exv4w6




Exhibit
4.6








Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

New York, NY 10036

Attn: John Servidio

Telephone: 646-855-8900

Facsimile: 704-208-2869




September 14, 2010





	To:  	 	Tower Group, Inc.

120 Broadway, 31st Floor

New York, NY 10271

Attention: Treasurer

Telephone No.:  (212) 655-2000

Facsimile No.:    (212) 655-2199






	Re:  	 	Base Warrants

(Transaction Reference Number: NY-108281861)





     The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the Warrants issued by Tower Group, Inc. (“Company”) to Bank of America, N.A.
(“Dealer”) as of the Trade Date specified below (the “Transaction”). This letter agreement
constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous agreements and serve as the final documentation for the
Transaction.



     The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation shall govern. The Transaction shall be
deemed to be a Share Option Transaction within the meaning set forth in the Equity Definitions.



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


1. This Confirmation evidences a complete and binding agreement between Dealer and Company as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Dealer and Company had executed an agreement in such form (but
without any Schedule except for the election of the laws of the State of New York as the governing
law (without reference to choice of law doctrine)) on the Trade Date. In the event of any
inconsistency between provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby
agree that no Transaction other than the Transaction to which this Confirmation relates shall be
governed by the Agreement.


2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction
for purposes of the Equity Definitions. The terms of the particular Transaction to which this
Confirmation relates are as follows:




 









 












	 	 	 

	General Terms.
	 	 
	 
	 	 
	Trade Date:


	 	September 14, 2010








	 	 	 

	Effective Date:


	 	The third Exchange
Business Day
immediately prior
to the Premium
Payment Date
	 
	 	 
	Warrants:


	 	Equity call
warrants, each
giving the holder
the right to
purchase a number
of Shares equal to
the Warrant
Entitlement at a
price per Share
equal to the Strike
Price, subject to
the terms set forth
under the caption
“Settlement Terms”
below. For the
purposes of the
Equity Definitions,
each reference to a
Warrant herein
shall be deemed to
be a reference to a
Call Option.
	 
	 	 
	Warrant Style:


	 	European
	 
	 	 
	Seller:


	 	Company
	 
	 	 
	Buyer:


	 	Dealer
	 
	 	 
	Shares:


	 	The common stock of
Company, par value
USD 0.01 per share
(Exchange symbol
“TWGP”)
	 
	 	 
	Number of Warrants:


	 	2,455,529. For the
avoidance of doubt,
the Number of
Warrants shall be
reduced by any
Warrants exercised
or deemed exercised
hereunder. In no
event will the
Number of Warrants
be less than zero.
	 
	 	 
	Warrant Entitlement:


	 	One Share per Warrant
	 
	 	 
	Strike Price:


	 	USD 33.4180
	 
	 	 
	 

	 	Notwithstanding
anything to the
contrary in the
Agreement, this
Confirmation or the
Equity Definitions
(but without
limiting Dealer’s
right to adjust any
variable relevant
to the exercise,
settlement, payment
or other terms of
the Transaction,
other than the
Strike Price), in
no event shall the
Strike Price be
subject to
adjustment to the
extent that, after
giving effect to
such adjustment,
the Strike Price
would be less than
USD 24.81, except
for any adjustment
pursuant to the
terms of this
Confirmation and
the Equity
Definitions in
connection with
stock splits or
similar changes to
Company’s
capitalization.
	 
	 	 
	Premium:


	 	USD 1,710,000.00
	 
	 	 
	Premium Payment Date:


	 	September 20, 2010
	 
	 	 
	Exchange:


	 	The NASDAQ Global Select Market
	 
	 	 
	Related Exchange(s):


	 	All Exchanges
	 
	 	 
	Procedures for Exercise.
	 	 
	 
	 	 
	Expiration Time:


	 	The Valuation Time
	 
	 	 
	Expiration Dates:


	 	Each Scheduled
Trading Day during
the period from,
and including, the
First Expiration
Date to, but
excluding, the
120th
Scheduled Trading
Day following the
First






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	 	Expiration Date shall be an
“Expiration Date” for a number of
Warrants equal to the Daily Number
of Warrants on such date; provided
that, notwithstanding anything to
the contrary in the Equity
Definitions, if any such date is a
Disrupted Day, the Calculation
Agent shall make adjustments, if
applicable, to the Daily Number of
Warrants or shall reduce such Daily
Number of Warrants to zero for
which such day shall be an
Expiration Date and shall designate
a Scheduled Trading Day or a number
of Scheduled Trading Days as the
Expiration Date(s) for the
remaining Daily Number of Warrants
or a portion thereof for the
originally scheduled Expiration
Date; and provided further that if
such Expiration Date has not
occurred pursuant to this clause as
of the eighth Scheduled Trading Day
following the last scheduled
Expiration Date under the
Transaction, the Calculation Agent
shall have the right to declare
such Scheduled Trading Day to be
the final Expiration Date and the
Calculation Agent shall determine
its good faith estimate of the fair
market value for the Shares as of
the Valuation Time on that eighth
Scheduled Trading Day or on any
subsequent Scheduled Trading Day,
as the Calculation Agent shall
determine using commercially
reasonable means.
	 
	 	 
	First Expiration Date:


	 	December 14, 2014 (or if such day
is not a Scheduled Trading Day, the
next following Scheduled Trading
Day), subject to Market Disruption
Event below.
	 
	 	 
	Daily Number of Warrants:

	 	For any Expiration Date, the Number
of Warrants that have not expired
or been exercised as of such day,
divided by the remaining number of
Expiration Dates (including such
day), rounded down to the nearest
whole number, subject to adjustment
pursuant to the provisos to
“Expiration Dates”.
	 
	 	 
	Automatic Exercise:


	 	Applicable; and means that for each
Expiration Date, a number of
Warrants equal to the Daily Number
of Warrants (as adjusted pursuant
to the terms hereof) for such
Expiration Date will be deemed to
be automatically exercised. For
the avoidance of doubt, Warrants
are not exercisable, and shall not
be exercised or deemed exercised,
other than in accordance with the
preceding sentence.
	 
	 	 
	Market Disruption Event:


	 	Section 6.3(a)(ii) of the Equity
Definitions is hereby amended by
replacing clause (ii) in its
entirety with “(ii) an Exchange
Disruption, or” and inserting
immediately following clause (iii)
the phrase “; in each case that the
Calculation Agent determines is
material.”
	 
	 	 






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	Valuation Terms.
	 	 
	 
	 	 
	Valuation Time:


	 	Scheduled Closing Time; provided that if the principal trading
session is extended, the Calculation Agent shall determine the
Valuation Time in its reasonable discretion.
	 
