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Exhibit 10.1

 

To:   

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida, 33431

From:   

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

Re:    Accelerated Stock Repurchase (Variable Cap) Ref. No:    As provided in
the Supplemental Confirmation Date:    November 19, 2013

 

 

This master confirmation (this “Master Confirmation”), dated as of November 19,
2013 is intended to set forth certain terms and provisions of certain
Transactions (each, a “Transaction”) entered into from time to time between J.P.
Morgan Securities LLC (“JPMS”), as agent for JPMorgan Chase Bank, National
Association, London Branch (“Dealer”) and The ADT Corporation (“Counterparty”).
This Master Confirmation, taken alone, is neither a commitment by either party
to enter into any Transaction nor evidence of a Transaction. The additional
terms of any particular Transaction shall be set forth in (i) a Supplemental
Confirmation in the form of Schedule A hereto (a “Supplemental Confirmation”),
which shall reference this Master Confirmation and supplement, form a part of,
and be subject to this Master Confirmation and (ii) a Trade Notification in the
form of Schedule B hereto (a “Trade Notification”), which shall reference the
relevant Supplemental Confirmation and supplement, form a part of, and be
subject to such Supplemental Confirmation. This Master Confirmation, each
Supplemental Confirmation and the related Trade Notification together shall
constitute a “Confirmation” as referred to in the Agreement specified below.

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

This Master Confirmation, each Supplemental Confirmation and each Trade
Notification supplement, form a part of, and are subject to an agreement in the
form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and
Counterparty had executed the Agreement on the date of this Master Confirmation
(but without any Schedule except for (i) the election of New York law (without
reference to its choice of laws doctrine other than Title 14 of Article 5 of the
New York General Obligations Law) as the governing law and US Dollars (“USD”) as
the Termination Currency; (ii) the election that subparagraph (ii) of
Section 2(c) will not apply to the Transactions; and (iii) the election that the
“Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to
each of Counterparty and Dealer, with a “Threshold Amount” of USD 100 million
for Counterparty and a “Threshold Amount” equal to 3% of shareholders’ equity of
Dealer as of the date hereof for Dealer (provided that (a) the phrase “or
becoming capable at such time of being declared” shall be deleted from clause
(1) of such Section 5(a)(vi) of the Agreement and (b) the following sentence
shall be added to the end thereof: “Notwithstanding the foregoing, a default
under subsection (2) hereof shall not constitute an Event of Default if (i) the
default was caused solely by error or omission of an administrative or
operational nature; (ii) funds were available to enable the party to make the
payment when due; and (iii) the payment is made within two Local Business Days
of such party’s receipt of written notice of its failure to pay.”).

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

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

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

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

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

 

General Terms:

Trade Date: For each Transaction, as set forth in the related Supplemental
Confirmation.

 

Buyer:

Counterparty

 

Seller:

Dealer

 

Shares:

Common stock, par value $0.01 per share, of Counterparty (Ticker: ADT)

 

Exchange:

The New York Stock Exchange

 

Related Exchange(s):

All Exchanges.

 

Prepayment\Variable Obligation:

Applicable

 

Prepayment Amount:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Prepayment Date:

For each Transaction, as set forth in the related Supplemental Confirmation.

Valuation:

 

Hedge Period:

The period from and including the Hedge Period Start Date to and including the
Hedge Completion Date.

 

Hedge Period Start Date:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Hedge Completion Date:

For each Transaction, as set forth in the related Trade Notification, as
determined by Dealer in its sole discretion, but in no event later than the
Hedge Period End Date.

 

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Hedge Period End Date:

For each Transaction, as set forth in the related Supplemental Confirmation,
subject to postponement as provided in “Valuation Disruption” below.

 

Hedge Period Reference Price:

For each Transaction, as set forth in the related Trade Notification, to be the
average of the VWAP Prices for the Exchange Business Days in the Hedge Period,
subject to “Valuation Disruption” below.

 

VWAP Price:

For any Exchange Business Day, as determined by the Calculation Agent based on
the New York 10b-18 Volume Weighted Average Price per Share for the regular
trading session (including any extensions thereof) of the Exchange on such
Exchange Business Day (without regard to pre-open or after hours trading outside
of such regular trading session for such Exchange Business Day), as published by
Bloomberg at 4:15 p.m. New York time (or 15 minutes following the end of any
extension of the regular trading session) on such Exchange Business Day, on
Bloomberg page “ADT <Equity> AQR_SEC” (or any successor thereto), or if such
price is not so reported on such Exchange Business Day for any reason or is, in
the Calculation Agent’s reasonable discretion, erroneous, such VWAP Price shall
be as reasonably determined by the Calculation Agent. For purposes of
calculating the VWAP Price, the Calculation Agent will include only those trades
that are reported during the period of time during which Counterparty could
purchase its own shares under Rule 10b-18(b)(2) and are effected pursuant to the
conditions of Rule 10b-18(b)(3), each under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) (such trades, “Rule 10b-18 eligible
transactions”).

 

Forward Price:

The average of the VWAP Prices for the Exchange Business Days in the Calculation
Period, subject to “Valuation Disruption” below.

 

Forward Price Adjustment Amount:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Calculation Period:

The period from and including the Calculation Period Start Date to and including
the Termination Date.

 

Calculation Period Start Date:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Termination Date:

The Scheduled Termination Date; provided that Dealer shall have the right to
designate any Exchange Business Day on or after the First Acceleration Date to
be the Termination Date (the “Accelerated Termination Date”) by delivering
notice to Counterparty of any such designation prior to 11:59 p.m. New York City
time on the Exchange Business Day immediately following the designated
Accelerated Termination Date.

 

Scheduled Termination Date:

For each Transaction, as set forth in the related Supplemental Confirmation,
subject to postponement as provided in “Valuation Disruption” below.

 

First Acceleration Date:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Valuation Disruption:

The definition of “Market Disruption Event” in Section 6.3(a) of the Equity
Definitions is hereby amended by deleting the words “at any time during the
one-hour period that ends at the relevant Valuation Time, Latest Exercise Time,
Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and
inserting the words “at any time on any Scheduled Trading Day during the Hedge
Period, Calculation Period or Settlement Valuation Period” after the word
“material,” in the third line thereof.

 

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  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.

 

  Notwithstanding anything to the contrary in the Equity Definitions, to the
extent that a Disrupted Day occurs (i) in the Hedge Period or the Calculation
Period, the Calculation Agent may, in its good faith and commercially reasonable
discretion, postpone either or both of the Hedge Period End Date and/or the
Scheduled Termination Date by one Scheduled Trading Day for each such Disrupted
Day, or (ii) in the Settlement Valuation Period, the Calculation Agent may
extend the Settlement Valuation Period by one Scheduled Trading Day for each
such Disrupted Day. If any such Disrupted Day is a Disrupted Day because of a
Market Disruption Event (or a deemed Market Disruption Event as provided
herein), the Calculation Agent shall determine whether (i) such Disrupted Day is
a Disrupted Day in full, in which case the VWAP Price for such Disrupted Day
shall not be included for purposes of determining the Hedge Period Reference
Price, the Forward Price or the Settlement Price, as the case may be, or
(ii) such Disrupted Day is a Disrupted Day only in part, in which case the VWAP
Price for such Disrupted Day shall be determined by the Calculation Agent based
on Rule 10b-18 eligible transactions in the Shares on such Disrupted Day taking
into account the nature and duration of the relevant Market Disruption Event,
and the weighting of the VWAP Price for the relevant Exchange Business Days
during the Hedge Period, the Calculation Period or the Settlement Valuation
Period, as the case may be, shall be adjusted in a commercially reasonable
manner by the Calculation Agent for purposes of determining the Hedge Period
Reference Price, the Forward Price or the Settlement Price, as the case may be,
with such adjustments based on, among other factors, the duration of any Market
Disruption Event and the volume, historical trading patterns and price of the
Shares. Any Exchange Business Day on which, as of the date hereof, the Exchange
is scheduled to close prior to its normal close of trading shall be deemed not
to be an Exchange Business Day; if a closure of the Exchange prior to its normal
close of trading on any Exchange Business Day is scheduled following the date
hereof, then such Exchange Business Day shall be deemed to be a Disrupted Day in
full.

