Document:

Exhibit 10.1

 

EXECUTION VERSION

 

Opening Transaction

 

	
To:
    	
 
    	
Alon USA Energy, Inc.
    12700 Park Central Dr.,   Suite 1600  
    Dallas, TX 75251
    
	
 
    	
 
    	
 
    
	
From:
    	
 
    	
Barclays Bank PLC  
 5 The North Colonnade  
 Canary Wharf, London E14 4BB  
 Facsimile: +44(20)77736461  
 Telephone: +44 (20) 777 36810  
    
 c/o Barclays Capital Inc.  
 as Agent for Barclays Bank PLC  
 745 Seventh Ave  
 New York, NY 10019  
 Telephone: +1 212 412 4000
    
	
 
    	
 
    	
 
    
	
Re:
    	
 
    	
Base   Convertible Bond Hedge Transaction
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
September 10,   2013
    

 

 

Dear Ladies and Gentlemen:

 

The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Barclays Bank PLC (“Dealer”), through its agent Barclays Capital Inc. (the “Agent”) and Alon USA Energy, Inc. (“Counterparty”).  This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  Barclays Bank PLC is not a member of the Securities Investor Protection Corporation (“SIPC”).  Barclays is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

 

1.     This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”).  In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern.  Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of September 16, 2013 between Counterparty and U.S. Bank, National Association, as trustee (the “Indenture”), relating to the USD 130,000,000 principal amount of 3.00% Convertible Senior Notes due 2018 (the “Convertible Securities”).  In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern.  For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation.  If any relevant sections of the Indenture are changed, added or renumbered between the execution of this Confirmation and the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties, as evidenced by such draft of the Indenture and the “Description of Notes” section of the Preliminary Offering Circular related to the offering of the Convertible Securities, as supplemented by the related pricing term sheet.  The parties further acknowledge that references to the Indenture herein are

 

 

references to the Indenture as in effect on the date of its execution and if the Indenture is amended, modified or supplemented following its execution, any such amendment, modification or supplement will be disregarded for purposes of this Confirmation (other than Section 8(b)(i)(B) below) unless the parties agree otherwise in writing.  The Transaction is subject to early unwind if the closing of the Convertible Securities is not consummated for any reason, as set forth below in Section 8(k).

 

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

 

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) as if Dealer and Counterparty had executed an agreement in such form on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method and US Dollars (“USD”) as the Termination Currency, and (ii) the replacement of the word “third” in the last line of Section 5(a)(i) of the Agreement with the word “first”.

 

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

 

The Transaction hereunder shall be the sole Transaction 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 Transaction shall not be considered a Transaction under, or otherwise governed by, such existing or deemed ISDA Master Agreement.

 

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

 

	
General   Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade   Date:
    	
 
    	
September 10, 2013
    
	
 
    	
 
    	
 
    
	
Effective   Date:
    	
 
    	
The closing date of the initial   issuance of the Convertible Securities.
    
	
 
    	
 
    	
 
    
	
Option   Style:
    	
 
    	
Modified   American, as described under “Procedures for Exercise” below.
    
	
 
    	
 
    	
 
    
	
Option   Type:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The   Common Stock of Counterparty, par value USD0.01 per share (Ticker Symbol:   “ALJ”).
    
	
 
    	
 
    	
 
    
	
Applicable   Percentage:
    	
 
    	
30.0%
    
	
 
    	
 
    	
 
    
	
Number   of Options:
    	
 
    	
The   number of Convertible Securities in denominations of USD1,000 principal   amount issued by Counterparty on the closing date for the initial issuance of   the Convertible Securities. For the
    

 

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avoidance   of doubt, the Number of Options outstanding shall be reduced by each exercise   of Options hereunder.
    
	
 
    	
 
    	
 
    
	
Option Entitlement:
    	
 
    	
As of any date, a number of Shares per Option   equal to the “Conversion Rate” (as defined in the Indenture, but without   regard to any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment).
    
	
 
    	
 
    	
 
    
	
Fundamental Change Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate   pursuant to Section 4.06 of the Indenture.
    
	
 
    	
 
    	
 
    
	
Discretionary Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate   pursuant to Section 4.05(b) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Strike   Price:
    	
 
    	
As   of any date, an amount in USD equal to USD1,000 divided by   the Option Entitlement as of such date. The Strike Price shall be rounded by   the Calculation Agent in accordance with the applicable provisions of the   Indenture.
    
	
 
    	
 
    	
 
    
	
Number   of Shares:
    	
 
    	
As   of any date, a number of Shares equal to the product (i) the Applicable   Percentage, (ii) the Number of Options and (iii) the Option   Entitlement.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD   7,398,300.00.
    
	
 
    	
 
    	
 
    
	
Premium   Payment Date:
    	
 
    	
The   Effective Date
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The   New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related   Exchange:
    	
 
    	
All   Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures   for Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise   Dates:
    	
 
    	
Each   Conversion Date.
    
	
 
    	
 
    	
 
    
	
Conversion   Date:
    	
 
    	
Each   “Conversion Date” (as defined in the Indenture) occurring during the Exercise   Period for Convertible Securities each in denominations of USD1,000 principal   amount (such Convertible Securities, the “Relevant   Convertible Securities” for such Conversion Date).
    
	
 
    	
 
    	
 
    
	
Exercise   Period:
    	
 
    	
The   period from and excluding the Effective Date to and including the Expiration   Date.
    
	
 
    	
 
    	
 
    
	
Expiration   Date:
    	
 
    	
The   earlier of (i) the last day on which any Convertible Securities remain   outstanding and (ii) the second “Scheduled Trading Day” (as defined in   the Indenture) immediately preceding the “Maturity Date” (as defined in the   Indenture). For the avoidance of doubt, the Options will be exercisable in   accordance with, and subject to the conditions set forth in, the provisions   set forth under “Automatic Exercise on Conversion Dates”, “Notice Deadline”   and “Notice of Exercise” below.
    
	
 
    	
 
    	
 
    
	
Automatic   Exercise on Conversion Dates:
    	
 
    	
Applicable;   and means that on each Conversion Date, a number of Options equal to the   number of Relevant Convertible Securities for such Conversion Date in
    

 

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denominations   of USD1,000 principal amount shall be automatically exercised, subject to   “Notice of Exercise” below.
    
	
 
    	
 
    	
 
    
	
Notice   Deadline:
    	
 
    	
In   respect of any exercise of Options hereunder on any Conversion Date,   4:00 P.M., New York City time, on (i) in the case the applicable   Relevant Convertible Securities will be settled by Counterparty by delivery   of Shares only (together with cash in lieu of any fractional Share), the   Scheduled Trading Day immediately following the relevant Conversion Date, or   (ii) otherwise, the Scheduled Trading Day immediately preceding the   first Scheduled Trading Day of the relevant Cash Settlement Averaging Period; provided that in the case of any exercise of Options   hereunder in connection with the conversion of any Relevant Convertible   Securities for any Conversion Date occurring during the period from and   including June 15, 2018 (or if Counterparty has elected to settle all   conversions of Convertible Securities solely in Shares (together with cash in   lieu of any fractional Share) or through combination settlement with the   “Specified Dollar Amount” (as defined in the Indenture) of less than USD1,000   and such election is effective on the 95th “Scheduled Trading Day” (as defined in the   Indenture) prior to the Maturity Date, then from and including such date) to   and including the Expiration Date (such period, the “Final   Conversion Period”), the Notice Deadline shall be 12:00 P.M.,   New York City time, on the “Scheduled Trading Day” (as defined in the   Indenture) immediately preceding the Maturity Date.
    