	 	 
	Valuation Date:


	 	Each Exercise Date.
	 
	 	 
	Settlement Terms.
	 	 
	 
	 	 
	Settlement Method:


	 	Net Share Settlement.
	 
	 	 
	Net Share Settlement:


	 	On the relevant Settlement Date, Company shall deliver to Dealer
a number of Shares equal to the Share Delivery Quantity for such
Settlement Date to the account specified hereto free of payment
through the Clearance System.
	 
	 	 
	Share Delivery Quantity:


	 	For any Settlement Date, a number of Shares, as calculated by
the Calculation Agent, equal to the Net Share Settlement Amount
for such Settlement Date divided by the Settlement Price on the
Valuation Date in respect of such Settlement Date, rounded down
to the nearest whole number plus any Fractional Share Amount.
	 
	 	 
	Net Share Settlement Amount:


	 	For any Settlement Date, an amount equal to the product of (i)
the Number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Strike Price Differential in
respect of the relevant Valuation Date and (iii) the Warrant
Entitlement.
	 
	 	 
	Settlement Price:


	 	For any Valuation Date, the per Share volume-weighted average
price as displayed under the heading “Bloomberg VWAP” on
Bloomberg page TWGP.UQ <equity> AQR (or any successor
thereto) in respect of the period from the scheduled opening
time of the Exchange to the Scheduled Closing Time on such
Valuation Date (or if such volume-weighted average price is
unavailable, the market value of one Share on such Valuation
Date, as determined by the Calculation Agent). Notwithstanding
the foregoing, if (i) any Expiration Date is a Disrupted Day and
(ii) the Calculation Agent determines that such Expiration Date
shall be an Expiration Date for fewer than the Daily Number of
Warrants, as described above, then the Settlement Price for the
relevant Valuation Date shall be the volume-weighted average
price per Share on such Valuation Date on the Exchange, as
determined by the Calculation Agent based on such sources as it
deems appropriate using a volume-weighted methodology, for the
portion of such Valuation Date for which the Calculation Agent
determines there is no Market Disruption Event.
	 
	 	 
	Settlement Dates:


	 	As determined pursuant to Section 9.4 of the Equity Definitions,
subject to Section 9(k)(i) hereof.
	 
	 	 
	Other Applicable Provisions:


	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5
of the Equity Definitions will be applicable, except 






4









 










	 	 	 

	 


	 	that all
references in such provisions to “Physically-settled” shall be
read as references to “Net Share Settled.” “Net Share Settled”
in relation to any Warrant means that Net Share Settlement is
applicable to that Warrant.

	 
	 	 
	Representation and Agreement:


	 	Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to Dealer may be,
upon delivery, subject to restrictions and limitations arising
from Company’s status as issuer of the Shares under applicable
securities laws.





3. Additional Terms applicable to the Transaction.



	 	 	 

	Adjustments applicable to the Transaction:
	 	 
	 
	 	 
	Method of Adjustment:


	 	Calculation Agent Adjustment. For the avoidance of doubt, in making any adjustments
under the Equity Definitions, the Calculation Agent may make adjustments, if any, to any
one or more of the Strike Price, the Number of Warrants, the Daily Number of Warrants and
the Warrant Entitlement. Notwithstanding the foregoing, any cash dividends or
distributions on the Shares, whether or not extraordinary, shall be governed by Section
9(f) of this Confirmation in lieu of Article 10 or Section 11.2(c) of the Equity
Definitions.
	 
	 	 
	Extraordinary Events applicable to the
Transaction:
	 	 
	 
	 	 
	New Shares:


	 	Section 12.1(i) of the Equity Definitions is hereby amended (a) by deleting the text in
clause (i) thereof in its entirety (including the word “and” following clause (i)) and
replacing it with the phrase “publicly quoted, traded or listed (or whose related
depositary receipts are publicly quoted, traded or listed) on any of the New York Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their
respective successors)” and (b) by inserting immediately prior to the period the phrase
“and (iii) of an entity or person organized under the laws of the United States, any
State thereof or the District of Columbia that also becomes Company under the Transaction
following such Merger Event or Tender Offer”.
	 
	 	 
	Consequence of Merger Events:
	 	 
	 
	 	 
	Merger Event:


	 	Applicable; provided that if an event occurs that constitutes both a Merger Event under
Section 12.1(b) of the Equity Definitions and an Additional Termination Event under
Section 9(h)(ii)(B) of this Confirmation, then (i) if such event does not result in
Cancellation and Payment under Section 12.2 of the Equity Definitions, Dealer may elect,
in its commercially reasonable judgment, whether the provisions of Section 12.1(b) of the
Equity Definitions or Section 9(h)(ii)(B) will apply, and (ii) otherwise, the provisions
of Section 9(h)(ii)(B) will apply.






5









 











	 	 	 

	Share-for-Share:


	 	Modified Calculation Agent Adjustment
	 
	 	 
	Share-for-Other:


	 	Cancellation and Payment (Calculation Agent Determination)
	 
	 	 
	Share-for-Combined:


	 	Cancellation and Payment (Calculation Agent Determination); provided that Dealer may elect, in its
commercially reasonable judgment, Component Adjustment (Calculation Agent Determination).
	 
	 	 
	Consequence of Tender Offers:
	 	 
	 
	 	 
	Tender Offer:


	 	Applicable; provided that if an event occurs that constitutes both a Tender Offer under Section
12.1(d) of the Equity Definitions and Additional Termination Event under Section 9(h)(ii)(A) of this
Confirmation, then (i) if such event does not result in Cancellation and Payment under Section 12.3
of the Equity Definitions, Dealer may elect, in its commercially reasonable judgment, whether the
provisions of Section 12.3 of the Equity Definitions or Section 9(h)(ii)(A) will apply, and (ii)
otherwise, the provisions of Section 9(h)(ii)(A) will apply.
	 
	 	 
	Share-for-Share:


	 	Modified Calculation Agent Adjustment
	 
	 	 
	Share-for-Other:


	 	Modified Calculation Agent Adjustment
	 
	 	 
	Share-for-Combined:


	 	Modified Calculation Agent Adjustment
	 
	 	 
	Nationalization, Insolvency or Delisting:

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


	 	Applicable; provided that Section 12.9(a)(ii)(X) of the Equity Definitions is hereby amended by
replacing the word “Shares” with the phrase “Hedge Positions.”
	 