 

  If a Disrupted Day occurs during the Hedge Period, the Calculation Period or
the Settlement Valuation Period, as the case may be, and each of the nine
immediately following Scheduled Trading Days is a Disrupted Day, then the
Calculation Agent, in its good faith and commercially reasonable discretion, may
deem such ninth Scheduled Trading Day to be an Exchange Business Day that is not
a Disrupted Day and determine the VWAP Price for such ninth Scheduled Trading
Day using its good faith estimate of the value of the Shares on such ninth
Scheduled Trading Day based on the volume, historical trading patterns and price
of the Shares and such other factors as it deems appropriate.

Settlement Terms:

 

Settlement Procedures:

If the Number of Shares to be Delivered is positive, Physical Settlement shall
be applicable; provided that Dealer does not, and shall not, make the agreement
or the representations set forth in Section 9.11 of the Equity Definitions
related to the restrictions imposed by applicable securities laws with respect
to any Shares delivered by Dealer to Counterparty under any Transaction that
arise as a result of the fact that Counterparty is the Issuer of the Shares. If
the Number of Shares to be Delivered is negative, then the Counterparty
Settlement Provisions in Annex A shall apply.

 

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Number of Shares to be Delivered:

A number of Shares equal to (a) the Prepayment Amount divided by (b) the
Settlement Price; provided that the Number of Shares to be Delivered as so
determined shall be reduced by the aggregate number of Shares delivered on the
Initial Share Delivery Date and the Minimum Share Delivery Date, if any.
Notwithstanding Section 9.2 of the Equity Definitions, the Number of Shares to
be Delivered shall be rounded down to the nearest whole number of Shares and no
Fractional Share Amounts shall be delivered.

 

Settlement Price:

(a) If the Cap Percentage is greater than 0%, then:

 

      (i) if the Calculation Period Price is equal to or greater than the Cap
Price, the Settlement Price shall be equal to the sum of (x) the Cap Price
multiplied by the Cap Percentage and (y) the Calculation Period Price multiplied
by the Non-Cap Percentage; or

 

      (ii) if the Calculation Period Price is less than the Cap Price, the
Settlement Price shall be equal to the Calculation Period Price; or

 

  (b) If the Cap Percentage is 0%, the Settlement Price shall be equal to the
Calculation Period Price.

 

Calculation Period Price:

The greater of (i) the Forward Price minus the Forward Price Adjustment Amount
and (ii) $2.00.

 

Cap Price:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Cap Percentage:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Non-Cap Percentage:

For each Transaction, as set forth in the related Supplemental Confirmation, to
be a percentage obtained by subtracting the Cap Percentage from 100%.

 

Excess Dividend Amount:

For the avoidance of doubt, all references to the Excess Dividend Amount shall
be deleted from Section 9.2(a)(iii) of the Equity Definitions.

 

Settlement Date:

If the Number of Shares to be Delivered is positive, the date that is one
Settlement Cycle immediately following the Termination Date.

 

Settlement Currency:

USD

 

Initial Share Delivery:

Dealer shall deliver a number of Shares equal to the Initial Shares to
Counterparty on the Initial Share Delivery Date in accordance with Section 9.4
of the Equity Definitions, with the Initial Share Delivery Date deemed to be a
“Settlement Date” for purposes of such Section 9.4.

 

Initial Share Delivery Date:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Initial Shares:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Minimum Share Delivery:

Dealer shall deliver a number of Shares equal to the Minimum Shares on the
Minimum Share Delivery Date in accordance with Section 9.4 of the Equity
Definitions, with the Minimum Share Delivery Date deemed to be a “Settlement
Date” for purposes of such Section 9.4.

 

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Minimum Share Delivery Date:

The date one Settlement Cycle immediately following the Hedge Completion Date.

 

Minimum Shares:

For each Transaction, as set forth in the related Supplemental Confirmation.

Share Adjustments:

 

Potential Adjustment Event:

Notwithstanding anything to the contrary in Section 11.2(e) of the Equity
Definitions, neither (i) an Extraordinary Dividend nor (ii) repurchases effected
in accordance with Section 7 below shall constitute Potential Adjustment Events.

 

  It shall constitute an additional Potential Adjustment Event if the Scheduled
Termination Date for any Transaction is postponed pursuant to “Valuation
Disruption” above, in which case the Calculation Agent may, in its commercially
reasonable discretion, adjust any relevant terms of any such Transaction as
appropriate to account for the economic effect on the Transaction of such
postponement.

 

Extraordinary Dividend:

For any calendar quarter, any dividend or distribution on the Shares with an
ex-dividend date occurring during such calendar quarter (other than any dividend
or distribution of the type described in Section 11.2(e)(i) or
Section 11.2(e)(ii)(A) of the Equity Definitions) (a “Dividend”) the amount or
value of which (as determined by the Calculation Agent), when aggregated with
the amount or value (as determined by the Calculation Agent) of any and all
previous Dividends with ex-dividend dates occurring in the same calendar
quarter, exceeds the Ordinary Dividend Amount.

 

Ordinary Dividend Amount:

For each Transaction, as set forth in the related Supplemental Confirmation.

 

Method of Adjustment:

Calculation Agent Adjustment

 

Early Ordinary Dividend Payment:

If an ex-dividend date for any Dividend that is not an Extraordinary Dividend
occurs during any calendar quarter occurring (in whole or in part) during the
Relevant Period (as defined below) and is prior to the Scheduled Ex-Dividend
Date for such calendar quarter, the Calculation Agent shall make such
commercially reasonable adjustments to the exercise, settlement, payment or any
other terms of the relevant Transaction as the Calculation Agent determines in
its good faith discretion to be appropriate to account for the economic effect
on the Transaction of such event.

 

Scheduled Ex-Dividend Dates:

For each Transaction for each calendar quarter, as set forth in the related
Supplemental Confirmation.

Extraordinary Events:

Consequences of Merger Events:

 

(a) Share-for-Share:

Modified Calculation Agent Adjustment

 

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(b) Share-for-Other:

Cancellation and Payment

 

(c) Share-for-Combined:

Component Adjustment

 

Tender Offer:

Applicable; provided that (i) Section 12.1(d) of the Equity Definitions shall be
amended by replacing “10%” in the third line thereof with “20%”,
(ii) Section 12.1(l) of the Equity Definitions shall be amended (x) by deleting
the parenthetical in the fifth line thereof, (y) by replacing “that” in the
fifth line thereof with “whether or not such announcement” and (z) by adding
immediately after the words “Tender Offer” in the fifth line thereof “, and any
publicly announced change or amendment to such an announcement (including the
announcement of an abandonment of such intention)” and (iii) Sections 12.3(a)
and 12.3(d) of the Equity Definitions shall each be amended by replacing each
occurrence of the words “Tender Offer Date” by “Announcement Date.”

Consequences of Tender Offers:

 

(a) Share-for-Share:

Modified Calculation Agent Adjustment

 

(b) Share-for-Other:

Modified Calculation Agent Adjustment

 

(c) Share-for-Combined:

Modified Calculation Agent Adjustment

Nationalization, Insolvency or

      Delisting:

Cancellation and Payment; provided that in addition to the provisions of
Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a
Delisting if the Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New York Stock
Exchange, the 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 be deemed to be the Exchange.