	
 
    	
 
    	
 
    
	
Notice   of Exercise:
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, Dealer shall have no   obligation to make any payment or delivery in respect of any exercise of   Options hereunder and such obligation in respect of such exercise shall be   permanently extinguished unless Counterparty notifies Dealer in writing prior   to the Notice Deadline in respect of such exercise, of (i) the number of   Relevant Convertible Securities being converted on the related Conversion   Date (specifying, if applicable, whether all or any portion of such   Convertible Securities are Convertible Securities as to which additional   Shares would be added to the Conversion Rate (as defined in the Indenture)   pursuant to Section 4.06 of the Indenture (the “Make-Whole Convertible Securities”)), (ii) the scheduled settlement date   under the Indenture for the Relevant Convertible Securities for such   Conversion Date, (iii) whether such Relevant Convertible Securities will   be settled by Counterparty by delivery of cash, Shares or a combination of   cash and Shares and, if such a combination, the “Specified Dollar Amount” (as   defined in the Indenture) and (iv) the first “Scheduled
    

 

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Trading   Day” (as defined in the Indenture) of the relevant “Observation Period” (as   defined in the Indenture), if any; provided that   in the case of any exercise of Options in connection with the conversion of   any Relevant Convertible Securities for any Conversion Date occurring during   the Final Conversion Period, the contents of such notice shall be as set   forth in clauses (i) and (ii) above. Counterparty acknowledges its   responsibilities under applicable securities laws, and in particular   Section 9 and Section 10(b) of the Securities Exchange Act of   1934, as amended (the “Exchange Act”)   and the rules and regulations thereunder, in respect of any election of   a settlement method with respect to the Convertible Securities. For the   avoidance of doubt, if Counterparty fails to give such notice when due in   respect of any exercise of Options hereunder, Dealer’s obligation to make any   payment or delivery in respect of such exercise shall be permanently   extinguished, and late notice shall not cure such failure; provided that notwithstanding the foregoing, such notice   (and the related exercise of Options) shall be effective with respect to   Options relating to Convertible Securities (I) with a Conversion Date   occurring prior to the first day of the Final Conversion Period if given   after the relevant Notice Deadline, but prior to 4:00 P.M. New York City   time, on the fifth Scheduled Trading Day following such Notice Deadline or   (II) with a Conversion Date occurring on or after the first day of the   Final Conversion Period if given after the relevant Notice Deadline, but   prior to 4:00 P.M. New York City time, on the Scheduled Trading Day   immediately following such Notice Deadline, in which event, in either case of   clauses (I) or (II), Dealer’s Delivery Obligation in respect of the related   Options shall not be extinguished but may instead be adjusted by the   Calculation Agent to reflect the additional costs (including, but not limited   to, hedging mismatches and market losses) and expenses incurred by Dealer in   connection with its hedging activities (including the unwinding of any hedge   position) as a result of Dealer not having received such notice on or prior   to such Notice Deadline. If applicable, the Notice of Exercise shall also   contain the Settlement Method Election Provisions.
    
	
 
    	
 
    	
 
    
	
Notice   of Final Convertible Security Settlement Method:
    	
 
    	
 
    
	
 
    	
Counterparty   shall notify Dealer in writing of the final settlement method (and, if   applicable, the final Specified Dollar Amount) elected (or deemed to be   elected) with respect to the Convertible Securities before 4:00 P.M.   (New York City time) on the earlier to occur of (x) the date on which it   makes the irrevocable election of a settlement method in accordance with   Section 8.01(j) of the Indenture and
    

 

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(y) May 2,   2018 (which date is the 95th “Scheduled Trading Day” (as defined in the   Indenture) prior to the Maturity Date). If applicable, the Notice of Final   convertible Security Settlement Method shall also contain the Settlement   Method Election Provisions.
    
	
 
    	
 
    	
 
    
	
Dealer’s   Telephone Number and Telex and/or Facsimile Number and Contact Details for   purpose of Giving Notice:
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
As   specified in Section 6(b) below.
    
	
 
    	
 
    	
 
    
	
Settlement   Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement   Date:
    	
 
    	
For   any Exercise Date, the settlement date for the cash (if any) and/or Shares   (if any) to be delivered in respect of the Relevant Convertible Securities   for the relevant Conversion Date under the terms of the Indenture; provided that the Settlement Date shall not be prior to   the latest of (i) the date one Settlement Cycle following the final day   of the relevant Cash Settlement Averaging Period, (ii) the Exchange   Business Day immediately following the date on which Counterparty gives   notice to Dealer of such Settlement Date prior to 4:00 P.M., New York   City time, or (iii) the Exchange Business Day immediately following the   date Counterparty provides the Notice of Delivery Obligation prior to   4:00 P.M., New York City time.
    
	
 
    	
 
    	
 
    
	
Delivery   Obligation:
    	
 
    	
In   lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity   Definitions, and subject to “Notice of Exercise” above, in respect of an   Exercise Date, Dealer will deliver to Counterparty on the related Settlement   Date (the “Delivery Obligation”):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i) a   number of Shares equal to the product of the Applicable Percentage and the   aggregate number of Shares included in the “Settlement Amount” (as defined in   the Indenture), if any, that Counterparty would be obligated to deliver to   the holder(s) of the Relevant Convertible Securities for such Conversion   Date pursuant to Section 4.03(a)(ii)(C) of the Indenture (except   that such number of Shares shall be determined without taking into   consideration any rounding pursuant to Section 4.03(b) of the   Indenture), rounded down to the nearest whole number, and cash in lieu of any   fractional Share resulting from such rounding;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) cash   equal to the product of the Applicable Percentage and the excess of   (I) the “Daily Principal Portion” (as defined in the Indenture but with   relevant references to “60” deemed replaced with a reference to the number of   “VWAP Trading Days” (as defined in the Indenture) comprising the relevant   Cash Settlement Averaging Period) over (II) USD1,000 divided by the number of “VWAP
    

 

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Trading   Days” (as defined in the Indenture) comprising the relevant Cash Settlement   Averaging Period, for each “VWAP Trading Day” (as defined in the Indenture)   during the relevant Cash Settlement Averaging Period per Convertible Security   (in denominations of USD1,000) that Counterparty would be obligated to   deliver to holder(s) of the Relevant Convertible Securities for such   Conversion Date pursuant to Section 4.03(a)(ii)(C) of the   Indenture; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii) if   the “Aggregate Share Cap” and the “Daily Share Cap” apply and the “Uncapped   Daily Share Amount” exceeds the “Daily Share Cap”, the product of   (I) the Applicable Percentage, (II) the excess of such “Uncapped   Daily Share Amount” over such “Daily Share Cap” and (III) the “Daily   VWAP” (with defined terms in this clause (iii) having the meanings   assigned in the Indenture but with relevant references to “60” deemed   replaced with a reference to the number of “VWAP Trading Days” (as defined in   the Indenture) comprising the relevant Cash Settlement Averaging Period), for   each “VWAP Trading Day” (as defined in the Indenture) during the relevant   Cash Settlement Averaging Period per Convertible Security (in denominations   of USD1,000) that Counterparty would be obligated to deliver to   holder(s) of the Relevant Convertible Securities for such Conversion   Date pursuant to Section 4.03(a)(ii)(C) of the Indenture,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
for   each of clauses (i), (ii) and (iii), determined as if Counterparty had   elected to satisfy its conversion obligation in respect of such Relevant   Convertible Securities by the Convertible Security Settlement Method,   notwithstanding any different actual election by Counterparty with respect to   the settlement of such Relevant Convertible Securities (collectively, the “Convertible Obligation”); provided that the Delivery Obligation shall be determined   excluding any Shares and/or cash that Counterparty is obligated to deliver to   holder(s) of the Relevant Convertible Securities as a direct or indirect   result of any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment and any interest payment that   Counterparty is (or would have been) obligated to deliver to   holder(s) of the Relevant Convertible Securities for such Conversion   Date. Notwithstanding the foregoing, in all events the Delivery Obligation   shall be capped so that the value of (x)(I) the number of Shares   comprising the Delivery Obligation multiplied by   the Share Obligation Value Price plus   (II) the amount of cash
    

