
Corporation Law or (iii) Dealer, Dealer Group (as defined below) or any person
whose ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal,
state or local laws, regulations or regulatory orders applicable to ownership of
Shares (“Applicable Laws”), owns, beneficially owns, constructively owns,
controls, holds the power to vote or otherwise meets a relevant definition of
ownership in excess of a number of Shares equal to (x) the number of Shares that
would give rise to reporting or registration obligations or other requirements
(including obtaining prior approval by a state or federal regulator) of a Dealer
Person under Applicable Laws and with respect to which such requirements have
not been met or the relevant approval has not been received or that would give
rise to any consequences under the constitutive documents of Issuer or any
contract or agreement to which Issuer is a party, in each case minus (y) 1% of
the number of Shares outstanding on the date of determination (each of
clause (i), (ii) and (iii) above, an “Ownership Limitation”).  If any delivery
owed to Dealer hereunder is not made, in whole or in part, as a result of an
Ownership Limitation, Dealer’s right to receive such delivery shall not be
extinguished and Issuer shall make such delivery as promptly as practicable
after, but in no event later than one Exchange Business Day after, Dealer gives
notice to Issuer that such delivery would not result in any of such Ownership
Limitations being breached.  “Dealer’s Beneficial Ownership” means the
“beneficial ownership” (within the meaning of Section 13 of the Exchange Act and
the rules promulgated thereunder (collectively, “Section 13”)) of Shares,
without duplication, by Dealer, together with any of its affiliates or other
person subject to aggregation with Dealer under Section 13 for purposes of
“beneficial ownership”, or by any “group” (within the meaning of Section 13) of
which Dealer is or may be deemed to be a part (Dealer and any such affiliates,
persons and groups, collectively, “Dealer Group”) (or, to the extent that, as a
result of a change in law, regulation or interpretation after the date hereof,
the equivalent calculation under Section 16 of the Exchange Act and the
rules and regulations thereunder results in a higher number, such number). 
Notwithstanding anything in the Agreement or this Confirmation to the contrary,
Dealer shall not become the record or beneficial owner, or otherwise have any
rights as a holder, of any Shares that Dealer is not entitled to receive at any
time pursuant to this Section 8(h), until such time as such Shares are delivered
pursuant to this Section 8(h).

 

(i)                                     Limitation On Delivery of Shares. 
Notwithstanding anything herein or in the Agreement to the contrary, in no event
shall Issuer be required to deliver Shares in connection with the Transaction in
excess of two times the Number of Warrants (the “Capped Number”). 
Notwithstanding anything to the contrary in the Agreement, this Confirmation or
the Equity Definitions, in no event shall the Capped Number be subject to
adjustment, to the extent that such adjustment would cause the Capped Number to
exceed the number of Available Shares, unless such adjustment results from
actions of Issuer or events within Issuer’s control.  Issuer represents and
warrants to Dealer (which representation and warranty shall be deemed to be
repeated on each day that the Transaction is outstanding) that the Capped Number
is equal to or less than the number of authorized but unissued Shares of the
Issuer that are not reserved for future issuance in connection with transactions
in the Shares (other than the Transaction) on the date of the determination of
the Capped Number (such Shares, the “Available Shares”).  In the event Issuer
shall not have delivered the full number of Shares otherwise deliverable as a
result of this Section 8(i) (the resulting deficit, the “Deficit
Shares”), Issuer shall be continually obligated to deliver, from time to time
until the full number of Deficit Shares have been delivered pursuant to this
paragraph, Shares when, and to the extent, that (i) Shares are repurchased,
acquired or otherwise received by Issuer or any of its subsidiaries after the
Trade Date (whether or not in exchange for cash, fair value or any other
consideration), (ii) authorized and unissued Shares reserved for issuance in
respect of other transactions prior to the Trade Date become no longer so
reserved or (iii) Issuer additionally authorizes any unissued Shares that are
not reserved for other transactions.  Issuer shall immediately notify Dealer of
the occurrence of any

 

18

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of the foregoing events (including the number of Shares subject to clause (i),
(ii) or (iii) and the corresponding number of Shares to be delivered) and
promptly deliver such Shares thereafter.  Issuer shall not, until Issuer’s
obligations under the Transaction have been satisfied in full, use any Shares
that become available for potential delivery to Dealer as a result of any of the
foregoing events for the settlement or satisfaction of any transaction or
obligation other than the Transaction or reserve any such Shares for future
issuance for any purpose other than to satisfy Issuer’s obligations to Dealer
under the Transaction.