	 	 
	Failure to Deliver:


	 	Not Applicable
	 
	 	 
	Insolvency Filing:


	 	Applicable






6









 











	 	 	 

	Hedging Disruption:


	 	Applicable; provided that:
	 
	 	 
	 

	 	(i)    Section 12.9(a)(v) of the Equity Definitions is hereby amended by inserting the following two phrases at the end of such
Section:

	 
	 	 
	 

	 	“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock
price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases
(A) or (B) above must be available on commercially reasonable pricing terms.”; and

	 
	 	 
	 

	 	(ii)   Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to
terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.

	 
	 	 
	Increased Cost of Hedging:


	 	Not Applicable
	 
	 	 
	Loss of Stock Borrow:


	 	Applicable
	 
	 	 
	Maximum Stock Loan Rate:


	 	200 basis points
	 
	 	 
	Increased Cost of Stock Borrow:

	 	Applicable
	 
	 	 
	Initial Stock Loan Rate:


	 	25 basis points
	 
	 	 
	Hedging Party:


	 	For all applicable Additional Disruption Events, Dealer.
	 
	 	 
	Determining Party:

	 	For all applicable Extraordinary Events, Dealer.
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
	 	 
	Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable
	 
	 	 
	4. Calculation Agent.

	 	Dealer
	 
	 	 
	5. Account Details.
	 	 







	 	(a)	 	Account for payments to Company:
	 
	 	 	 	Bank: State Street Trust Bank

ABA#: 011000028

Acct No.: 00153577

Beneficiary: Tower Group Inc./4RAX

Ref: Tower Group Inc./4RAX


Account for delivery of Shares from Company:


To be provided by Company.




7









 

















	 	(b)	 	Account for payments to Dealer:
	 
	 	 	 	Bank of America, N.A.

New York, NY

SWIFT: BOFAUS3N

Bank Routing: 026-009-593

Account Name: Bank of America

Account No. : 0012334-61892


Account for delivery of Shares to Dealer:


DTC 0773

Acct Name: Bank of America NA

Acct #: 116-00777






	6.	 	Offices.






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






	 	(b)	 	The Office of Dealer for the Transaction is: New York
	 
	 	 	 	Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036






	7.	 	Notices.






	 	(a)	 	Address for notices or communications to Company:
	 
	 	 	 	Tower Group, Inc.

120 Broadway, 31st Floor

New York, NY 10271

Attention: Treasurer

Telephone No.: (212) 655-2000

Facsimile No.: (212) 655-2199






	 	(b)	 	Address for notices or communications to Dealer:
	 
	 	 	 	Bank of America, N.A.

c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated

Bank of America Tower at One Bryant Park

New York, NY 10036

Attn: John Servidio

Telephone: 646-855-7127

Facsimile: 704-208-2869






	8.	 	Representations and Warranties of Company.
	 
	 	 	Each of the representations and warranties of Company set forth in Section 3 of the Purchase
Agreement (the “Purchase Agreement”), dated as of September 14, 2010, between Company and
J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the Initial
Purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby
deemed to be




8









 

















	 	repeated to Dealer as if set forth herein. Company hereby further represents
and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the
case of the representations in Section 8(f), at all times until termination of the
Transaction, that:






	 	(a)	 	Company is duly organized and validly existing and in good standing under the
laws of its jurisdiction of incorporation.






	 	(b)	 	Company has the corporate power and authority to execute and deliver this
Confirmation and to perform its obligations hereunder; and all action required to be
taken for the due and proper authorization, execution and delivery by it of this
Confirmation and the consummation by it of the transactions contemplated hereby has
been duly and validly taken.






	 	(c)	 	This Confirmation has been duly authorized by Company and, when duly executed
and delivered in accordance with its terms by each of the parties hereto, will
constitute a valid and legally binding agreement of Company enforceable against Company
in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally or by
equitable principles relating to enforceability.






	 	(d)	 	The execution, delivery and performance by Company of this Confirmation and the
consummation of the transactions contemplated hereby will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of Company or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which Company or any of its subsidiaries is a party or by which Company
or any of its subsidiaries is bound or to which any of the property or assets of
Company or any of its subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws or similar organizational documents of Company or
any of its subsidiaries or (iii) result in the violation of any law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental or
regulatory authority applicable to Company or any of its subsidiaries; except, in the
case of clauses (i) and (iii) above, for any such conflict, breach, default or
violation that would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business, properties, management, financial
position, stockholders’ equity, results of operations or prospects of Company and its
subsidiaries taken as a whole or on the performance by Company of its obligations under
this Confirmation (“Material Adverse Effect”); provided that, in the case of clause (i)
above, such representation and warranty is based on the assumption that any cash
payment made by Company upon any termination, cancellation or early unwind of the
Transaction shall, at the time such cash payment is made, be made in compliance with
the terms and conditions of the Credit Agreement, dated as of May 14, 2010, among
Company, each lender from time to time party thereto and Bank of America, N.A., as
Administrative Agent, Fronting Bank and L/C Administrator, as amended by the First
Amendment to Credit Agreement, dated as of September 10, 2010, among Company, each
lender from time to time party thereto and Bank of America, N.A., as Administrative
Agent, Fronting Bank and L/C Administrator.






	 	(e)	 	No consent, approval, authorization, order, registration or qualification of or
with any court or arbitrator or governmental or regulatory authority is required for
the execution, delivery and performance by Company of this Confirmation and the
consummation of the transactions contemplated hereby, except for (i) such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required under applicable state securities laws, (ii) as may be required and have been
or will be obtained under the rules of The NASDAQ Stock Market in connection with the
issuance of the Warrant Shares (as defined below) by Company or (iii) where the failure
to obtain or make any such consents, approvals, authorizations, orders and
registrations or qualifications would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; provided that such failure to obtain or
make any such consents,
approvals, authorizations, orders and registrations or qualifications does not
prevent Company from performing its obligations under this Confirmation.




9









 

















	 	(f)	 	A number of Shares equal to the Maximum Number of Shares (as defined below)
(the “Warrant Shares”) have been reserved for issuance by all required corporate action
of Company. The Warrant Shares reserved for issuance upon exercise of the Warrants
have been duly authorized and reserved and, when issued upon exercise of the Warrants
in accordance with the terms of the Warrants, will be validly issued, fully paid and
non-assessable, and the issuance of the Warrant Shares will not be subject to any
preemptive or similar rights.






	 	(g)	 	Company is not and, after giving effect to the transactions contemplated
hereby, will not be required to register as an “investment company” or an entity
“controlled” by an “investment company” within the meaning of the Investment Company
Act of 1940, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder.






	 	(h)	 	Company is an “eligible contract participant” (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended, other than a person that is
an eligible contract participant under Section 1a(12)(C) of the Commodity Exchange
Act).