 

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comprising   the Delivery Obligation, does not exceed (y) the relevant Net   Convertible Share Obligation Value. For the avoidance of doubt, if the “Daily   Conversion Value” (as defined in the Indenture but with references therein to   “60” deemed replaced with a reference to the number of “VWAP Trading Days”   (as defined in the Indenture) comprising the relevant Cash Settlement   Averaging Period) for any “VWAP Trading Day” (as defined in the Indenture)   occurring in the relevant Cash Settlement Averaging Period is less than or   equal to USD1,000 divided by   the number of “VWAP Trading Days” (as defined in the Indenture) comprising   the relevant Cash Settlement Averaging Period, Dealer will have no delivery   obligation hereunder in respect of the related Exercise Date and such VWAP   Trading Day.
    
	
 
    	
 
    	
 
    
	
Convertible   Security Settlement Method:
    	
 
    	
For   any Relevant Convertible Securities, if (i) Counterparty has notified   Dealer in the related Notice of Exercise (or in the Notice of Final   Convertible Security Settlement Method, as the case may be) that it has   elected to satisfy its conversion obligation in respect of such Relevant   Convertible Securities in cash or in a combination of cash and Shares in   accordance with Section 4.03(a)(i) of the Indenture with a   Specified Dollar Amount of at least USD1,000 (a “Cash Election”) and (ii) such Notice of Exercise (or   such Notice of Final Convertible Security Settlement Method, as the case may   be) contains all of the Settlement Method Election Provisions (to the extent   required under the “Settlement Method Election Provisions” below), the   Convertible Security Settlement Method shall be the settlement method   actually so elected by Counterparty in respect of such Relevant Convertible   Securities; otherwise, the Convertible Security Settlement Method shall   (x) assume Counterparty had made a Cash Election with respect to such   Relevant Convertible Securities with a Specified Dollar Amount of USD1,000   per Relevant Convertible Security and (y) be calculated as if the   relevant “Observation Period” pursuant to Section 4.03(a)(ii)(C) of   the Indenture consisted of 90 “VWAP Trading Days” (as defined in the   Indenture) commencing on (I) the second “Scheduled Trading Day” (as   defined in the Indenture) after the Conversion Date for conversions with a   related Conversion Date occurring prior to the Final Conversion Period or   (II) the 92nd “Scheduled Trading Day” (as defined in the   Indenture) prior to the Maturity Date for conversions with a related   Conversion Date occurring during the Final Conversion Period (such   “Observation Period”, subject to the provisions of this clause (y), the “Cash Settlement Averaging Period” for such Relevant   Convertible Securities).
    
	
 
    	
 
    	
 
    
	
Settlement   Method Election Provisions:
    	
 
    	
In   order for the Convertible Security Settlement
    

 

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Method   to be the settlement method actually elected by Counterparty under the   Indenture in respect of the applicable Relevant Convertible Securities in   accordance with “Convertible Security Settlement Method” above, the related   Notice of Exercise (or Notice of Final Convertible Security Settlement   Method, as the case may be) must contain in writing the following   representations, warranties and acknowledgments from Counterparty to Dealer as   of such notice delivery date (except that such representations, warranties   and acknowledgments will not be required in the case where the Relevant   Convertible Securities will be settled by Counterparty by delivery of a   combination of cash and Shares with a Specified Dollar Amount equal to   USD1,000 where Counterparty has either (x) failed to elect a settlement   method under the Indenture in respect of the applicable Relevant Convertible   Securities so that Counterparty is deemed to have elected such settlement   method pursuant to Section 4.03(a)(i) of the Indenture or   (y) merely confirmed such deemed election pursuant to   Section 4.03(a)(i) of the Indenture):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i) none of Counterparty and its officers or   directors, or any person that controls, potentially controls, or otherwise   exercises influence over, Counterparty’s decision to elect the Convertible   Security Settlement Method is aware   of any material nonpublic information regarding Counterparty or the Shares;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) Counterparty is electing the Convertible   Security Settlement Method in good   faith and not as part of a plan or scheme to evade compliance with the U.S.   federal securities laws; Counterparty is not electing the settlement method   under the Indenture for the Relevant Convertible Securities or the   Convertible Security Settlement Method to create actual or apparent trading   activity in the Shares (or any security convertible into or exchangeable for   Shares) or to raise or depress or otherwise manipulate the price of the   Shares (or any security convertible into or exchangeable for Shares) or   otherwise in violation of the Exchange Act; and Counterparty has not entered   into or altered any hedging transaction relating to the Shares corresponding   to or offsetting the Transaction;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii) Counterparty has the power to make such   election and to execute and deliver any documentation relating to such   election that it is required by this Confirmation to deliver and to perform   its obligations under this Confirmation and has taken all necessary action to   authorize
    

 

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such election, execution, delivery and   performance;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv) such election and performance of its   obligations under this Confirmation do not violate or conflict with any law   applicable to it, any provision of its constitutional documents, any order or   judgment of any court or other agency of government applicable to it or any   of its assets or any contractual restriction binding on or affecting it or   any of its assets; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(v) any transaction that Dealer makes with   respect to the Shares during the period beginning at the time that   Counterparty delivers such notice and ending at the close of business on the   final day of the Cash Settlement Averaging Period shall be made by Dealer at   Dealer’s sole discretion for Dealer’s own account and Counterparty shall not   have, and shall not attempt to exercise, any influence over how, when,   whether or at what price Dealer effects such transactions, including, without   limitation, the prices paid or received by Dealer per Share pursuant to such   transactions, or whether such transactions are made on any securities   exchange or privately.
    
	
 
    	
 
    	
 
    
	
Notice   of Delivery Obligation:
    	
 
    	
No   later than the Exchange Business Day immediately following the last day of the   relevant Cash Settlement Averaging Period, Counterparty shall give Dealer   notice of the final number of Shares and/or amount of cash comprising the   settlement obligation under the Indenture in respect of the Relevant   Convertible Securities; provided   that, with respect to any Exercise Date occurring during the Final Conversion   Period, Counterparty may provide Dealer with a single notice of the aggregate   number of Shares and/or amount of cash comprising the settlement obligation   under the Indenture in respect of the Relevant Convertible Securities for all   Exercise Dates occurring during such period (it being understood, for the   avoidance of doubt, that the requirement of Counterparty to deliver such   notice shall not limit Counterparty’s obligations with respect to a Notice of   Exercise or Notice of Convertible Security Settlement Method, as the case may   be, as set forth above, in any way).
    
	
 
    	
 
    	
 
    
	
Net   Convertible Share Obligation Value:
    	
 
    	
With   respect to Relevant Convertible Securities as to a Conversion Date, (i) the   product of the Applicable Percentage and the Total Convertible Share   Obligation Value of such Relevant Convertible Securities for such Conversion   Date minus (ii) the product of the   Applicable Percentage and the aggregate principal amount of such Relevant   Convertible Securities for such Conversion Date.
    