Additional Disruption Events:

 

(a) Change in Law:

Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the phrase “the interpretation” in the third
line thereof with the phrase “, or public announcement of, the formal or
informal interpretation”, (ii) by replacing the word “Shares” where it appears
in clause (X) thereof with the words “Hedge Position” and (iii) by immediately
following the word “Transaction” in clause (X) thereof, adding the phrase “in
the manner contemplated by the Hedging Party on the Trade Date”; provided
further that (i) any determination as to whether (A) the adoption of or any
change in any applicable law or regulation (including, for the avoidance of
doubt and without limitation, (x) any tax law or (y) adoption or promulgation of
new regulations authorized or mandated by existing statute) or (B) the
promulgation of or any change in the interpretation by any court, tribunal or
regulatory authority with competent jurisdiction of any applicable law or
regulation (including any action taken by a taxing authority), in each case,
constitutes a “Change in Law” shall be made without regard to Section 739 of the
Dodd-Frank Wall Street Reform and Consumer

 

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Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date, and (ii) Section 12.9(a)(ii) of the Equity Definitions is hereby amended
by replacing the parenthetical beginning after the word “regulation” in the
second line thereof the words “(including, for the avoidance of doubt and
without limitation, (x) any tax law or (y) adoption or promulgation of new
regulations authorized or mandated by existing statute)”.

 

(b) Failure to Deliver:

Applicable

 

(c) Insolvency Filing:

Applicable

 

(d) Loss of Stock Borrow:

Applicable

 

      Maximum Stock Loan Rate:

200 basis points per annum

 

      Hedging Party:

Dealer

(e) Increased Cost of Stock

Borrow:

Applicable

 

      Initial Stock Loan Rate:

50 basis points per annum

 

      Hedging Party:

Dealer

 

      Determining Party:

Dealer; provided that, upon receipt of written request from Counterparty, the
Determining Party shall promptly provide Counterparty with a written explanation
describing in reasonable detail any calculation, adjustment or determination
made by it (including any quotations, market data or information from internal
or external sources used in making such calculation, adjustment or
determination, as the case may be, but without disclosing Dealer’s proprietary
models or other information that may be proprietary or subject to contractual,
legal or regulatory obligations to not disclose such information), and shall use
commercially reasonable efforts to provide such written explanation within five
(5) Exchange Business Days from the receipt of such request.

 

Additional Termination Event:

The declaration by the Issuer of any Extraordinary Dividend, the ex-dividend
date for which occurs or is scheduled to occur during the Relevant Dividend
Period, will constitute an Additional Termination Event, with Counterparty as
the sole Affected Party and all Transactions hereunder as the Affected
Transactions.

 

Relevant Dividend Period:

The period from and including the first day of the Hedge Period (or, if there is
no Hedge Period for the relevant Transaction, on the Calculation Period Start
Date for such Transaction) to and including the Relevant Dividend Period End
Date.

 

Relevant Dividend Period End Date:

If Annex A applies, the last day of the Settlement Valuation Period; otherwise,
the Termination Date.

 

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Non-Reliance/Agreements and

Acknowledgements Regarding Hedging

Activities/Additional Acknowledgements:

Applicable

 

Transfer:

Notwithstanding anything to the contrary in the Agreement, Dealer may assign,
transfer and set over all rights, title and interest, powers, privileges and
remedies of Dealer under any Transaction, in whole or in part, to an Affiliate
of Dealer (1) whose obligations are guaranteed by JPMorgan Chase & Co. pursuant
to a guarantee in a form customarily used by JPMorgan Chase & Co. at such time
without the consent of Counterparty or (2) of equal or better creditworthiness
as Dealer (as determined by reference to then-current credit ratings of such
Affiliate); provided that (i) prior written notice of such transfer is provided
to Counterparty, (ii) immediately upon giving effect to such transfer and
assignment, an Event of Default, Potential Event of Default or Termination Event
will not occur as a result thereof and (iii) as a result of such transfer and
assignment, Counterparty will not be expected as of the date of such transfer
and assignment to (x) be required to pay or deliver to the transferee on any
payment date or delivery date an amount under Section 2(d)(i)(4) of the
Agreement or a number of Shares, as applicable, greater than the amount or the
number of Shares, respectively, that Counterparty would have been required to
pay or deliver to Dealer in the absence of such transfer and assignment or
(y) receive from the transferee on any payment date or delivery date an amount
under Section 2(d)(i)(4) of the Agreement or a number of Shares, as applicable,
lower than the amount or the number of Shares, respectively, that Dealer would
have been required to pay or deliver to Counterparty in the absence of such
transfer and assignment. Notwithstanding any other provision in this Master
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 any Transaction and any such designee may assume such obligations.
Dealer may assign the right to receive Registered Settlement Shares or
Unregistered Settlement Shares to any third party who may legally receive
Registered Settlement Shares or Unregistered Settlement Shares. Dealer shall be
discharged of its obligations to Counterparty only to the extent of any such
performance. For the avoidance of doubt, Dealer hereby acknowledges that
notwithstanding any such designation hereunder, to the extent any of Dealer’s
obligations in respect of any Transaction are not completed by its designee,
Dealer shall be obligated to continue to perform or to cause any other of its
designees to perform in respect of such obligations.

 

Dealer Payment Instructions:

To be provided by Dealer.

 

Counterparty’s Contact Details for Purpose of Giving Notice:

To be provided by Counterparty

 

Dealer’s Contact Details for Purpose of Giving Notice:

To be provided by Dealer.

 

2. Calculation Agent.

Dealer; provided that, upon receipt of written request from Counterparty, the
Calculation Agent shall promptly provide Counterparty with a written explanation
describing in reasonable detail any calculation, adjustment or determination
made by it (including any quotations, market data or information from internal
or external sources used in making such calculation, adjustment or
determination, as the case may be, but without disclosing Dealer’s proprietary

 

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models or other information that may be proprietary or subject to contractual,
legal or regulatory obligations to not disclose such information), and shall use
commercially reasonable efforts to provide such written explanation within five
(5) Exchange Business Days from the receipt of such request.

3. Additional Mutual Representations, Warranties and Covenants of Each Party. In
addition to the representations, warranties and covenants in the Agreement, each
party represents, warrants and covenants to the other party that:

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

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

3A. Additional Representations, Warranties and Covenants of Dealer.

(a) In addition to the covenants in the Agreement and herein, Dealer agrees to
use good faith efforts, during the Hedge Period, the Calculation Period and any
Settlement Valuation Period (as defined in Annex A) for any Transaction, to make
all purchases of Shares in connection with such Transaction in a manner that
would comply with the limitations set forth in clauses (b)(2), (b)(3) and (b)(4)
of Rule 10b-18 under the Securities Exchange Act of 1934 (“Rule 10b-18”), as if
such rule was applicable to such purchases and taking into account any
applicable Securities and Exchange Commission no-action letters as appropriate,
and subject to any delays between the execution and reporting of a trade of the
Shares on the Exchange and other circumstances beyond Dealer’s control; provided
that, during the Calculation Period, the foregoing agreement shall not apply to
purchases made to dynamically hedge for Dealer’s own account or the account of
its affiliate(s) the optionality arising under a Transaction; provided further
that, without limiting the generality of the first sentence of this
Section 3A(a), Dealer shall not be responsible for any failure to comply with
Rule 10b-18(b)(3) to the extent any transaction that was executed (or deemed to
be executed) by or on behalf of the Counterparty or an affiliated purchaser
pursuant to a separate agreement is not deemed to be an “independent bid” or an
“independent transaction” for purposes of Rule 10b-18(b)(3).

(b) In connection with each Transaction, Dealer represents and warrants to
Counterparty that it has not, at any time on or before the Trade Date for such
Transaction, discussed any offsetting transaction(s) in respect of such
Transaction with any third party.