 

Notwithstanding anything to the contrary herein or in the Definitions or the
Agreement, any Payment Obligation shall, for all purposes, be calculated without
regard to the provisions set forth under this Section 8(i); provided that the
number of Shares deliverable pursuant to Section 8(a) above (if applicable)
shall not exceed the applicable Capped Number.

 

(j)                                    Right to Extend.  Dealer may postpone any
Exercise Date or Settlement Date or any other date of valuation or delivery with
respect to some or all of the relevant Warrants (in which event the Calculation
Agent shall make appropriate adjustments to the Number of Shares to be Delivered
with respect to one or more Components), if Dealer determines, in its good faith
and reasonable discretion, upon advice of counsel in the case of the immediately
following clause (ii), that such extension is reasonably necessary or
appropriate to (i) preserve Dealer’s hedging or hedge unwind activity hereunder
in light of existing liquidity conditions in the cash market, the stock loan
market or any 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 Issuer or an affiliated
purchaser of Issuer, be in compliance with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable
to Dealer.

 

(k)                                 No Netting and Set-Off.  Each party waives
any and all rights it may have to set off obligations arising under the
Agreement and the Transaction against other obligations between the parties,
whether arising under any other agreement, applicable law or otherwise.

 

(l)                                     Status of Claims in Bankruptcy.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 or Issuer in the event of Issuer’s bankruptcy.  For the avoidance
of doubt, the parties agree that the preceding sentence shall not apply at any
time other than during Issuer’s bankruptcy.

 

(m)                             No Collateral.  Notwithstanding any provision of
this Confirmation, the Agreement, the Equity Definitions or any other agreement
between the parties to the contrary, the obligations of Issuer under the
Transaction are not secured by any collateral.

 

(n)                                 Disclosure.  Effective from the date of
commencement of discussions concerning the Transaction, Issuer 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 Issuer relating to such tax treatment and tax
structure.

 

(o)                                 Method of Delivery.  Whenever delivery of
funds or other assets is required hereunder by or to Issuer, such delivery shall
be effected through RBCCM.  In addition, all notices, demands and communications
of any kind relating to the Transaction between Dealer and Issuer shall be
transmitted exclusively through RBCCM.

 

(p)                                 Effectiveness.  If, prior to the Effective
Date, Dealer reasonably determines that it is advisable to cancel the
Transaction because of concerns that Dealer’s related hedging activities could
be viewed as not complying with applicable securities laws, rules or
regulations, the Transaction shall be cancelled and shall not become effective,
and neither party shall have any obligation to the other party in respect of the
Transaction.

 

(q)                                 Severability; Illegality.  Notwithstanding
anything to the contrary in the Agreement, if compliance by either party with
any provision of the Transaction would be unenforceable or illegal, (a) the
parties shall negotiate in good faith to resolve such unenforceability or
illegality in a manner that preserves the economic benefits of the transactions
contemplated hereby and (b) the other provisions of the Transaction shall not be
invalidated, but shall remain in full force and effect.

 

(r)                                    Agreements and Acknowledgments Regarding
Hedging.  Issuer understands, acknowledges and agrees that:  (A) at any time on
and prior to the final 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,

 

19

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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 VWAP Price; 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 VWAP Price, each in a
manner that may be adverse to Issuer.