	 	(i)	 	Company and each of its affiliates is not, on the date hereof, in possession of
any material non-public information with respect to Company or the Shares.






	9.	 	Other Provisions.






	 	(a)	 	Opinions. Company shall deliver to Dealer an opinion of counsel, dated
as of the Trade Date, with respect to the matters set forth in Sections 8(a) through
(f) of this Confirmation. Delivery of such opinion to Dealer shall be a condition
precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each
obligation of Dealer under Section 2(a)(i) of the Agreement.
	 
	 	(b)	 	Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a
“Repurchase Notice”) on such day if following such repurchase, the number of
outstanding Shares on such day, subject to any adjustments provided herein, is (i) less
than 40.1 million (in the case of the first such notice) or (ii) thereafter more than
2.7 million less than the number of Shares included in the immediately preceding
Repurchase Notice. Company agrees to indemnify and hold harmless Dealer and its
affiliates and their respective officers, directors, employees, affiliates, advisors,
agents and controlling persons (each, an “Indemnified Person”) from and against any and
all losses (including losses relating to Dealer’s hedging activities as a consequence
of becoming, or of the risk of becoming, a Section 16 “insider”, including without
limitation, any forbearance from hedging activities or cessation of hedging activities
and any losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s fees),
joint or several, which an Indemnified Person actually may become subject to, as a
result of Company’s failure to provide Dealer with a Repurchase Notice on the day and
in the manner specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable legal or other
expenses incurred in connection with investigating, preparing for, providing testimony
or other evidence in connection with or defending any of the foregoing. If any suit,
action, proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against the Indemnified Person, such Indemnified
Person shall promptly notify Company in writing, and Company, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others Company may designate in such
proceeding and shall pay the reasonable out-of-pocket fees and expenses of such counsel
related to such proceeding. Company shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, Company agrees to indemnify any
Indemnified Person from and
against any loss or liability by reason of such settlement or judgment. Company
shall not, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is a party and indemnity has





10









 











	 	 	 	been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of such
proceeding on terms reasonably satisfactory to such Indemnified Person. If the
indemnification provided for in this paragraph is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Company under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities.
The remedies provided for in this paragraph are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any Indemnified Person at
law or in equity. The indemnity and contribution agreements contained in this
paragraph shall remain operative and in full force and effect regardless of the
termination of the Transaction.






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






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






	 	(e)	 	Transfer or Assignment. Company may not transfer any of its rights or
obligations under the Transaction without the prior written consent of Dealer. Dealer
may, without Company’s consent, transfer or assign all or any part of its rights or
obligations under the Transaction at any time to any affiliate of Dealer (A) that has a
rating for its long term, unsecured and unsubordinated indebtedness that is equal to or
better than the best of Dealer’s credit rating and the credit rating of any guarantor
of Dealer’s obligations hereunder, in each case, at the time of the transfer or
assignment, or (B) whose obligations hereunder will be guaranteed, pursuant to the
terms of a customary guarantee in a form used by Dealer generally for similar
transactions, by Dealer or any parent of Dealer that has a credit rating that is equal
to or better than the best of Dealer’s credit rating and the credit rating of any
guarantor of Dealer’s obligations hereunder, in each case, at the time of the transfer
or assignment; provided that any such transfer or assignment shall be subject to the
conditions that (I) following such transfer or assignment, the terms and conditions of
the Agreement as so transferred or assigned (the “Transferred Agreement”) shall be
substantially the same as the terms and conditions of the Agreement immediately prior
to such transfer or assignment, (II) Company will not be required to pay to the
transferee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the
Transferred Agreement greater than the amount in respect of which Company would have
been required to pay to Dealer under Section 2(d)(i)(4) in the absence of the transfer,
(III) Company will not receive any payment under the Transferred Agreement from which
an amount is required to be withheld or deducted for or on account of a Tax with
respect to which no additional amount is required to be paid by the transferee under
Section 2(d)(i)(4) of the Transferred Agreement (other than by reason of Section
2(d)(i)(4)(A) or (B) thereof), (IV) neither an Event of Default with respect to which
Dealer is the Defaulting Party nor a Termination Event with respect to which Dealer is
the sole Affected Party has occurred and is continuing at the time of the transfer, and
neither an Event of Default nor a Termination Event shall occur as a result of the
transfer, (V) each of Dealer and the transferee is a dealer in “notional principal
contracts” within the meaning of Section 1.446-3(c)(4)(iii) of the U.S. Treasury
Regulations and in other derivatives, and (VI) Dealer has used its good faith efforts
to provide
prior notice to Company of such transfer and the proposed date of such transfer, and
shall provide written notice to Company reasonably promptly following such transfer.
In addition, if at any time (A) the Section 16 Percentage exceeds 7.5%, (B) the
Warrant Equity Percentage exceeds




11









 

















	 	 	 	14.5%, or (C) the Share Amount exceeds the
Applicable Share Limit (if any applies) (any such condition described in clauses
(A), (B) or (C), an “Excess Ownership Position”), Dealer may, without Company’s
consent, transfer or assign all or any part of its rights or obligations under the
Transaction to any third party who is a dealer in “notional principal contracts”
within the meaning of Section 1.446-3(c)(4)(iii) of the U.S. Treasury Regulations
and in other derivatives. If at any time an Excess Ownership Positions exists,
Dealer may designate any Exchange Business Day as an Early Termination Date with
respect to all or a portion of the Transaction (the “Terminated Portion”) such that
following such termination no Excess Ownership Position exists; provided that Dealer
may only designate an Early Termination Date pursuant to this Section 9(e) if Dealer
has used its good faith efforts to notify Counterparty of the existence of such
Excess Ownership Position, and Dealer is unable, acting in good faith and after
using its commercially reasonable efforts, to effect a transfer or assignment of
Warrants to a third party in accordance with this Section 9(e) on pricing terms
reasonably acceptable to Dealer and within a time period reasonably acceptable to
Dealer such that no Excess Ownership Position exists. In the event that Dealer so
designates an Early Termination Date with respect to a Terminated Portion, a payment
shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination
Date had been designated in respect of a Transaction having terms identical to the
Transaction and a Number of Warrants equal to the number of Warrants underlying the
Terminated Portion, (2) Company were the sole Affected Party with respect to such
partial termination and (3) the Terminated Portion were the sole Affected
Transaction (and, for the avoidance of doubt, the provisions of Section 9(j) shall
apply to any amount that is payable by Company to Dealer pursuant to this sentence
as if Company was not the Affected Party). The “Section 16 Percentage” as of any
day is the fraction, expressed as a percentage, (A) the numerator of which is the
number of Shares that Dealer and each person subject to aggregation of Shares with
Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated
thereunder directly or indirectly beneficially own (as defined under Section 13 or
Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the
denominator of which is the number of Shares outstanding. The “Warrant Equity
Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the sum of (1) the product of the Number of Warrants and the
Warrant Entitlement and (2) the aggregate number of Shares underlying any other
warrants purchased by Dealer from Company, and (B) the denominator of which is the
number of Shares outstanding. The “Share Amount” as of any day is the number of
Shares that Dealer and any person whose ownership position would be aggregated with
that of Dealer (Dealer or any such person, a “Dealer Person”) under any insurance or
other law, rule, regulation, regulatory order or organizational documents or
contracts of Company that are, in each case, applicable to ownership of Shares
(“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls,
holds the power to vote or otherwise meets a relevant definition of ownership under
any Applicable Restriction, as determined by Dealer in its reasonable discretion.
The “Applicable Share Limit” means a number of Shares equal to (A) the minimum
number of Shares that could give rise to reporting or registration obligations or
other requirements (including obtaining prior approval from any person or entity) of
a Dealer Person, or could result in an adverse effect on a Dealer Person, under any
Applicable Restriction, as determined by Dealer in its reasonable discretion, minus
(B) 1% of the number of Shares outstanding. Notwithstanding any other provision in
this Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities, or make or receive any payment in
cash, to or from Company, Dealer may designate any of its affiliates to purchase,
sell, receive or deliver such Shares or other securities, or make or receive such
payment in cash, and otherwise to perform Dealer’s obligations in respect of the
Transaction and any such designee may assume such obligations. Dealer shall be
discharged of its obligations to Company only to the extent of any such performance.