4. Additional Representations, Warranties and Covenants of Counterparty. In
addition to the representations, warranties and covenants in the Agreement,
Counterparty represents, warrants and covenants to Dealer that:

(a) Counterparty is not engaged in on the Trade Date, and will not engage in
during the Relevant Period (as defined below in clause (g) of this Section 4),
any tender offer for the Shares.

(b) It is not entering into, nor making any election with respect to, any
Transaction (i) on the basis of, and is not aware of, any material non-public
information with respect to the Shares (ii) in anticipation of, in connection
with, or to facilitate, a distribution of its securities, a self-tender offer or
a third-party tender offer or (iii) to create actual or apparent trading
activity in the Shares (or any security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate the price of the Shares
(or any security convertible into or exchangeable for the Shares).

 

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(c) Each Transaction is being entered into pursuant to a publicly disclosed
Share buy-back program and its Board of Directors has approved the use of
derivatives to effect the Share buy-back program.

(d) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that neither Dealer nor any of its affiliates is
making any representations or warranties or taking any position or expressing
any view with respect to the treatment of any Transaction under any accounting
standards including ASC Topic 260, Earnings Per Share, ASC Topic 815,
Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from
Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own
Equity.

(e) As of (i) the date hereof and (ii) the Trade Date for each Transaction
hereunder, Counterparty is in compliance with its reporting obligations under
the Exchange Act, and its most recent report on Form 10-K, together with all
reports subsequently filed by it pursuant to the Exchange Act, taken together
and as amended and supplemented to the date of this representation, do not, as
of their respective filing dates, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

(f) Counterparty shall report each Transaction as required under the Exchange
Act and the rules and regulations thereunder.

(g) The Shares are not, and Counterparty will not cause the Shares to be,
subject to a “restricted period” (as defined in Regulation M promulgated under
the Exchange Act) at any time during any Regulation M Period (as defined below)
for any Transaction unless Counterparty has provided written notice to Dealer of
such restricted period not later than the Scheduled Trading Day immediately
preceding the first day of such “restricted period”; Counterparty acknowledges
that any such notice may cause a Disrupted Day to occur pursuant to Section 5
below; accordingly, Counterparty acknowledges that its delivery of such notice
must comply with the standards set forth in Section 6 below; “Regulation M
Period” means, for any Transaction, (i) the Relevant Period (as defined below)
and (ii) the Settlement Valuation Period, if any, for such Transaction.
“Relevant Period” means, for any Transaction, the period commencing on the first
day of the Hedge Period for such Transaction (or, if there is no Hedge Period
for such Transaction, on the Calculation Period Start Date for such Transaction)
and ending on the earlier of (i) the Scheduled Termination Date and (ii) the
last Additional Relevant Day (as specified in the related Supplemental
Confirmation) for such Transaction, or such earlier day as elected by Dealer and
communicated to Counterparty on such day (or, if later, the First Acceleration
Date without regard to any acceleration thereof pursuant to “Special Provisions
for Friendly Transaction Announcements” below).

(h) As of the Trade Date and the Prepayment Date for each Transaction,
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 a number of
Shares with a value equal to the Prepayment Amount in compliance with the laws
of the jurisdiction of Counterparty’s incorporation.

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

(j) Counterparty has not and will not enter into agreements similar to the
Transactions described herein where any initial hedge period, calculation
period, relevant period or settlement valuation period (each however defined) in
such other transaction will overlap at any time (including as a result of
extensions in such initial hedge period, calculation period, relevant period or
settlement valuation period as provided in the relevant agreements) with any
Relevant Period or, if applicable, any Settlement Valuation Period under this
Master Confirmation. In the event that the initial hedge period, relevant
period, calculation period or settlement valuation period in any other similar
transaction overlaps with any Relevant Period or, if applicable, Settlement
Valuation Period under this Master Confirmation as a result of any postponement
of the Scheduled Termination Date or extension of the Settlement Valuation
Period pursuant to “Valuation Disruption” above, Counterparty shall promptly
amend such transaction to avoid any such overlap.

 

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5. Regulatory Disruption. In the event that Dealer concludes, in good faith and
in consultation with counsel, that it is appropriate with respect to any legal,
regulatory or self-regulatory requirements or related policies and procedures
generally applicable to the relevant line of business (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by Dealer), for it to refrain from or decrease any market activity on
any Scheduled Trading Day or Days during the Hedge Period, the Calculation
Period or, if applicable, the Settlement Valuation Period, Dealer may by written
notice to Counterparty elect to deem that a Market Disruption Event has occurred
and will be continuing on such Scheduled Trading Day or Days.

6. 10b5-1 Plan. Counterparty represents, warrants and covenants to Dealer that:

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

(b) Counterparty will not seek to control or influence Dealer’s decision to make
any “purchases or sales” (within the meaning of Rule 10b5-1(c)(1)(i)(B)(3))
under any Transaction entered into under this Master Confirmation, including,
without limitation, Dealer’s decision to enter into any hedging transactions.
Counterparty represents and warrants that it has consulted with its own advisors
as to the legal aspects of its adoption and implementation of this Master
Confirmation, each Supplemental Confirmation and each Trade Notification under
Rule 10b5-1.

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

7. Counterparty Purchases. Counterparty (or any “affiliated purchaser” as
defined in Rule 10b-18) shall not, without the prior written consent of Dealer
(not to be unreasonably withheld or delayed), directly or indirectly purchase
any Shares (including by means of a derivative instrument), listed contracts on
the Shares or securities that are convertible into, or exchangeable or
exercisable for Shares (including, without limitation, any Rule 10b-18 purchases
of blocks (as defined in Rule 10b-18)) during any Relevant Period or, if
applicable, Settlement Valuation Period, except through Dealer; provided that
(x) purchases of Shares that do not constitute “Rule 10b-18 purchases” under
subparagraphs (ii) or (iii) of Rule 10b-18(a)(13), (y) withholding of Shares to
cover amounts payable (including tax liabilities and/or payment of exercise
price) in respect of the exercise of employee stock options, and (z) privately
negotiated off-exchange repurchases of Shares that are not reasonably expected
to result in purchases of Shares in the market shall, in each case, not be
subject to this Section 7.

8. Special Provisions for Merger Transactions. Notwithstanding anything to the
contrary herein or in the Equity Definitions:

(a) Counterparty agrees that it:

(i) will not during the period commencing on the Trade Date through the end of
the Relevant Period or, if applicable, the Settlement Valuation Period for any
Transaction make, or (to the extent within its control) permit to be made, any
public announcement (as defined in Rule 165(f) under the Securities Act) of any
Merger Transaction or potential Merger Transaction (a “Public Announcement”)
unless such Public Announcement is made prior to the opening or after the close
of the regular trading session on the Exchange for the Shares;

 

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

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

(b) Counterparty acknowledges that a Public Announcement may cause the terms of
any Transaction to be adjusted or such Transaction to be terminated;
accordingly, Counterparty acknowledges that in making any Public Announcement,
it must comply with the standards set forth in Section 6 above.

(c) Upon the occurrence of any Public Announcement (whether made by Counterparty
or a third party), Dealer in its sole discretion may (i) make commercially
reasonable adjustments to the terms of any Transaction, including, without
limitation, the Scheduled Termination Date or the Forward Price Adjustment
Amount, and/or suspend the Hedge Period, the Calculation Period and/or any
Settlement Valuation Period or (ii) treat the occurrence of such Public
Announcement as an Additional Termination Event with Counterparty as the sole
Affected Party and the Transactions hereunder as the Affected Transactions and
with the amount under Section 6(e) of the Agreement determined taking into
account the fact that the Calculation Period or Settlement Valuation Period, as
the case may be, had fewer Scheduled Trading Days than originally anticipated.