 

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Total   Convertible Share Obligation Value:
    	
 
    	
With   respect to Relevant Convertible Securities with respect to a Conversion Date,   (i) (A) the number of Shares equal to the aggregate number of   Shares that Counterparty is obligated to deliver to the holder(s) of   Relevant Convertible Securities for such Conversion Date pursuant to the   Indenture (except that such number of Shares shall be determined without   taking into consideration any rounding pursuant to   Section 4.03(b) of the Indenture) multiplied   by (B) the Share Obligation Value Price plus   (ii) an amount of cash equal to (A) the fractional Shares, if any,   that would have resulted but for the rounding under (i)(A) above multiplied by (B) the Share Obligation Value Price plus (iii) an amount of cash equal to the aggregate   amount of cash that Counterparty is obligated to deliver to the   holder(s) of Relevant Convertible Securities for such Conversion Date   pursuant to the Indenture; provided   that, the Total Convertible Share Obligation Value shall be determined excluding   any Shares and/or cash that Counterparty is obligated to deliver to   holder(s) of the Relevant Convertible Securities as a direct or indirect   result of any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment and any interest payment that   Counterparty is (or would have been) obligated to deliver to   holder(s) of the Relevant Convertible Securities for such Conversion   Date.
    
	
 
    	
 
    	
 
    
	
Share   Obligation Value Price:
    	
 
    	
The   opening price as displayed under the heading “Op” on Bloomberg   page “ALJ.N <Equity>“ (or any successor thereto) (or if such   displayed price is unavailable or is manifestly incorrect, the market value   of one Share on such date, as determined by the Calculation Agent) on the   applicable Settlement Date.
    
	
 
    	
 
    	
 
    
	
Other   Applicable Provisions:
    	
 
    	
To   the extent Dealer is obligated to deliver Shares hereunder, the provisions of   Sections 9.8, 9.9, 9.10 and 9.11 of the Equity Definitions will be applicable   as if “Physical Settlement” applied to the Transaction; provided that the Representation and   Agreement contained in Section 9.11 of the Equity Definitions shall be   modified by excluding any representations therein relating to restrictions,   obligations, limitations or requirements under applicable securities laws   that exist as a result of the fact that Counterparty is the issuer of the   Shares.
    
	
 
    	
 
    	
 
    
	
Certificated   Shares:
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, Dealer may, in whole or   in part, deliver Shares required to be delivered to Counterparty hereunder in   certificated form in lieu of delivery through the Clearance System. With   respect to such certificated Shares, the Representation and Agreement   contained in Section 9.11 of the Equity Definitions shall be modified by   deleting the
    

 

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remainder   of the provision after the word “encumbrance” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method   of Adjustment:
    	
 
    	
Notwithstanding   Section 11.2 of the Equity Definitions, upon the occurrence of any event   or condition set forth in Sections 4.04(a) through (e) of the   Indenture, the Calculation Agent shall make a corresponding adjustment in   respect of any one or more of the Strike Price, the Number of Options, the   Option Entitlement and any other term relevant to the exercise, settlement or   payment of the Transaction. Immediately upon the occurrence of any such   adjustment event, Counterparty shall notify the Calculation Agent of such   adjustment event; and once the adjustments to be made to the terms of the   Indenture and the Convertible Securities in respect of such adjustment event   have been determined, Counterparty shall immediately notify the Calculation   Agent in writing of the details of such adjustments. In addition, the Calculation   Agent shall, to the extent the Calculation Agent determines practicable in   good faith and in its commercially reasonable discretion, make a   corresponding adjustment to the settlement terms of the Options (but without   duplication of any adjustment pursuant to the foregoing sentence) to the   extent an analogous adjustment would be made pursuant to   Section 4.04(f) or Section 4.05(a), as applicable, of the   Indenture; provided that the Calculation   Agent may limit or alter any such adjustment referenced in this sentence so   that the fair value of the Transaction to Dealer is not reduced as a result   of such adjustment. For the avoidance of doubt, Dealer shall not have any   delivery obligation hereunder in respect of any “Distributed Property”   delivered by Counterparty pursuant to the first paragraph under the first   formula under Section 4.04(c) of the Indenture or any payment   obligation in respect of any cash paid by Counterparty pursuant to the first   sentence of the second paragraph under the formula under Section 4.04(d) of   the Indenture (collectively, the “Dilution Adjustment   Fallback Provisions”), and no adjustment shall be made to the   terms of the Transaction on account of any event or condition described in   the Dilution Adjustment Fallback Provisions.
    
	
 
    	
 
    	
 
    
	
Dividends:
    	
 
    	
If   at any time during the period from and including the Trade Date, to but   excluding the Expiration Date, (i) an ex-dividend date for a regular   quarterly cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that dividend is less than the   Regular Dividend on a per Share basis or (ii) if no Ex-Dividend Date for   a regular quarterly cash dividend occurs with respect to the Shares in any
    

 

12

 

	
 
    	
 
    	
quarterly   dividend period of Counterparty, then the Calculation Agent will make a   corresponding adjustment in respect of any one or more of the Strike Price,   the Number of Options, the Option Entitlement and any other term relevant to   the exercise, settlement or payment of the Transaction to preserve the fair   value of the Options to Dealer after taking into account such dividend or   lack thereof. “Regular Dividend” shall mean   USD0.06 per Share per quarter.
    
	
 
    	
 
    	
 
    
	
Extraordinary   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger   Events:
    	
 
    	
Notwithstanding   Section 12.1(b) of the Equity Definitions, a “Merger Event” means   any “Merger Event” as defined in Section 4.07(a) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Consequences   of Merger Events:
    	
 
    	
Notwithstanding   Section 12.2 of the Equity Definitions, upon the occurrence of a Merger   Event, the Calculation Agent shall make a corresponding adjustment in respect   of any one or more of the Strike Price, the Number of Options, the Option   Entitlement and any other term relevant to the exercise, settlement or   payment of the Transaction; provided that   such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to a Fundamental Change Adjustment or a   Discretionary Adjustment; and provided further   that the Calculation Agent may limit or alter any such adjustment referenced   in this paragraph so that the fair value of the Transaction to Dealer is not   reduced as a result of such adjustment; and provided   further that if, with respect to a Merger Event, (i) the   consideration for the Shares includes (or, at the option of a holder of   Shares, may include) shares of an entity or person that is not a corporation   organized under the laws of the United States, any state thereof or the   District of Columbia or (ii) the Counterparty to the Transaction   following such Merger Event will not be a corporation and/or will not be the   Issuer following such Merger Event, in either case, Dealer may elect (in its   sole discretion) for Cancellation and Payment (Calculation Agent   Determination) to apply.
    
	
 
    	
 
    	
 
    
	
Notice   of Merger Consideration and Consequences:
    	
 
    	
Upon   the occurrence of a Merger Event that causes the Shares to be converted into   the right to receive more than a single type of consideration (determined   based in part upon any form of stockholder election), Counterparty shall   reasonably promptly (but in any event prior to the relevant merger date)   notify the Calculation Agent of (i) the type and amount of consideration that   a holder of Shares would have been entitled to in the case of   reclassifications, consolidations, mergers, sales or transfers of assets or   other transactions that cause Shares to be converted into the right to   receive more than a single type of consideration, (ii) if holders of   Shares affirmatively
    

 

13

 

	
 
    	
 
    	
make   such an election, the weighted average of the types and amounts of   consideration to be received by the holders of Shares that affirmatively make   such an election, and (iii) the details of the adjustment to be made   under the Indenture in respect of such Merger Event.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation   and Payment (Calculation Agent Determination); provided that in addition to the provisions of   Section 12.6(a)(iii) of the Equity Definitions, it will also   constitute a Delisting if the Shares are not immediately re-listed, re-traded   or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The NASDAQ Global Market (or their respective successors); if the   Shares are immediately re-listed, re-traded or re-quoted on any such exchange   or quotation system, such exchange or quotation system shall thereafter be   deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional   Termination Event(s):
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, if, as a result of an   Extraordinary Event, any Transaction would be cancelled or terminated   (whether in whole or in part) pursuant to Article 12 of the Equity   Definitions, an Additional Termination Event (with such terminated   Transaction(s) (or portions thereof) being the Affected Transaction(s) and   Counterparty being the sole Affected Party) shall be deemed to occur, and, in   lieu of Sections 12.7, 12.8 and 12.9 of the Equity Definitions,   Section 6 of the Agreement shall apply to such Affected Transaction(s).
    