	 	(f)	 	Dividends. If at any time during the period from and including the
Effective Date, to and including the last Expiration Date, (i) an ex-dividend date for
a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that
dividend differs from the Regular Dividend on a per Share basis or (ii) if no
Ex-Dividend Date for a cash dividend occurs with respect to the Shares




12









 

















	 	 	 	in any quarterly
dividend period of Company, then the Calculation Agent will adjust any of the Strike
Price, Number of Warrants and/or Daily Number of Warrants to preserve the fair value of
the Warrants to Dealer after taking into account such dividend or lack thereof.
“Regular Dividend” shall mean for any calendar quarter, USD 0.125 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date falls within such
calendar quarter, and zero for any subsequent dividend or distribution on the Shares
for which the Ex-Dividend Date falls within the same calendar quarter.






	 	(g)	 	[Reserved.]






	 	(h)	 	Additional Provisions.






	 	(i)	 	Amendments to the Equity Definitions:






	 	(A)	 	Section 11.2(a) of the Equity Definitions is
hereby amended by deleting the words “a diluting or concentrative” and
replacing them with the words “a material”; and adding the phrase “or
Warrants” at the end of the sentence.
	 
	 	(B)	 	Section 11.2(c) of the Equity Definitions is
hereby amended by (x) replacing the words “a diluting or concentrative”
with “a material”, (y) adding the phrase “or Warrants” after the words
“the relevant Shares” in the same sentence and (z) deleting the phrase
“(provided that no adjustments will be made to account solely for
changes in volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)” and replacing it with the phrase
“(and, for the avoidance of doubt, adjustments may be made to account
solely for changes in volatility, expected dividends, stock loan rate
or liquidity relative to the relevant Shares).”
	 
	 	(C)	 	Section 11.2(e)(vii) of the Equity Definitions
is hereby amended by deleting the words “a diluting or concentrative”
and replacing them with the words “a material”; and adding the phrase
“or Warrants” at the end of the sentence.
	 
	 	(D)	 	Section 12.6(a)(ii) of the Equity Definitions
is hereby amended by (1) deleting from the fourth line thereof the word
“or” after the word “official” and inserting a comma therefor, and (2)
deleting the semi-colon at the end of subsection (B) thereof and
inserting the following words therefor “or (C) at Dealer’s option, the
occurrence of any of the events specified in Section 5(a)(vii) (1)
through (9) of the ISDA Master Agreement with respect to that Issuer.”
	 
	 	(E)	 	Section 12.9(b)(iv) of the Equity Definitions
is hereby amended by:






	 	(x)	 	deleting (1) subsection (A) in
its entirety, (2) the phrase “or (B)” following subsection (A)
and (3) the phrase “in each case” in subsection (B); and
	 
	 	(y)	 	deleting the phrase “neither the
Non-Hedging Party nor the Lending Party lends Shares in the
amount of the Hedging Shares or” in the penultimate sentence.






	 	(F)	 	Section 12.9(b)(v) of the Equity Definitions is
hereby amended by:






	 	(x)	 	adding the word “or” immediately
before subsection “(B)” and deleting the comma at the end of
subsection (A); and






	 	(y)	 	(1) deleting subsection (C) in
its entirety, (2) deleting the word “or” immediately preceding
subsection (C) and (3) deleting the penultimate





13









 
















	 	 	 	sentence in its
entirety and replacing it with the sentence “The Hedging Party
will determine the Cancellation Amount payable by one party to
the other.”









	 	(ii)	 	Notwithstanding anything to the contrary in this Confirmation,
upon the occurrence of one of the following events, with respect to the
Transaction, (1) Dealer shall have the right to designate such event an
Additional Termination Event and designate an Early Termination Date pursuant
to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected
Party with respect to such Additional Termination Event and (3) the
Transaction shall be deemed the sole Affected Transaction:






	 	(A)	 	A “person” or “group” within the meaning of
Section 13(d) of the Exchange Act, other than Company, its subsidiaries
and its and their employee benefit plans, has become the “beneficial
owner,” as defined in Rule 13d-3 under the Exchange Act, of the common
equity of Company representing more than 50% of the voting power of
such common equity.
	 
	 	(B)	 	Consummation of (I) any recapitalization,
reclassification or change of the Shares (other than changes resulting
from a subdivision or combination or changes solely in par value) as a
result of which the Shares would be converted into, or exchanged for,
stock, other securities, other property or assets or (II) any share
exchange, consolidation or merger involving Company pursuant to which
the Shares will be converted into cash, securities or other property or
any sale, lease or other transfer in one transaction or a series of
transactions of all or substantially all of the consolidated assets of
Company and its subsidiaries, taken as a whole, to any person other
than one of Company’s subsidiaries; provided, however, that a
transaction where the holders of all classes of Company’s common equity
immediately prior to such transaction that is a share exchange,
consolidation or merger (each such holder, a “Pre-transaction Holder”)
own, directly or indirectly, more than 50% of all classes of common
equity of the continuing or surviving corporation or transferee or the
parent thereof immediately after such event shall not constitute an
Additional Termination Event, so long as the proportion of the
respective ownership of each Pre-transaction Holder does not
substantially change solely pursuant to the terms of such transaction.
Notwithstanding the foregoing, a transaction or transactions described
in this clause (B) shall not constitute an Additional Termination Event
if at least 90% of the consideration received or to be received by
holders of the Shares, excluding cash payments for fractional Shares in
connection with such transaction or transactions consists of shares of
common stock that are listed or quoted on any of The New York Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market
(or any of their respective successors) or will be so listed or quoted
when issued or exchanged in connection with such transaction or
transactions.
	 