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

9. Special Provisions for Friendly Transaction Announcements. (a) If a Friendly
Transaction Announcement occurs on or prior to the Settlement Date for any
Transaction, then the Calculation Agent shall make such adjustments to the
exercise, settlement, payment or any other terms of such Transaction (including,
without limitation, the Cap Price, if any, and the Forward Price Adjustment
Amount) as the Calculation Agent determines appropriate, at such time or at
multiple times as the Calculation Agent determines appropriate, to account for
the economic effect on such Transaction of such Friendly Transaction
Announcement (including adjustments to account for changes in volatility,
expected dividends, stock loan rate and liquidity relevant to the Shares or to
such Transaction). If a Friendly Transaction Announcement occurs after the Trade
Date, but prior to the First Acceleration Date of any Transaction, the First
Acceleration Date shall be the date of such Friendly Transaction Announcement.
If a Friendly Transaction Announcement occurs after the Settlement Date for any
Transaction or any earlier date of termination or cancellation of such
Transaction pursuant to Section 6 of the Agreement or Article 12 of the Equity
Definitions, then a second settlement of such Transaction (a “Second
Settlement”) shall occur (notwithstanding such earlier termination or
cancellation) with a Number of Shares to be Delivered equal to the lesser of
(i) zero and (ii) (x) the Number of Shares to be Delivered determined pursuant
to the first sentence of this paragraph as if such Friendly Transaction
Announcement occurred prior to such Settlement Date minus (y) the Number of
Shares to be Delivered determined pursuant to Section 1 of this Master
Confirmation (provided that in the case of a Second Settlement occurring after
such an early termination or cancellation, a Number of Shares to be Delivered
shall not be determined and instead a Forward Cash Settlement Amount will be
determined as provided in Annex A).

(b) “Friendly Transaction Announcement” means (i) an Acquisition Transaction
Announcement by Counterparty or its board of directors prior to the Settlement
Date or any earlier date of termination or cancellation of the relevant
Transaction pursuant to Section 6 of the Agreement or Article 12 of the Equity
Definitions (such

 

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date, the “Actual Termination Date”), (ii) (A) an announcement by Counterparty
or its board of directors prior to the date three months following the Scheduled
Termination Date that an Acquisition Transaction that is the subject of an
Acquisition Transaction Announcement occurring prior to the Actual Termination
Date has been approved, agreed to, recommended by or otherwise consented to by
Counterparty or its board of directors, or negotiated by Counterparty or any
authorized representative of Counterparty or (B) consummation prior to the date
three months following the Scheduled Termination Date of an Acquisition
Transaction that is the subject of an Acquisition Transaction Announcement
occurring prior to the Actual Termination Date, or (iii) where Counterparty or
its board of directors has a legal obligation to make a recommendation to its
shareholders in respect of any such Acquisition Transaction prior to the date
three months following the Scheduled Termination Date, the absence of a
recommendation that its shareholders reject such transaction.

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

(d) “Acquisition Transaction” means (i) any Merger Event (for purposes of this
definition the definition of Merger Event shall be read with the references
therein to “100%” being replaced by “25%” and to “50%” by “75%” and without
reference to the clause beginning immediately following the definition of
Reverse Merger therein to the end of such definition), Tender Offer or Merger
Transaction (provided that, for purposes of this Section 9, the Merger
Transaction involves consideration (x) valued in excess of 25% of the market
capitalization of Counterparty measured on the relevant date of announcement or
(y) consisting of a number of Shares that exceeds 25% of the number of
outstanding Shares on the relevant date of announcement) or any other
transaction involving the merger of Counterparty with or into any third party,
(ii) the sale or transfer of all or substantially all of the assets of
Counterparty, (iii) a recapitalization, reclassification, binding share exchange
or other similar transaction, (iv) any acquisition, lease, exchange, transfer,
disposition (including by way of spin-off or distribution) of assets (including
any capital stock or other ownership interests in subsidiaries) or other similar
event by Counterparty or any of its subsidiaries where the aggregate
consideration transferable or receivable by or to Counterparty or its
subsidiaries exceeds 25% of the market capitalization of Counterparty measured
as of the relevant date of announcement and (v) any transaction in which
Counterparty or its board of directors has a legal obligation to make a
recommendation to its shareholders in respect of such transaction (whether
pursuant to Rule 14e-2 under the Exchange Act or otherwise).

10. Acknowledgments. (a) The parties hereto intend for:

(i) each Transaction to be a “securities contract” as defined in Section 741(7)
of the Bankruptcy Code, a “swap agreement” as defined in Section 101(53B) of the
Bankruptcy Code and a “forward contract” as defined in Section 101(25) of the
Bankruptcy Code, and the parties hereto to be entitled to the protections
afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 362(b)(27),
362(o), 546(e), 546(g), 546(j), 555, 556, 560 and 561 of the Bankruptcy Code;

(ii) the Agreement to be a “master netting agreement” as defined in
Section 101(38A) of the Bankruptcy Code;

(iii) a party’s right to liquidate, terminate or accelerate any Transaction, net
out or offset termination values or payment amounts, and to exercise any other
remedies upon the occurrence of any Event of Default or Termination Event under
the Agreement with respect to the other party or any Extraordinary Event that
results in the termination or cancellation of any Transaction to constitute a
“contractual right” (as defined in the Bankruptcy Code); and

 

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(iv) all payments for, under or in connection with each Transaction, all
payments for the Shares (including, for the avoidance of doubt, payment of the
Prepayment Amount) and the transfer of such Shares to constitute “settlement
payments” and “transfers” (as defined in the Bankruptcy Code).

(b) Counterparty acknowledges that:

(i) during the term of any Transaction, 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 establish, adjust or
unwind its hedge position with respect to such Transaction;

(ii) Dealer and its affiliates may also be active in the market for the Shares
and derivatives linked to the Shares other than in connection with hedging
activities in relation to any Transaction, including acting as agent or as
principal and for its own account or on behalf of customers;

(iii) Dealer shall make its own determination as to whether, when or in what
manner any hedging or market activities in Counterparty’s securities shall be
conducted and shall do so in a manner that it deems appropriate to hedge its
price and market risk with respect to the Forward Price and the VWAP Price;

(iv) any market activities of Dealer and its affiliates with respect to the
Shares may affect the market price and volatility of the Shares, as well as the
Forward Price and VWAP Price, each in a manner that may be adverse to
Counterparty; and

(v) each Transaction is a derivatives transaction in which it has granted Dealer
an option; Dealer may purchase shares for its own account at an average price
that may be greater than, or less than, the price paid by Counterparty under the
terms of the related Transaction.

(c) Counterparty:

(a) is an “institutional account” as defined in FINRA Rule 4512(c);

(b) is capable of evaluating investment risks independently, both in general and
with regard to all transactions and investment strategies involving a security
or securities, and will exercise independent judgment in evaluating the
recommendations of Dealer or its associated persons; and

(c) will notify Dealer if any of the statements contained in clause (i) or
(ii) of this Section 12(c) ceases to be true.

11. Credit Support Documents. The parties hereto acknowledge that no Transaction
hereunder is secured by any collateral that would otherwise secure the
obligations of Counterparty herein or pursuant to the Agreement.

12. Set-off. (a) The parties agree to amend Section 6 of the Agreement by adding
a new Section 6(f) thereto as follows:

“(f) Upon the occurrence of an Event of Default or Termination Event with
respect to a party who is the Defaulting Party or the Affected Party (“X”), the
other party (“Y”) will have the right (but not be obliged) without prior notice
to X or any other person to set-off or apply any obligation of X owed to Y
(whether or not matured or contingent and whether or not arising under the
Agreement, and regardless of the currency, place of payment or booking office of
the obligation) against any obligation of Y owed to X (whether or not matured or
contingent and whether or not arising under the Agreement, and regardless of the
currency, place of payment or booking office of the obligation). Y will give
notice to the other party of any set-off effected under this Section 6(f).