	
 
    	
 
    	
 
    
	
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 adding the phrase “and/or Hedge Position” after the word “Shares” in   clause (X) thereof, 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 (the contemplation of which on the Trade Date   the Hedging Party is able to reasonably demonstrate) and the Hedging Party   has determined in good faith that it would not be practicable for it to hedge   its exposure with respect to such Transaction in any other manner due to   materially increased costs, greater liability exposure or greater exposure to   market risk or for any other reasonable reason”; 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
    

 

14

 

	
 
    	
 
    	
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 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)         Hedging Disruption:
    	
 
    	
Applicable;   provided that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             Section 12.9(a)(v) of the Equity   Definitions is hereby modified 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, the transactions or assets referred to in   phrases (A) or (B) above must be available on commercially   reasonable pricing and other terms.”;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(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”.
    
	
 
    	
 
    	
 
    
	
(e)          Increased Cost of Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging   Party:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Determining   Party:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements   and Acknowledgments Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    

 

15

 

	
3.              Calculation Agent:
    	
 
    	
Dealer; provided that all calculations   and determinations made by the Calculation Agent shall be made in good faith   and in a commercially reasonable manner; provided further   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 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.
    

 

4.              Account Details:

 

Dealer Payment Instructions:

 

Bank:  Barclays Bank plc NY

ABA#  026 00 2574

BIC:  BARCUS33

Acct:  50038524

Beneficiary:  BARCGB33

Ref:   Barclays Bank plc London Equity Derivatives

 

Counterparty Payment Instructions:

 

To be provided by Counterparty.

 

5.              Offices:

 

The Office of Dealer for the Transaction is:

 

Inapplicable, Barclays is not a Multibranch Party.

 

The Office of Counterparty for the Transaction is:

 

12700 Park Central Dr., Suite 1600

Dallas, TX 75251

 

6.              Notices: For purposes of this Confirmation:

 

(a)                                 Address for notices or communications to Counterparty:(1)

 

To:

Attn:                                                                    Shai Even

Chief Financial Officer

Telephone:                                   (972) 367-3669

Facsimile:                                         (972) 367-3726

Email:                                                            shai.even@alonusa.com

 

(1) Please provide.

 

16

 

With a copy to:

 

Attn:                                                                    James Ranspot

Chief Legal Counsel — Corporate

Telephone:                                   (972) 367-3614

Email:                                                            james.ranspot@alonusa.com

 

With a copy to:

 

Attn:                                                                    David Stone

Vinson & Elkins LLP

Telephone:                                   (713) 758-2236

Email:            dstone@velaw.com

 

(b)                                 Address for notices or communications to Dealer:

 

To:                                                                             Barclays Bank PLC

c/o Barclays Capital Inc.

745 Seventh Ave.

New York, NY 10019

Attn:                                                                    Paul Robinson

Telephone:                                   (+1) 212-526-0111

Facsimile:                                         (+1) 917-522-0458

 

7.              Representations, Warranties and Agreements:

 

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

 

(i)                                     On the Trade Date and as of the date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 8(c) below, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act, when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

 

(ii)                                  (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.

 

(iii)                               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 the 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 (or any successor issue statements).

 

(iv)                              Counterparty will not be engaged in an “issuer tender offer” as such term is defined in Rule 13e-4 under the Exchange Act nor is it aware of any third party tender offer with respect to the Shares within the meaning of Rule 13e-1 under the Exchange Act.

 

17

 

(v)                                 Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.  Based on such resolutions, neither Dealer nor any of its affiliates shall be subject to the restrictions under Section 203 of the Delaware General Corporation Law as an “interested stockholder” of Counterparty by virtue of (A) its role as initial purchaser of, or market-maker in, the Convertible Securities, (B) its entry into the Transaction and/or (C) any hedging transactions in Counterparty’s securities in connection with the Transaction.

 

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

 

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

 

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

 

(ix)                              The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1(g), (h), (j), (m), (p), (t), (u), (v), (w), (x), (y), (z), (bb), (cc), (dd), (ee), (gg) and (hh) of the Purchase Agreement, dated as of September 10, 2013, between the Initial Purchasers (as defined therein) and Counterparty (the “Purchase Agreement”) are true and correct as of the Trade Date and the Effective Date and are hereby deemed to be repeated to Dealer as if set forth herein.

 

(x)                                 To Counterparty’s knowledge, based on due inquiry, no state or local (including non-U.S. jurisdictions) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

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

 

(xii)                           Without limiting the generality of Sections 3(a)(i), (ii), (iv) and (v) of the Agreement, neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will (A) conflict with or result in a breach of (w) the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, (x) to Counterparty’s knowledge, based on due inquiry, any applicable law or regulation, (y) any order, writ, injunction or decree of any court or governmental authority or agency, or (z) any agreement or instrument filed as an exhibit to Counterparty’s Annual Report on Form 10-K for the year ended December 31, 2012, as updated by any subsequent filings, to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or (B) constitute a default under, or result in the creation of any lien under, any such agreement or instrument referred to in clause (A)(z) above.

 

(b)                                 Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended, and is entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.

 

18

 

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

 

(d)                                 Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is 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), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)                                  As a condition to the effectiveness of the Transaction, Counterparty shall deliver to Dealer (i) an incumbency certificate, dated as of the Trade Date, of Counterparty in customary form and (ii) one or more opinions of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement (provided that solely for such purpose, the phrase “any law applicable to it,” shall be deemed to be deleted from clause (iii) thereof), Sections 7(a)(vii) and 7(a)(xii)(A)(w) and (z) hereof and such other matters as Dealer may reasonably request.

 

(f)                                   Counterparty understands that notwithstanding any other relationship between Counterparty and Dealer and its affiliates, in connection with this Transaction and any other over-the-counter derivative transactions between Counterparty and Dealer or its affiliates, Dealer or its affiliates is acting as principal and is not a fiduciary or advisor in respect of any such transaction, including any entry, exercise, amendment, unwind or termination thereof.

 

(g)                                  Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.

 

(h)                                 Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.

 

(i)                                     Counterparty represents and warrants that the assets used in the Transaction (i) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (ii) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.

 

19

 

8.  Other Provisions:

 

(a)                                 Right to Extend.  Dealer may postpone, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, that such extension or addition is reasonably necessary or appropriate to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock borrow market or other relevant market or to enable Dealer to effect purchases and/or sales of Shares or Share Termination Delivery Units in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer generally in its corporate equity derivatives business with respect to transactions similar to the Transaction).

 

(b)                                 Additional Termination Events.

 

(i)                                     The occurrence of (A) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the Indenture, or (B) an Amendment Event, in each case, shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party, and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement.

 

“Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, absence of redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions) (in each case, other than any term that Counterparty is required to amend, modify or supplement under the terms of the Indenture that would not require the consent of any holder of the Convertible Securities to so amend, modify or supplement), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend, in each case without the prior consent of Dealer.