	 	(C)	 	Default by Company or any of its subsidiaries
with respect to any mortgage, agreement or other instrument under which
there may be outstanding, or by which there may be secured or
evidenced, any indebtedness for money borrowed in excess of $20 million
in the aggregate of Company and/or of any such subsidiary, whether such
indebtedness now exists or shall hereafter be created (I) resulting in
such indebtedness becoming or being declared due and payable
(unless such declaration has been rescinded) or (II) constituting a
failure to pay the principal of or interest on any such indebtedness
when due and payable at its stated maturity, upon required
repurchase, upon declaration of acceleration or otherwise.




14









 

















	 	(D)	 	A final judgment for the payment of $20 million
or more (excluding any amounts covered by insurance) rendered against
Company or any of its “significant subsidiaries” (as defined in Article
1, Rule 1-02 of Regulation S-X), which judgment is not discharged or
stayed within 60 days after (I) the date on which the right to appeal
thereof has expired if no such appeal has commenced, or (II) the date
on which all rights to appeal have been extinguished.
	 
	 	(E)	 	Dealer, despite using commercially reasonable
efforts, is unable or reasonably determines that it is impractical or
illegal, to hedge its exposure with respect to the Transaction in the
public market without registration under the Securities Act of 1933, as
amended (the “Securities Act”) or as a result of any legal, regulatory
or self-regulatory requirements or related policies and procedures
(whether or not such requirements, policies or procedures are imposed
by law or have been voluntarily adopted by Dealer).






	(i)	 	No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary, the obligations
of Company hereunder are not secured by any collateral. Neither party shall have the
right to set off any obligation that it may have to the other party under the
Transaction against any obligation such other party may have to it, whether arising
under the Agreement, this Confirmation or any other agreement between the parties
hereto, by operation of law or otherwise.






	(j)	 	Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events.
	 
	 	 	If, in respect of the Transaction, an amount is payable by Company to Dealer, (A)
pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant
to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Obligation”),
Company shall have the right, in its sole discretion, to satisfy the Payment
Obligation by the Share Termination Alternative (as defined below) (except that
Company shall not have the right to make such an election in the event of (I) a
Nationalization, Insolvency, Merger Event or Tender Offer in which the consideration
to be paid to holders of Shares consists solely of cash, (II) a Merger Event or
Tender Offer that is within Company’s control, or (III) an Event of Default in which
Company is the Defaulting Party or a Termination Event in which Company is the
Affected Party, other than an Event of Default of the type described in Section
5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the
type described in Section 5(b) of the Agreement, in each case that resulted from an
event or events outside Company’s control) and shall give irrevocable telephonic
notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later
than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date,
Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early
Termination Date or date of cancellation, as applicable; provided that if Company
does not validly elect to satisfy the Payment Obligation by the Share Termination
Alternative, Dealer shall have the right to require Company to satisfy its Payment
Obligation by the Share Termination Alternative.





	 	 	 

	Share Termination
Alternative:

	 	If the Share Termination
Alternative is applicable
in respect of any Payment
Obligation, Company shall
deliver to Dealer the Share
Termination Delivery
Property on the date (the
“Share Termination Payment
Date”) on which the Payment
Obligation would otherwise
be due pursuant to Section
12.7 or Section 12.9 of the
Equity Definitions or
Section 6(d)(ii) of the
Agreement, as applicable,
subject to Section 9(k)(i)
below, in satisfaction,
subject to Section 9(k)(ii)
below, of the Payment
Obligation in the manner
reasonably requested by
Dealer free of payment.






15









 











	 	 	 

	Share Termination Delivery
Property:

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

	 	The value to Dealer of property contained in one
Share Termination Delivery Unit on the date such Share Termination Delivery
Units are to be delivered as Share Termination Delivery Property, as
determined by the Calculation Agent in its discretion by commercially
reasonable means. The Calculation Agent shall notify Company of such Share
Termination Unit Price at the time of notification of the Payment Obligation.
In the case of a Private Placement of Share Termination Delivery Units that
are Restricted Shares (as defined below), as set forth in Section 9(k)(i)
below, the Share Termination Unit Price shall be determined by the discounted
price applicable to such Share Termination Delivery Units. In the case of a
Registration Settlement of Share Termination Delivery Units that are
Restricted Shares (as defined below) as set forth in Section 9(k)(ii) below,
the Share Termination Unit Price shall be the Settlement Price on the Merger
Date, the Tender Offer Date, the Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), the date of cancellation or the
Early Termination Date, as applicable.
	 
	 	 
	Share Termination Delivery Unit:

	 	 In the case of a Termination Event, Event of
Default Additional Disruption Event or Delisting, one Share or, in the case of
Nationalization, Insolvency, Tender Offer or Merger Event, a unit consisting
of the number or amount of each type of property received by a holder of one
Share (without consideration of any requirement to pay cash or other
consideration in lieu of fractional amounts of any securities) in such
Nationalization, Insolvency, Tender Offer or Merger Event. If such
Nationalization, Insolvency, Tender Offer or Merger Event involves a choice of
consideration to be received by holders, such holder shall be deemed to have
elected to receive the maximum possible amount of cash.
	 
	 	 
	Failure to Deliver:

	 	Inapplicable






16









 











	 	 	 

	Other applicable provisions:

	 	If Share Termination Alternative is applicable,
the provisions of Sections 9.8, 9.9, 9.11, 9.12 and 10.5 (as modified above) of
the Equity Definitions will be applicable, except that all references in such
provisions to “Physically-settled” shall be read as references to “Share
Termination Settled” and all references to “Shares” shall be read as references
to “Share Termination Delivery Units”. “Share Termination Settled” in relation
to the Transaction means that the Share Termination Alternative is applicable
to the Transaction.