 

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Amounts (or the relevant portion of such amounts) subject to set-off may be
converted by Y into the Termination Currency at the rate of exchange at which
such party would be able, acting in a reasonable manner and in good faith, to
purchase the relevant amount of such currency. If any obligation is
unascertained, Y may in good faith estimate that obligation and set-off in
respect of the estimate, subject to the relevant party accounting to the other
when the obligation is ascertained. Nothing in this Section 6(f) shall be
effective to create a charge or other security interest. This Section 6(f) shall
be without prejudice and in addition to any right of set-off, combination of
accounts, lien or other right to which any party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).”

(b) Notwithstanding anything to the contrary in the foregoing, Dealer agrees not
to set off or net amounts due from Counterparty with respect to any Transaction
against amounts due from Dealer to Counterparty with respect to contracts or
instruments that are not Equity Contracts. “Equity Contract” means any
transaction or instrument that does not convey to Dealer rights, or the ability
to assert claims, that are senior to the rights and claims of common
stockholders in the event of Counterparty’s bankruptcy.

13. Delivery of Shares. Notwithstanding anything to the contrary herein, Dealer
may, by prior notice to Counterparty, satisfy its obligation to deliver any
Shares or other securities on any date due (an “Original Delivery Date”) by
making separate deliveries of Shares or such securities, as the case may be, at
more than one time on or prior to such Original Delivery Date, so long as the
aggregate number of Shares and other securities so delivered on or prior to such
Original Delivery Date is equal to the number required to be delivered on such
Original Delivery Date.

14. Early Termination. In the event that an Early Termination Date (whether as a
result of an Event of Default or a Termination Event) occurs or is designated
with respect to any Transaction (except as a result of a Merger Event in which
the consideration or proceeds to be paid to holders of Shares consists solely of
cash), if either party would owe any amount to the other party pursuant to
Section 6(d)(ii) of the Agreement (any such amount, a “Payment Amount”), then,
in lieu of any payment of such Payment Amount, Counterparty may, no later than
the Early Termination Date or the date on which such Transaction is terminated,
elect to deliver or for Dealer to deliver, as the case may be, to the other
party a number of Shares (or, in the case of a Merger Event, a number of units,
each comprising the number or amount of the securities or property that a
hypothetical holder of one Share would receive in such Merger Event (each such
unit, an “Alternative Delivery Unit” and, the securities or property comprising
such unit, “Alternative Delivery Property”)) with a value equal to the Payment
Amount, as determined by the Calculation Agent (and the parties agree that, in
making such determination of value, the Calculation Agent may take into account
a number of factors, including the market price of the Shares or Alternative
Delivery Property on the date of early termination and, if such delivery is made
by Dealer, the prices at which Dealer purchases Shares or Alternative Delivery
Property to fulfill its delivery obligations under this Section 14); provided
that in determining the composition of any Alternative Delivery Unit, if the
relevant 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; and provided further that Counterparty may make such
election only if Counterparty represents and warrants to Dealer in writing on
the date it notifies Dealer of such election that, as of such date, Counterparty
is not aware of any material non-public information concerning the Shares and is
making such election in good faith and not as part of a plan or scheme to evade
compliance with the federal securities laws. If such delivery is made by
Counterparty, paragraphs 2 through 7 of Annex A shall apply as if such delivery
were a settlement of the Transaction to which Net Share Settlement applied, the
Cash Settlement Payment Date were the Early Termination Date and the Forward
Cash Settlement Amount were zero (0) minus the Payment Amount owed by
Counterparty.

15. Calculations and Payment Date upon Early Termination. The parties
acknowledge and agree that in calculating Close-out Amount pursuant to Section 6
of the Agreement, Dealer may (but need not) determine losses incurred in
connection with terminating, liquidating or re-establishing any hedge without
reference to actual losses incurred but based on expected losses assuming a
commercially reasonable (including without limitation with regard to reasonable
legal and regulatory guidelines) risk bid were used to determine such losses to
avoid awaiting the delay associated with closing out any hedge or related
trading position in a commercially reasonable manner prior to or sooner
following the designation of an Early Termination Date; provided that, if such a
risk bid is used by Dealer,

 

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then, in addition to and without limiting the generality of Section 6(d) of the
Agreement, Dealer shall promptly provide Counterparty with a written statement
describing in reasonable detail the basis for such risk bid (including any
quotations, market data or information from internal or external sources used in
determining such risk bid, but without disclosing Dealer’s proprietary models or
other information that may be proprietary or subject to contractual, legal or
regulatory obligations to not disclose such information). Notwithstanding
anything to the contrary in Section 6(d)(ii) of the Agreement, all amounts
calculated as being due in respect of an Early Termination Date under
Section 6(e) of the Agreement will be payable on the day that notice of the
amount payable is effective; provided that if Counterparty elects to receive
Shares or Alternative Delivery Property in accordance with Section 14, such
Shares or Alternative Delivery Property shall be delivered on a date selected by
Dealer as promptly as practicable.

16. Automatic Termination Provisions. Notwithstanding anything to the contrary
in Section 6 of the Agreement, if a Termination Price is specified in any
Supplemental Confirmation, then an Additional Termination Event with
Counterparty as the sole Affected Party and the Transaction to which such
Supplemental Confirmation relates as the Affected Transaction will automatically
occur without any notice or action by Dealer or Counterparty if the closing
price of the Shares on the Exchange is below such Termination Price for two
consecutive Exchange Business Days, and the second Exchange Business Day that
the closing price of the Shares on the Exchange is below the Termination Price
will be the “Early Termination Date” for purposes of the Agreement.

17. Delivery of Cash. For the avoidance of doubt, nothing in this Master
Confirmation shall be interpreted as requiring Counterparty to deliver cash in
respect of the settlement of the Transactions contemplated by this Master
Confirmation following payment by Counterparty of the relevant Prepayment
Amount, except in circumstances where the required cash settlement thereof is
permitted for classification of the contract as equity by ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity, as in effect on the
relevant Trade Date (including, without limitation, where Counterparty so elects
to deliver cash or fails timely to elect to deliver Shares or Alternative
Delivery Property in respect of the settlement of such Transactions).

18. Claim in Bankruptcy. Dealer acknowledges and agrees that this Confirmation
is not intended to convey to it rights with respect to the Transactions that are
senior to the claims of common stockholders in the event of Counterparty’s
bankruptcy.

19. General Obligations Law of New York. With respect to each Transaction,
(i) this Master Confirmation, together with the related Supplemental
Confirmation, as supplemented by the related Trade Notification, is a “qualified
financial contract”, as such term is defined in Section 5-701(b)(2) of the
General Obligations Law of New York (the “General Obligations Law”); (ii) such
Trade Notification constitutes a “confirmation in writing sufficient to indicate
that a contract has been made between the parties” hereto, as set forth in
Section 5-701(b)(3)(b) of the General Obligations Law; and (iii) this Master
Confirmation, together with the related Supplemental Confirmation, constitutes a
prior “written contract” as set forth in Section 5-701(b)(1)(b) of the General
Obligations Law, and each party hereto intends and agrees to be bound by this
Master Confirmation and the related Supplemental Confirmation, as supplemented
by the Trade Notification.

20. Governing Law. The Agreement, this Master Confirmation, each Supplemental
Confirmation, each Trade Notification and all matters arising in connection with
the Agreement, this Master Confirmation, each Supplemental Confirmation and each
Trade Notification shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York (without reference to its
choice of laws doctrine other than Title 14 of Article 5 of the New York General
Obligations Law).