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty, within the applicable time period set forth under “Notice of Exercise” above, of any Notice of Exercise in respect of Options that relate to Make-Whole Convertible Securities shall constitute an Additional Termination Event as provided in this clause (ii).  Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange Business Day following such Additional Termination Event (which Exchange Business Day shall be as soon as commercially reasonably practicable on or after the related settlement date under the Indenture for such Make-Whole Convertible Securities) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Make-Whole Options”) equal to the lesser of (A) the aggregate principal amount of such Make-Whole Convertible Securities specified in such Notice of Exercise, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Make-Whole Options.  Any payment hereunder with respect to such termination (the “Make-Whole Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a number of Options equal to the number of Make-Whole Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take

 

20

 

into account any Fundamental Change Adjustment); provided that the Make-Whole Unwind Payment shall not be greater than the excess of (x) (I) the Applicable Percentage, multiplied by (II) the number of Make-Whole Options multiplied by (III) the Conversion Rate (determined after taking into account any applicable Fundamental Change Adjustment) multiplied by (IV) the Share Obligation Value Price on the applicable settlement date for the cash and/or Shares to be delivered pursuant to Section 4.03(a)(ii) of the Indenture in respect of the relevant Make-Whole Convertible Securities over (y) the product of (I) the Applicable Percentage, (II) USD1,000 and (III) the number of such Make-Whole Options, as determined by the Calculation Agent in a commercially reasonable manner.

 

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

 

	
Share   Termination Alternative:
    	
 
    	
Applicable   and means that Dealer shall deliver to Counterparty the Share Termination   Delivery Property on the date on which the Payment Obligation would otherwise   be due pursuant to “Consequences of Merger Events” above or   Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or   Section 6(d)(ii) of the Agreement, as applicable, or such later   date as the Calculation Agent may reasonably determine (the “Share Termination Payment Date”), in satisfaction of the   Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share   Termination Delivery Property:
    	
 
    	
A   number of Share Termination Delivery Units, as calculated by the Calculation   Agent, equal to the Payment Obligation divided by the Share Termination Unit   Price. The Calculation Agent shall adjust the Share Termination Delivery   Property by replacing any fractional portion of the aggregate amount of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    	
 
    
	
Share   Termination Unit Price:
    	
 
    	
The   value of property contained in one Share Termination Delivery Unit on the   date such Share Termination Delivery Units are to be delivered as Share   Termination Delivery Property, as determined by the Calculation Agent in its   discretion by commercially reasonable means and notified by the Calculation   Agent to Dealer at the time of notification of the Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share   Termination Delivery Unit:
    	
 
    	
In   the case of a Termination Event, Event of Default, Delisting or
    

 

21

 

	
 
    	
 
    	
Additional   Disruption Event, one Share or, in the case of an Insolvency, Nationalization   or Merger Event, one Share or a unit consisting of the number or amount of   each type of property received by a holder of one Share (without   consideration of any requirement to pay cash or other consideration in lieu   of fractional amounts of any securities) in such Insolvency, Nationalization   or Merger Event, as applicable. If such Insolvency, Nationalization or Merger   Event involves a choice of consideration to be received by holders, such   holder shall be deemed to have elected to receive the maximum possible amount   of cash.
    
	
 
    	
 
    	
 
    
	
Failure   to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Other   Applicable Provisions:
    	
 
    	
If   Share Termination Alternative is applicable, the provisions of Sections 9.8,   9.9, 9.10 and 9.11 of the Equity Definitions will be applicable as if   “Physical Settlement” applied to the Transaction, except that all references   to “Shares” shall be read as references to “Share Termination Delivery   Units”; provided that the   Representation and Agreement contained in Section 9.11 of the Equity   Definitions shall be modified by excluding any representations therein   relating to restrictions, obligations, limitations or requirements under   applicable securities laws as a result of the fact that Counterparty is the   issuer of any Share Termination Delivery Units (or any part thereof).
    

 

(d)                                 Disposition of Hedge Shares.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer based on the advice of counsel, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the U.S. public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure letters of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Counterparty elects clause (i) above but the items referred to therein are not completed in a timely manner, or if Dealer, in its commercially reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(d) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance reasonably satisfactory to Dealer, including 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 Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the “Daily VWAP” (as defined in the Indenture) on such Exchange Business Days, and in the amounts, requested by Dealer.  This Section 8(d) shall survive the termination, expiration or early unwind of the Transaction.

 

(e)                                  Repurchase and Conversion Rate Adjustment Notices.  Counterparty shall, at least two Exchange Business Days prior to any day on which Counterparty effects any repurchase of Shares or consummates or otherwise engages in any transaction or event that could reasonably be expected to lead to an increase in the Conversion Rate (other than as a result of a Fundamental Change Adjustment) (a

 

22

 

“Conversion Rate Adjustment Event”), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) on such day if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage would reasonably be expected to be (i) greater than 4.5% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and , if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material nonpublic information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice.  The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day.  In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses (including losses relating to the 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 this Transaction), claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act or under any state or federal law, regulation or regulatory order, relating to or arising out of such failure.  If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.  In addition, Counterparty will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty.  This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

 

(f)                                    Transfer and Assignment.  Either party may transfer or assign any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed; provided that Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder, in whole or in part, to (i) any affiliate of Dealer of credit quality equivalent to or better than Dealer’s (or its guarantor’s) or whose obligations would be guaranteed by Dealer (or its guarantor), or (ii) if Dealer has, or prior to giving effect to such a transfer or assignment, would have, an Excess Ownership Position, any person, or any person whose obligations would be guaranteed by a person, in either case of this clause (ii), of credit quality equivalent to Dealer’s (or, if Dealer’s obligations are then guaranteed by another party, such guarantor’s). If at any time at which (1) the Equity Percentage exceeds 8.5% or (2) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware General Corporation Law or other federal, state or local law, rule, regulation or regulatory order or organizational documents or contracts of Counterparty 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 in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting, registration, filing or notification obligations (other than to file a Schedule 13D or Schedule 13G under the Exchange Act) or other requirements (including obtaining prior approval by a state or federal regulator) of a Dealer Person under Applicable Restrictions and with respect to which such requirements have not been met or the relevant approval has not been received minus (y) 1% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party after its commercially reasonable efforts on pricing and terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer

 

23

 

exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess Ownership Position no longer exists following such partial termination.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(c) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty were the sole Affected Party with respect to such partial termination, (iii) such portion of the Transaction were the only Terminated Transaction and (iv) Dealer were the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication on such day and (B) the denominator of which is the number of Shares outstanding on such day.  In the case of a transfer or assignment by Counterparty of its rights and obligations hereunder and under the Agreement, in whole or in part (any such Options so transferred or assigned, the “Transfer Options”), to any party, withholding of such consent by Dealer shall not be considered unreasonable if such transfer or assignment does not meet the reasonable conditions that Dealer may impose including, but not limited, to the following conditions:

 

(A)                           With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 8(e) or any obligations under Section 2 (regarding Extraordinary Events) or 8(d) of this Confirmation;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to the 10th Exchange Business Day after such

 

24

 

Nominal Settlement Date, but not prior to the earlier of the relevant Conversion Date and the first day of the relevant Cash Settlement Averaging Period) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

 

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

 

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

 

(i)                                     No Netting and Set-off.  The provisions of Section 2(c) of the Agreement shall not apply to the Transaction.  Each party waives any and all rights it may have to set-off delivery or payment obligations it owes to the other party under the Transaction against any delivery or payment obligations owed to it by the other party, whether arising under the Agreement, under any other agreement between parties hereto, by operation of law or otherwise.