	 	(k)	 	Registration/Private Placement Procedures. If, in the reasonable
opinion of Dealer, following any delivery of Shares or Share Termination Delivery
Property to Dealer hereunder, such Shares or Share Termination Delivery Property would
be in the hands of Dealer subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery requirement for such
Shares or Share Termination Delivery Property pursuant to any applicable federal or
state securities law (including, without limitation, any such requirement arising under
Section 5 of the Securities Act as a result of such Shares or Share Termination
Delivery Property being “restricted securities”, as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule 145 under the
Securities Act) (such Shares or Share Termination Delivery Property, “Restricted
Shares”), then delivery of such Restricted Shares shall be effected pursuant to either
clause (i) or (ii) below at the election of Company, unless Dealer waives the need for
registration/private placement procedures set forth in (i) and (ii) below.
Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants
exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the
first Settlement Date for the First Expiration Date, a Private Placement Settlement or
Registration Settlement for all deliveries of Restricted Shares for all such Expiration
Dates which election shall be applicable to all Settlement Dates for such Warrants and
the procedures in clause (i) or clause (ii) below shall apply for all such delivered
Restricted Shares on an aggregate basis commencing after the final Settlement Date for
such Warrants. The Calculation Agent shall make reasonable adjustments to settlement
terms and provisions under this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered hereunder.






	 	(i)	 	If Company elects to settle the Transaction pursuant to this
clause (i) (a “Private Placement Settlement”), then delivery of Restricted
Shares by Company shall be effected in customary private placement procedures
with respect to such Restricted Shares reasonably acceptable to Dealer;
provided that Company may not elect a Private Placement Settlement if, on the
date of its election, it has taken, or caused to be taken, any action that
would make unavailable either the exemption pursuant to Section 4(2) of the
Securities Act for the sale by Company to Dealer (or any affiliate designated
by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1)
or Section 4(3) of the Securities Act for resales of the Restricted Shares by
Dealer (or any such affiliate of Dealer). The Private Placement Settlement of
such Restricted Shares shall include customary representations, covenants, blue
sky and other governmental filings and/or registrations, indemnities to Dealer,
due diligence rights (for Dealer or any designated buyer of the Restricted
Shares by Dealer), opinions and certificates, and such other documentation as
is customary for private placement agreements, all reasonably acceptable to
Dealer. In the case of a Private Placement Settlement, Dealer shall determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of such Restricted Shares to be delivered to Dealer




17









 

















	 	 	 	hereunder. Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Dealer to Company, of such applicable discount and the number of Restricted Shares to be delivered pursuant to this clause (i). For the avoidance of doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be due on the Share Termination Payment Date (in the case of settlement of Share Termination Delivery Units
pursuant to Section 9(j) above) or on the Settlement Date for such Restricted Shares (in the case of settlement in Shares pursuant to Section 2 above).






	 	(ii)	 	If Company elects to settle the Transaction pursuant to this
clause (ii) (a “Registration Settlement”), then Company shall promptly (but in
any event no later than the beginning of the Resale Period) file and use its
commercially reasonable efforts to cause to become effective under the
Securities Act a registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably satisfactory to Dealer,
to cover the resale of such Restricted Shares in accordance with customary
resale registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable), commissions (if
applicable), indemnities, due diligence rights, opinions and certificates, and
such other documentation as is customary for equity resale underwriting
agreements, all reasonably acceptable to Dealer. If Dealer, in its reasonable
discretion, is not satisfied with such procedures and documentation, Private
Placement Settlement shall apply. If Dealer is satisfied with such procedures
and documentation, it shall sell the Restricted Shares pursuant to such
registration statement during a period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Restricted Shares (which, for
the avoidance of doubt, shall be (x) the Share Termination Payment Date in case
of settlement in Share Termination Delivery Units pursuant to Section 9(j)
above or (y) the Settlement Date in respect of the final Expiration Date for
all Daily Number of Warrants) and ending on the earliest of (i) the Exchange
Business Day on which Dealer completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds of such sales equals or
exceeds the Payment Obligation (as defined above), (ii) the date upon which all
Restricted Shares have been sold or transferred pursuant to Rule 144 (or
similar provisions then in force) or Rule 145(d)(2) (or any similar provision
then in force) under the Securities Act and (iii) the date upon which all
Restricted Shares may be sold or transferred by a non-affiliate pursuant to
Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any
similar provision then in force) under the Securities Act. If the Payment
Obligation exceeds the realized net proceeds from such resale, Company shall
transfer to Dealer by the open of the regular trading session on the Exchange
on the Exchange Trading Day immediately following the last day of the Resale
Period the amount of such excess (the “Additional Amount”) in cash or in a
number of Shares (“Make-whole Shares”) in an amount that, based on the
Settlement Price on the last day of the Resale Period (as if such day was the
“Valuation Date” for purposes of computing such Settlement Price), has a dollar
value equal to the Additional Amount. The Resale Period shall continue to
enable the sale of the Make-whole Shares. If Company elects to pay the
Additional Amount in Shares, the requirements and provisions for Registration
Settlement shall apply. This provision shall be applied successively until the
Additional Amount is equal to zero. In no event shall Company deliver a number
of Restricted Shares greater than the Maximum Number of Shares.






	 	(iii)	 	Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Dealer, as purchaser of such
Restricted Shares, (i) may be transferred by and among Dealer and its
affiliates and Company shall effect such transfer without any further action by
Dealer and (ii) after the period of 6 months from the Trade Date (or 1 year
from the Trade Date if, at such time, informational requirements of Rule 144(c)
are not satisfied with respect to Company) has elapsed after any Settlement
Date for such




18









 

















	 	 	 	Restricted Shares, Company shall promptly remove, or cause the
transfer agent for such Restricted Shares to remove, any legends referring to
any such restrictions or requirements from such Restricted Shares upon request
by Dealer (or such affiliate of Dealer) to Company or such transfer agent,
without any requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by Dealer (or such
affiliate of Dealer).






	 	 	 	If the Private Placement Settlement or the Registration Settlement shall not be
effected as set forth in clauses (i) or (ii), as applicable, then failure to effect
such Private Placement Settlement or such Registration Settlement shall constitute
an Event of Default with respect to which Company shall be the Defaulting Party.






	 	(l)	 	Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery
of any Shares deliverable hereunder, and Automatic Exercise shall not apply with
respect to any Warrant hereunder, to the extent (but only to the extent) that, after
such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder,
(i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed
the Applicable Share Limit. Any purported delivery hereunder shall be void and have no
effect to the extent (but only to the extent) that, after such delivery, (i) the
Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the
Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole
or in part, as a result of this provision, Company’s obligation to make such delivery
shall not be extinguished and Company shall make such delivery as promptly as
practicable after, but in no event later than one Business Day after, Dealer gives
notice to Company that, after such delivery, (i) the Section 16 Percentage would not
exceed 7.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.