21. Offices.

(a) The Office of Dealer for each Transaction is: London

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

 

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(b) The Office of Counterparty for each Transaction is: 1501 Yamato Road, Boca
Raton, Florida, 33431.

22. Account Opening Agreements. If in connection with any Transaction there is
any inconsistency between the Agreement, this Master Confirmation, any
Supplemental Confirmation and the Equity Definitions, on the one hand, and, on
the other hand, any account opening documents entered into between Dealer and
Counterparty in connection with executing this Master Confirmation, as amended
or supplemented from time to time, the Agreement, this Master Confirmation, and
Supplemental Confirmation and the Equity Definitions, as the case may be, shall
prevail for purposes of such Transaction.

23. Submission to Jurisdiction. Section 13(b) of the Agreement is hereby deleted
in its entirety and replaced by the following:

“Each party hereby irrevocably and unconditionally submits for itself and its
property in any suit, legal action or proceeding relating to this Agreement
and/or any Transaction, or for recognition and enforcement of any judgment in
respect thereof, (each, “Proceedings”) 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. Nothing in the Master Confirmation, any
Supplemental Confirmation, any Trade Notification or this Agreement precludes
either party from bringing Proceedings in any other jurisdiction if (A) the
courts of the State of New York or the United States of America for the Southern
District of New York lack jurisdiction over the parties or the subject matter of
the Proceedings or declines to accept the Proceedings on the grounds of lacking
such jurisdiction; (B) the Proceedings are commenced by a party for the purpose
of enforcing against the other party’s property, assets or estate any decision
or judgment rendered by any court in which Proceedings may be brought as
provided hereunder; (C) the Proceedings are commenced to appeal any such court’s
decision or judgment to any higher court with competent appellate jurisdiction
over that court’s decisions or judgments if that higher court is located outside
the State of New York or Borough of Manhattan, such as a federal court of
appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has
been commenced in another jurisdiction by or against the other party or against
its property, assets or estate and, in order to exercise or protect its rights,
interests or remedies under this Agreement, the Master Confirmation, any
Supplemental Confirmation or any Trade Notification, the party (1) joints, files
a claim, or takes any other action, in any such suit, action or proceeding or
(2) otherwise commences any Proceeding in that other jurisdiction as the result
of that other suit, action or proceeding having commenced in that other
jurisdiction.”

24. 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 AGREEMENT, THIS MASTER CONFIRMATION, EACH SUPPLEMENTAL
CONFIRMATION AND THE RELATED TRADE NOTIFICATION AND EACH TRANSACTION OR THE
ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR
ENFORCEMENT HEREOF.

25. Role of Agent. Each party agrees and acknowledges that (a) JPMS, an
Affiliate of Dealer, has acted solely as agent and not as principal with respect
to this Master Confirmation and each Transaction and (b) JPMS has no obligation
or liability, by way of guaranty, endorsement or otherwise, in any manner in
respect of any Transaction (including, if applicable, in respect of the
settlement thereof). Each party agrees it will look solely to the other party
(or any guarantor in respect thereof) for performance of such other party’s
obligations under any Transaction. JPMS is authorized to act as agent for
Dealer.

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

 

18

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Counterparty hereby agrees (a) to check this Master 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 any particular Transaction to which this
Master Confirmation relates, by manually signing this Master 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.

 

Yours faithfully,

 

J.P. MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch

By:   /s/ Sudheer Tegulapalle  

Name: Sudheer Tegulapalle

Title:   Executive Director

 

Agreed and Accepted By:

 

THE ADT CORPORATION

By:   /s/ Ravi Tulsyan  

Name: Ravi Tulsyan

Title:   SVP and Treasurer

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

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SCHEDULE A

SUPPLEMENTAL CONFIRMATION

 

To:   

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida, 33431

From:   

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

Subject:    Accelerated Stock Repurchase (Variable Cap) Date:   
[___________________]

 

 

The purpose of this Supplemental Confirmation is to confirm the terms and
conditions of the Transaction entered into between J.P. Morgan Securities LLC
(“JPMS”), as agent for JPMorgan Chase Bank, National Association, London Branch
(“Dealer”) and The ADT Corporation (“Counterparty”) (together, the “Contracting
Parties”) on the Trade Date specified below. This Supplemental Confirmation is a
binding contract between Dealer and Counterparty as of the relevant Trade Date
for the Transaction referenced below.

1. This Supplemental Confirmation supplements, forms part of, and is subject to
the Master Confirmation dated as of November 19, 2013 (the “Master
Confirmation”) between the Contracting Parties, as amended and supplemented from
time to time. All provisions contained in the Master Confirmation govern this
Supplemental Confirmation except as expressly modified below.

 

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

 

Trade Date:    [________________] Forward Price Adjustment Amount:    USD [__]
Cap Price:    [As set forth in the Trade Notification, [__]% of the Hedge Period
Reference Price.] / [Not Applicable] Cap Percentage:    [__]% Non-Cap
Percentage:    [__]% Hedge Period Start Date:    [____________] / [Not
Applicable] Hedge Period End Date:    [____________] / [Not Applicable]
Calculation Period Start Date:    [____________] Scheduled Termination Date:   
[____________] First Acceleration Date:    [____________]

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

 

A-1

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Prepayment Amount:    USD [_____________] Prepayment Date:   
[___________________] Ordinary Dividend Amount:    For any calendar quarter, USD
[__] per Share. Scheduled Ex-Dividend Dates:    [___________________]
Termination Price:    USD [_______________________] Initial Shares:   
[_________________] Shares; provided that if, in connection with the
Transaction, Dealer is unable to borrow or otherwise acquire a number of Shares
equal to the Initial Shares for delivery to Counterparty on the Initial Share
Delivery Date, the Initial Shares delivered on the Initial Share Delivery Date
shall be reduced to such number of Shares that Dealer is able to so borrow or
otherwise acquire, and thereafter Dealer shall continue to use commercially
reasonable efforts to borrow or otherwise acquire a number of Shares, at a stock
borrow cost no greater than the Initial Stock Loan Rate, equal to the shortfall
in the Initial Share Delivery and to deliver such additional Shares as soon as
reasonably practicable (it being understood, for the avoidance of doubt, that in
using such commercially reasonable efforts Dealer shall act in good faith and in
accordance with its then current policies, practices and procedures (including
without limitation any policies, practices or procedures relating to
counterparty risk, market risk, reputational risk, credit, documentation, legal,
regulatory capital, compliance and collateral), and shall not be required to
enter into any securities lending transaction or transact with any potential
securities lender if such transaction would not be in accordance with such
policies, practices and procedures). For the avoidance of doubt, the aggregate
of all shares delivered to Counterparty in respect of the Transaction pursuant
to this paragraph shall be the “number of Initial Shares” for purposes of
“Number of Shares to be Delivered” in the Master Confirmation. Initial Share
Delivery Date:    [_____________] Minimum Shares:   

[As set forth in the Trade Notification, to be a number of Shares equal to the
excess, if any, of:

 

(a) (i) the Prepayment Amount multiplied by the Cap Percentage divided by (ii)
the Cap Price, over

 

(b) the number of Initial Shares.] / [Not Applicable]

Additional Relevant Days:    The three Exchange Business Days immediately
following the Calculation Period.

3. [The parties agree and acknowledge, solely for purposes of the uncapped
Transaction evidenced by this Supplemental Confirmation, that any references in
the Master Confirmation to Hedge Period, Hedge Period Start Date, Hedge Period
Completion Date, Hedge Period End Date and Trade Notification shall be
disregarded.]

4. [Notwithstanding anything to the contrary in the Master Confirmation, the
representation and warranty of Counterparty in clause (i) of Section 4(b) shall
be given as of the date and time that Counterparty delivers to Dealer a
certificate in substantially the form of Exhibit A hereto and not as of the
Trade Date. The parties agree that in the event Counterparty does not deliver
such certificate to Dealer prior to close of business on [            ], the
Transaction shall terminate with no further payment or delivery due from either
party.]