 

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

 

(k)                                 Early Unwind.  In the event the sale by Counterparty of the Firm Securities is not consummated pursuant to the Purchase Agreement for any reason by the close of business in New York on September 16, 2013 (or such later date as agreed upon by the parties, which in no event shall be later than September 23, 2013) (September 16, 2013 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty hereunder shall be cancelled and terminated and Counterparty shall pay to Dealer, other than in cases involving a breach of the Purchase Agreement by Dealer as the Initial Purchaser, an amount in cash equal to the aggregate amount of costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities, unless Counterparty agrees to purchase any such Shares at the cost at which Dealer purchased such Shares) or, at the election of Counterparty, deliver to Dealer Shares with a value equal to such amount, as determined by the Calculation Agent, in which event the parties shall enter into customary and commercially reasonable documentation relating to the registered or exempt resale of such Shares; provided that, if Counterparty makes such election to deliver Shares, notwithstanding the foregoing, the number of Shares so delivered will not exceed a number of Shares equal to two multiplied by the Number of Shares.  Following such termination, cancellation and payment or delivery, each party shall be released and discharged by the other party from, and agrees not to make any claim against the other party with respect to, any obligations or liabilities of either party arising out of, and to be performed in connection with, the Transaction either prior to or after the Early Unwind Date.  Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(l)             Wall Street Transparency and Accountability Act of 2010.  The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable,

 

25

 

arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein or the Agreement (including, but not limited to, rights arising from a Change in Law, a Failure to Deliver, a Hedging Disruption, an Increased Cost of Hedging, an Excess Ownership Position or Illegality (as defined in the Agreement)).

 

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

 

(n)         Governing Law.  THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION 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 LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

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

 

(p)         Counterparts.  This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

(q)         Role of Agent.  Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction.  Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder.  Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.

 

(r)            Regulatory Provisions.  The time of dealing for the Transaction will be confirmed by Dealer upon written request by Counterparty. The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with a Transaction.

 

(s)           Standard Tax Reps.

 

(i)                                     Part 2(b) of the ISDA Schedule — Payee Representation:

 

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

 

Counterparty is a corporation established under the laws of the State of Delaware and is a U.S. person (as that term is defined in Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended).

 

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

 

(A)                               Each payment received or to be received by it in connection with the Agreement is effectively connected with its conduct of a trade or business within the United States; and

 

26

 

(B)                               It is a “foreign person” (as that term is used in Section 1.6041-4(a)(4) of the United States Treasury Regulations) for United States federal income tax purposes.

 

(ii)                                  Part 3(a) of the ISDA Schedule — Tax Forms:

 

Party Required to Deliver Document

 

	
 
    	
 
    	
Form/Document/Certificate
    	
 
    	
Date by which to be Delivered
    
	
Counterparty
    	
 
    	
A   complete and duly executed United States Internal Revenue Service   Form W-9 (or successor thereto.)
    	
 
    	
(i) Upon   execution and delivery of this Confirmation; (ii) promptly upon   reasonable demand by Dealer; and (iii) promptly upon learning that any such   Form previously provided by Counterparty has become obsolete or incorrect.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Dealer
    	
 
    	
A   complete and duly executed United States Internal Revenue Service   Form W-8ECI (or successor thereto.)
    	
 
    	
(i) Upon   execution and delivery of this Confirmation; and (ii) promptly upon   learning that any such Form previously provided by Dealer has become obsolete   or incorrect.
    

 

(t)            Waiver of Jury Trial.  EACH PARTY IRREVOCABLY 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.

 

27

 

Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Barclays a facsimile of the fully-executed Confirmation to Barclays at (+1) 917-522-0458.  Originals shall be provided for your execution upon your request.

 

Very truly yours,

 

 

BARCLAYS CAPITAL INC.
  acting solely as Agent in connection with this Transaction

 

 

	
By:
    	
/s/   Nicholas Abbate
    	
 
    
	
 
    	
Name:   Nicholas Abbate
    	
 
    
	
 
    	
Title:   Authorized Signatory
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Agreed   and Accepted By:
    	
 
    
	
 
    	
 
    
	
ALON USA ENERGY, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Shai Even
    	
 
    
	
 
    	
Name:   Shai Even
    	
 
    
	
 
    	
Title:   Senior Vice President and
    	
 
    
	
 
    	
Chief Financial OfficerExhibit 10.2

 

EXECUTION VERSION

 

GOLDMAN, SACHS & CO. | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL:  212-902-1000

 

Opening Transaction

 

	
To:
    	
Alon USA Energy, Inc.

12700 Park Central Dr., Suite 1600

Dallas, TX 75251
    
	
 
    	
 
    
	
A/C:
    	
046214615
    
	
 
    	
 
    
	
From:
    	
Goldman, Sachs & Co.
    
	
 
    	
 
    
	
Re:
    	
Base   Convertible Bond Hedge Transaction
    
	
 
    	
 
    
	
Ref.   No:
    	
SDB4166562360
    
	
 
    	
 
    
	
Date:
    	
September   10, 2013
    

 

 

Dear Ladies and Gentlemen:

 

The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Goldman, Sachs & Co. (“Dealer”) and Alon USA Energy, Inc. (“Counterparty”).  This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1.              This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”).  In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern.  Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of September 16, 2013 between Counterparty and U.S. Bank, National Association, as trustee (the “Indenture”), relating to the USD 130,000,000 principal amount of 3.00% Convertible Senior Notes due 2018 (the “Convertible Securities”).  In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern.  For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation.  If any relevant sections of the Indenture are changed, added or renumbered between the execution of this Confirmation and the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties, as evidenced by such draft of the Indenture and the “Description of Notes” section of the Preliminary Offering Circular related to the offering of the Convertible Securities, as supplemented by the related pricing term sheet.  The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution and if the Indenture is amended, modified or supplemented following its execution, any such amendment, modification or supplement will be disregarded for purposes of this Confirmation (other than Section 8(b)(i)(B) below) unless the parties agree otherwise in writing.  The Transaction is subject to early unwind if the closing of the Convertible Securities is not consummated for any reason, as set forth below in Section 8(k).

 

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

 

 

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) as if Dealer and Counterparty had executed an agreement in such form on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method and US Dollars (“USD”) as the Termination Currency, and (ii) the replacement of the word “third” in the last line of Section 5(a)(i) of the Agreement with the word “first”.

 

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

 

The Transaction hereunder shall be the sole Transaction 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 Transaction shall not be considered a Transaction under, or otherwise governed by, such existing or deemed ISDA Master Agreement.

 

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

 

	
General Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade   Date:
    	
 
    	
September   10, 2013
    
	
 
    	
 
    	
 
    
	
Effective   Date:
    	
 
    	
The closing date of the initial   issuance of the Convertible Securities.
    
	
 
    	
 
    	
 
    
	
Option   Style:
    	
 
    	
Modified   American, as described under “Procedures for Exercise” below.
    
	
 
    	
 
    	
 
    
	
Option   Type:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The   Common Stock of Counterparty, par value USD0.01 per share (Ticker Symbol:   “ALJ”).
    
	
 
    	
 
    	
 
    
	
Applicable   Percentage:
    	
 
    	
70.0%
    
	
 
    	
 
    	
 
    
	
Number   of Options:
    	
 
    	
The   number of Convertible Securities in denominations of USD1,000 principal   amount issued by Counterparty on the closing date for the initial issuance of   the Convertible Securities. For the avoidance of doubt, the Number of Options   outstanding shall be reduced by each exercise of Options hereunder.
    
	
 
    	
 
    	
 
    
	
Option Entitlement:
    	
 
    	
As of any date, a number of Shares per Option   equal to the “Conversion Rate” (as defined in the Indenture, but without   regard to any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment).
    
	
 
    	
 
    	
 
    
	
Fundamental Change Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate   pursuant to Section 4.06 of the Indenture.
    