	 	(m)	 	Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been an affiliate for
90 days (it being understood that Dealer will not be considered an affiliate under this
paragraph solely by reason of its receipt of Shares pursuant to the Transaction), and
otherwise satisfies all holding period and other requirements of Rule 144 of the
Securities Act applicable to it, any delivery of Shares or Share Termination Delivery
Property hereunder at any time after 6 months from the Trade Date (or 1 year from the
Trade Date if, at such time, informational requirements of Rule 144(c) are not
satisfied with respect to Company) shall be eligible for resale under Rule 144 of the
Securities Act and Company agrees to promptly remove, or cause the transfer agent for
such Shares or Share Termination Delivery Property, to remove, any legends referring to
any restrictions on resale under the Securities Act from the Shares or Share
Termination Delivery Property. Company further agrees that any delivery of Shares or
Share Termination Delivery Property prior to the date that is 6 months from the Trade
Date (or 1 year from the Trade Date if, at such time, informational requirements of
Rule 144(c) are not satisfied with respect to Company), may be transferred by and among
Dealer and its affiliates and Company shall effect such transfer without any further
action by Dealer. Notwithstanding anything to the contrary herein, Company agrees that
any delivery of Shares or Share Termination Delivery Property shall be effected by
book-entry transfer through the facilities of DTC, or any successor depositary, if at
the time of delivery, such class of Shares or class of Share Termination Delivery
Property is in book-entry form at DTC or such successor depositary. Notwithstanding
anything to the contrary herein, to the extent the provisions of Rule 144 of the
Securities Act or any successor rule are amended, or the applicable interpretation
thereof by the Securities and Exchange Commission or any court change after the
Trade Date, the agreements of Company herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of Company, to comply with Rule 144 of
the Securities Act, as in effect at the time of delivery of the relevant Shares or
Share Termination Delivery Property.




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






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






	 	(p)	 	Maximum Share Delivery.






	 	(i)	 	Notwithstanding any other provision of this Confirmation, the
Agreement or the Equity Definitions, in no event will Company at any time be
required to deliver a number of Shares greater than two times the Number of
Shares (the “Maximum Number of Shares”) to Dealer in connection with the
Transaction.






	 	(ii)	 	In the event Company shall not have delivered to Dealer the
full number of Shares or Restricted Shares otherwise deliverable by Company to
Dealer pursuant to the terms of the Transaction because Company has
insufficient authorized but unissued Shares (such deficit, the “Deficit
Shares”), Company shall be continually obligated to deliver, from time to time,
Shares or Restricted Shares, as the case may be, to Dealer until the full
number of Deficit Shares have been delivered pursuant to this Section 9(p)(ii),
when, and to the extent that, (A) Shares are repurchased, acquired or otherwise
received by Company or any of its subsidiaries after the Trade Date (whether or
not in exchange for cash, fair value or any other consideration), (B)
authorized and unissued Shares reserved for issuance in respect of other
transactions prior to such date that prior to the relevant date become no
longer so reserved or (C) Company additionally authorizes any unissued Shares
that are not reserved for other transactions; provided that in no event shall
Company deliver any Shares or Restricted Shares to Dealer pursuant to this
Section 9(p)(ii) to the extent that such delivery would cause the aggregate
number of Shares and Restricted Shares delivered to Dealer to exceed the
Maximum Number of Shares. Company shall immediately notify Dealer of the
occurrence of any of the foregoing events (including the number of Shares
subject to clause (A), (B) or (C) and the corresponding number of Shares or
Restricted Shares, as the case may be, to be delivered) and promptly deliver
such Shares or Restricted Shares, as the case may be, thereafter.






	 	(q)	 	Right to Extend. Dealer may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with respect to some or all
of the relevant Warrants (in which event the Calculation Agent shall make appropriate
adjustments to the Daily Number of Warrants with respect to one or more Expiration
Dates) if Dealer determines, in its commercially reasonable judgment, that such
extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge
unwind activity hereunder in light of existing liquidity conditions or to enable Dealer
to effect purchases of Shares in connection with its hedging, hedge unwind or
settlement activity hereunder in a manner that would, if Dealer were Issuer or an
affiliated purchaser of Issuer, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Dealer.






	 	(r)	 	Status of Claims in Bankruptcy. Dealer acknowledges and agrees that
this Confirmation is not intended to convey to Dealer rights against Company with
respect to the Transaction that are




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	 	 	 	senior to the claims of common stockholders of
Company in any United States bankruptcy proceedings of Company; provided that nothing
herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the
event of a breach by Company of its obligations and agreements with respect to the
Transaction; provided, further, that nothing herein shall limit or shall be deemed to
limit Dealer’s rights in respect of any transactions other than the Transaction.






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






	 	(t)	 	Early Unwind. In the event the sale of the “Initial Securities” (as
defined in the Purchase Agreement) is not consummated with the Initial Purchasers for
any reason, or Company fails to deliver to Dealer opinions of counsel as required
pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium
Payment Date, or such later date as agreed upon by the parties (the Premium Payment
Date or such later date the “Early Unwind Date”), the Transaction shall automatically
terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and
all of the respective rights and obligations of Dealer and Company under the
Transaction shall be cancelled and terminated and (ii) each party shall be released and
discharged by the other party from and agrees not to make any claim against the other
party with respect to any obligations or liabilities of the other party arising out of
and to be performed in connection with the Transaction either prior to or after the
Early Unwind Date; provided that Company shall purchase from Dealer on the Early Unwind
Date all Shares purchased by Dealer or one or more of its affiliates in connection with
the Transaction at the then prevailing market price. Each of Dealer and Company
represent and acknowledge to the other that, subject to the proviso included in this
Section 9(t), upon an Early Unwind, all obligations with respect to the Transaction
shall be deemed fully and finally discharged.






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




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     Company hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the
foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement
between Dealer and Company with respect to the Transaction, by manually signing this Confirmation
or this page hereof as evidence of agreement to such terms and providing the other information
requested herein and immediately returning an executed copy to Chris Hutmaker, Facsimile No.
212-326-9882.



Very truly yours,




	 	 	 	 	 
	 	Bank of America, N.A.

 	 
	 	By:  	/s/ Christopher A. Hutmaker
 	 
	 	 	Authorized Signatory 	 
	 	 	Name: Christopher A. Hutmaker 	 
	 



	 	 	 	 	 
	Accepted and confirmed

as of the Trade Date:



Tower Group, Inc.

 	 
	By:  	/s/ William E. Hitselberger
 	 
	 	Authorized Signatory 	 
	 	Name: William E. Hitselberger