 

A-2

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5. Counterparty represents and warrants to Dealer that neither it nor any
“affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has
made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under
the Exchange Act during either (i) the four full calendar weeks immediately
preceding the Trade Date or (ii) during the calendar week in which the Trade
Date occurs.

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

 

A-3

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Counterparty hereby agrees (a) to check this Supplemental 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 to which this
Supplemental Confirmation relates, by manually signing this Supplemental
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.

 

Yours sincerely,

 

J.P. MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch

By:      

Name:

Title:   

 

Agreed and Accepted By:

 

THE ADT CORPORATION

By:      

Name:

Title:   

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

 

B-1

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EXHIBIT A

[Form of Certificate]

[ADT Corporation Letterhead]

[Date]

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

 

Re: Accelerated Stock Repurchase (Variable Cap)

Ladies and Gentlemen:

In connection with the Transaction documented under the Master Confirmation and
Supplemental Confirmation, each dated as of [            ], each between J.P.
Morgan Securities LLC (“JPMS”), as agent for JPMorgan Chase Bank, National
Association, London Branch (“Dealer”), and The ADT Corporation (“Counterparty”),
as of the date hereof Counterparty represents to Dealer that it is not aware of
any material non-public information regarding Counterparty or the Shares.

Very truly yours,

 

THE ADT CORPORATION

By:

     

Name:

Title:  

 

B-1

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SCHEDULE B

TRADE NOTIFICATION

 

To:   

The ADT Corporation

1501 Yamato Road

Boca Raton, Florida, 33431

From:   

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

Subject:    Accelerated Stock Repurchase (Variable Cap) Date:    [Insert Date]

 

 

The purpose of this Trade Notification is to notify you of certain terms in the
Transaction entered into between J.P. Morgan Securities LLC (“JPMS”), as agent
for JPMorgan Chase Bank, National Association, London Branch (“Dealer”) and The
ADT Corporation (“Counterparty”) (together, the “Contracting Parties”) bearing
the trade reference number set forth above.

This Trade Notification supplements, forms part of, and is subject to the
Supplemental Confirmation dated as of [Insert Date of Supplemental Confirmation]
(the “Supplemental Confirmation”) between the Contracting Parties, as amended
and supplemented from time to time. The Supplemental Confirmation is subject to
the Master Confirmation dated as of November 19, 2013 (the “Master
Confirmation”) between the Contracting Parties, as amended and supplemented from
time to time.

 

Hedge Completion Date:    [            ] Hedge Period Reference Price:    USD
[            ] Minimum Shares:    [    ] / [zero] [Cap Price    USD
[            ]]

 

Yours sincerely,

 

J.P. MORGAN SECURITIES LLC, as agent for JPMorgan Chase Bank, National
Association, London Branch

By:      

Name:

Title:   

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

 

B-1

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ANNEX A

COUNTERPARTY SETTLEMENT PROVISIONS

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

 

        Settlement Currency:

USD

 

        Settlement Method Election:

Applicable; provided that (i) Section 7.1 of the Equity Definitions is hereby
amended by deleting the word “Physical” in the sixth line thereof and replacing
it with the words “Net Share” and (ii) the Electing Party may make a settlement
method election only if the Electing Party represents and warrants to Dealer in
writing on the date it notifies Dealer of its election that, as of such date,
the Electing Party is not aware of any material non-public information
concerning Counterparty or the Shares and is electing the settlement method in
good faith and not as part of a plan or scheme to evade compliance with the
federal securities laws.

 

        Electing Party:

Counterparty

 

        Settlement Method Election Date:

The earlier of (i) the Scheduled Termination Date and (ii) the second Exchange
Business Day immediately following the Accelerated Termination Date (in which
case the election under Section 7.1 of the Equity Definitions shall be made no
later than 10 minutes prior to the open of trading on the Exchange on such
second Exchange Business Day), as the case may be; provided that if a Friendly
Transaction Announcement occurs after the Settlement Date, the Settlement Method
Election Date for the Second Settlement shall be the date of the Friendly
Transaction Announcement.

 

        Default Settlement Method:

Cash Settlement

 

        Forward Cash Settlement Amount:

The Number of Shares to be Delivered multiplied by the Settlement Price;
provided that in the case of a Second Settlement occurring after an early
termination or cancellation of the relevant Transaction pursuant to Section 6 of
the Agreement or Article 12 of the Equity Definitions, the Forward Cash
Settlement Amount shall equal the lesser of (i) zero and (ii)(x) the Payment
Amount that would have been calculated for such early termination or
cancellation if the Friendly Transaction Announcement had occurred immediately
prior to such early termination or cancellation and the Calculation Agent had
made adjustments to the terms of the Transaction pursuant to Section 9(a)
herein, minus (y) the actual Payment Amount calculated for such early
termination or cancellation (in each case, with an amount that would have been
owed by Counterparty expressed as a negative number for purposes of this
calculation).

 

1

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        Settlement Price:

The average of the VWAP Prices (or, in the case of a Second Settlement, the
Relevant Prices) for the Exchange Business Days in the Settlement Valuation
Period, subject to Valuation Disruption as specified in the Master Confirmation
or, in the case of a Second Settlement, subject to Section 6.6(a) of the Equity
Definitions as if such dates were Valuation Dates.

 

        Settlement Valuation Period:

A number of Scheduled Trading Days selected by Dealer in its commercially
reasonable and good faith discretion, beginning on the Scheduled Trading Day
immediately following the earlier of (i) the Scheduled Termination Date or
(ii) the Exchange Business Day immediately following the Termination Date or, in
the case of a Second Settlement, the date of the Friendly Transaction
Announcement.

 

        Cash Settlement:

If Cash Settlement is applicable, then Buyer shall pay to Seller the absolute
value of the Forward Cash Settlement Amount on the Cash Settlement Payment Date.

 

        Cash Settlement Payment Date:

The date one Settlement Cycle following the last day of the Settlement Valuation
Period.

 

        Net Share Settlement Procedures:

If Net Share Settlement is applicable, Net Share Settlement shall be made in
accordance with paragraphs 2 through 7 below.

2. Net Share Settlement shall be made by delivery on the Cash Settlement Payment
Date of a number of Shares satisfying the conditions set forth in paragraph 3
below (the “Registered Settlement Shares”), or a number of Shares not satisfying
such conditions (the “Unregistered Settlement Shares”), in either case with a
value equal to the absolute value of the Forward Cash Settlement Amount, with
such Shares’ value based on the value thereof to Dealer (which value shall, in
the case of Unregistered Settlement Shares, take into account a commercially
reasonable illiquidity discount), in each case as determined by the Calculation
Agent. For the avoidance of doubt, if delivery of any shares would not satisfy
the conditions listed in paragraph 3 below, the provisions of paragraph 4 below
shall apply to such delivery.

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

(a) a registration statement covering public resale of the Registered Settlement
Shares by Dealer (the “Registration Statement”) shall have been filed with the
Securities and Exchange Commission under the Securities Act and been declared or
otherwise become effective on or prior to the date of delivery, and no stop
order shall be in effect with respect to the Registration Statement; a printed
prospectus relating to the Registered Settlement Shares (including any
prospectus supplement thereto, the “Prospectus”) shall have been delivered to
Dealer, in such quantities as Dealer shall reasonably have requested, on or
prior to the date of delivery;

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

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

 

2

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

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

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

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

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

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

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

 

3

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

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

A – B

 

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

“Reserved Shares” means initially, 18,687,223 Shares. The Reserved Shares may be
increased or decreased in a Supplemental Confirmation.

 

4