 

(s)                                   Early Unwind.  In the event the exchange
by Issuer of the Existing Notes for the New Notes (each as defined in the
Exchange Agreement) is not consummated with each Holder (as defined in each
Exchange Agreement) pursuant to the Exchange Agreement for any reason by the
close of business in New York on June 19, 2013 (or such later date as agreed
upon by the parties) (June 19, 2013 or such later date being the “Early Unwind
Date”), the Transaction shall automatically terminate (the “Early Unwind”) on
the Early Unwind Date and (x) the Transaction and all of the respective rights
and obligations of Dealer and Issuer thereunder shall be cancelled and
terminated and (y) Issuer shall assume, or reimburse the cost of, derivatives
and other hedging activities entered into by Dealer or one or more of its
affiliates in connection with hedging the Transaction and the unwind of such
hedging activities.  Following such termination, cancellation and payment,
subject to the preceding sentence, 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.

 

(t)                                    Waiver of Jury Trial.  EACH OF ISSUER AND
BUYER 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 BUYER
OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

(u)                                 Governing Law; Jurisdiction.  THIS
CONFIRMATION AND THE TRADE NOTIFICATION AND ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING UNDER OR RELATED TO THIS CONFIRMATION AND THE TRADE NOTIFICATION SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN
CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE
LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE
COURTS.

 

[Remainder of Page Intentionally Blank]

 

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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.

 

Issuer 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 a facsimile of the fully-executed
Confirmation to Dealer at (212) 428-3053.  Originals shall be provided for your
execution upon your request.

 

We are very pleased to have executed the Transaction with you and we look
forward to completing other transactions with you in the near future.

 

Very truly yours,

 

ROYAL BANK OF CANADA
by its agent

 

RBC Capital Markets, LLC

 

By:

/s/ Alex Rabaev

 

 

Name:

Alex Rabaev

 

 

Title:

Associate Director

 

 

 

Issuer hereby agrees to, accepts and confirms the terms of the foregoing as of
the Trade Date.

 

JANUS CAPITAL GROUP INC.

 

 

By:

/s/ Bruce Koepfgen

 

 

Name:

Bruce Koepfgen

 

 

Title:

Executive Vice President and Chief Financial Officer

 

 

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ANNEX A

 

For each Component of the Transaction, the Number of Warrants and Expiration
Date is set forth below.

 

Component Number

 

Number of Warrants

 

Expiration Date

 

1

 

268,359

 

October 15, 2018

 

2

 

268,359

 

October 16, 2018

 

3

 

268,359

 

October 17, 2018

 

4

 

268,359

 

October 18, 2018

 

5

 

268,359

 

October 19, 2018

 

6

 

268,359

 

October 22, 2018

 

7

 

268,359

 

October 23, 2018

 

8

 

268,359

 

October 24, 2018

 

9

 

268,359

 

October 25, 2018

 

10

 

268,359

 

October 26, 2018

 

11

 

268,359

 

October 29, 2018

 

12

 

268,359

 

October 30, 2018

 

13

 

268,359

 

October 31, 2018

 

14

 

268,359

 

November 1, 2018

 

15

 

268,359

 

November 2, 2018

 

16

 

268,359

 

November 5, 2018

 

17

 

268,359

 

November 6, 2018

 

18

 

268,359

 

November 7, 2018

 

19

 

268,359

 

November 8, 2018

 

20

 

268,359

 

November 9, 2018

 

21

 

268,359

 

November 12, 2018

 

22

 

268,359

 

November 13, 2018

 

23

 

268,359

 

November 14, 2018

 

24

 

268,359

 

November 15, 2018

 

25

 

268,359

 

November 16, 2018

 

26

 

268,359

 

November 19, 2018

 

27

 

268,359

 

November 20, 2018

 

28

 

268,359

 

November 21, 2018

 

29

 

268,359

 

November 23, 2018

 

30

 

268,359

 

November 26, 2018

 

31

 

268,359

 

November 27, 2018

 

32

 

268,359

 

November 28, 2018

 

33

 

268,359

 

November 29, 2018

 

34

 

268,359

 

November 30, 2018

 

35

 

268,359

 

December 3, 2018

 

36

 

268,359

 

December 4, 2018

 

37

 

268,359

 

December 5, 2018

 

38

 

268,359

 

December 6, 2018

 

39

 

268,359

 

December 7, 2018

 

40

 

268,356

 

December 10, 2018

 

 

 

 

 

 

 

Total

 

10,734,357

 

 

 

 

A-1

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SCHEDULE A

 

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SCHEDULE B

 

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