 

2

 

	
Discretionary Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate   pursuant to Section 4.05(b) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Strike   Price:
    	
 
    	
As   of any date, an amount in USD equal to USD1,000 divided by   the Option Entitlement as of such date. The Strike Price shall be rounded by   the Calculation Agent in accordance with the applicable provisions of the   Indenture.
    
	
 
    	
 
    	
 
    
	
Number   of Shares:
    	
 
    	
As   of any date, a number of Shares equal to the product (i) the Applicable   Percentage, (ii) the Number of Options and (iii) the Option Entitlement.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD   17,262,700.00.
    
	
 
    	
 
    	
 
    
	
Premium   Payment Date:
    	
 
    	
The   Effective Date
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The   New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related   Exchange:
    	
 
    	
All   Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures for Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise   Dates:
    	
 
    	
Each   Conversion Date.
    
	
 
    	
 
    	
 
    
	
Conversion   Date:
    	
 
    	
Each   “Conversion Date” (as defined in the Indenture) occurring during the Exercise   Period for Convertible Securities each in denominations of USD1,000 principal   amount (such Convertible Securities, the “Relevant   Convertible Securities” for such Conversion Date).
    
	
 
    	
 
    	
 
    
	
Exercise   Period:
    	
 
    	
The   period from and excluding the Effective Date to and including the Expiration   Date.
    
	
 
    	
 
    	
 
    
	
Expiration   Date:
    	
 
    	
The   earlier of (i) the last day on which any Convertible Securities remain   outstanding and (ii) the second “Scheduled Trading Day” (as defined in the   Indenture) immediately preceding the “Maturity Date” (as defined in the   Indenture). For the avoidance of doubt, the Options will be exercisable in   accordance with, and subject to the conditions set forth in, the provisions   set forth under “Automatic Exercise on Conversion Dates”, “Notice Deadline”   and “Notice of Exercise” below.
    
	
 
    	
 
    	
 
    
	
Automatic   Exercise on Conversion Dates:
    	
 
    	
Applicable;   and means that on each Conversion Date, a number of Options equal to the   number of Relevant Convertible Securities for such Conversion Date in   denominations of USD1,000 principal amount shall be automatically exercised,   subject to “Notice of Exercise” below.
    
	
 
    	
 
    	
 
    
	
Notice   Deadline:
    	
 
    	
In   respect of any exercise of Options hereunder on any Conversion Date, 4:00 P.M.,   New York City time, on (i) in the case the applicable Relevant Convertible   Securities will be settled by Counterparty by delivery of Shares only   (together with cash in lieu of any fractional Share), the Scheduled Trading   Day immediately following the relevant Conversion Date, or (ii) otherwise,   the Scheduled Trading Day
    

 

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immediately   preceding the first Scheduled Trading Day of the relevant Cash Settlement   Averaging Period; provided   that in the case of any exercise of Options hereunder in connection with the   conversion of any Relevant Convertible Securities for any Conversion Date   occurring during the period from and including June 15, 2018 (or if   Counterparty has elected to settle all conversions of Convertible Securities   solely in Shares (together with cash in lieu of any fractional Share) or   through combination settlement with the “Specified Dollar Amount” (as defined   in the Indenture) of less than USD1,000 and such election is effective on the   95th “Scheduled Trading Day” (as defined in the   Indenture) prior to the Maturity Date, then from and including such date) to   and including the Expiration Date (such period, the “Final   Conversion Period”), the Notice Deadline shall be 12:00 P.M., New   York City time, on the “Scheduled Trading Day” (as defined in the Indenture)   immediately preceding the Maturity Date.
    
	
 
    	
 
    	
 
    
	
Notice   of Exercise:
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, Dealer shall have no   obligation to make any payment or delivery in respect of any exercise of   Options hereunder and such obligation in respect of such exercise shall be   permanently extinguished unless Counterparty notifies Dealer in writing prior   to the Notice Deadline in respect of such exercise, of (i) the number of   Relevant Convertible Securities being converted on the related Conversion   Date (specifying, if applicable, whether all or any portion of such   Convertible Securities are Convertible Securities as to which additional   Shares would be added to the Conversion Rate (as defined in the Indenture)   pursuant to Section 4.06 of the Indenture (the “Make-Whole Convertible Securities”)),   (ii) the scheduled settlement date under the Indenture for the Relevant   Convertible Securities for such Conversion Date, (iii) whether such Relevant   Convertible Securities will be settled by Counterparty by delivery of cash,   Shares or a combination of cash and Shares and, if such a combination, the   “Specified Dollar Amount” (as defined in the Indenture) and (iv) the first   “Scheduled Trading Day” (as defined in the Indenture) of the relevant   “Observation Period” (as defined in the Indenture), if any; provided that in the case of any exercise of Options in   connection with the conversion of any Relevant Convertible Securities for any   Conversion Date occurring during the Final Conversion Period, the contents of   such notice shall be as set forth in clauses (i) and (ii) above. Counterparty   acknowledges its responsibilities under applicable securities laws, and in particular   Section 9 and Section 10(b) of the Securities Exchange Act of 1934, as   amended (the “Exchange Act”) and the
    

 

4

 

	
 
    	
 
    	
rules   and regulations thereunder, in respect of any election of a settlement method   with respect to the Convertible Securities. For the avoidance of doubt, if   Counterparty fails to give such notice when due in respect of any exercise of   Options hereunder, Dealer’s obligation to make any payment or delivery in   respect of such exercise shall be permanently extinguished, and late notice   shall not cure such failure; provided   that notwithstanding the foregoing, such notice (and the related exercise of   Options) shall be effective with respect to Options relating to Convertible   Securities (I) with a Conversion Date occurring prior to the first day of the   Final Conversion Period if given after the relevant Notice Deadline, but   prior to 4:00 P.M. New York City time, on the fifth Scheduled Trading Day   following such Notice Deadline or (II) with a Conversion Date occurring on or   after the first day of the Final Conversion Period if given after the   relevant Notice Deadline, but prior to 4:00 P.M. New York City time, on the   Scheduled Trading Day immediately following such Notice Deadline, in which   event, in either case of clauses (I) or (II), Dealer’s Delivery Obligation in   respect of the related Options shall not be extinguished but may instead be   adjusted by the Calculation Agent to reflect the additional costs (including,   but not limited to, hedging mismatches and market losses) and expenses   incurred by Dealer in connection with its hedging activities (including the   unwinding of any hedge position) as a result of Dealer not having received   such notice on or prior to such Notice Deadline. If applicable, the Notice of   Exercise shall also contain the Settlement Method Election Provisions.
    
	
 
    	
 
    	
 
    
	
Notice   of Final Convertible Security Settlement Method:
    	
 
    	
Counterparty   shall notify Dealer in writing of the final settlement method (and, if   applicable, the final Specified Dollar Amount) elected (or deemed to be   elected) with respect to the Convertible Securities before 4:00 P.M. (New   York City time) on the earlier to occur of (x) the date on which it makes the   irrevocable election of a settlement method in accordance with Section 8.01(j)   of the Indenture and (y) May 2, 2018 (which date is the 95th “Scheduled   Trading Day” (as defined in the Indenture) prior to the Maturity Date). If   applicable, the Notice of Final convertible Security Settlement Method shall   also contain the Settlement Method Election Provisions.
    
	
 
    	
 
    	
 
    
	
Dealer’s   Telephone Number and Telex and/or Facsimile Number and Contact Details for   purpose of Giving Notice:
    	
 
    	
As   specified in Section 6(b) below.
    

 

5

 

	
Settlement Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement   Date:
    	
 
    	
For   any Exercise Date, the settlement date for the cash (if any) and/or Shares   (if any) to be delivered in respect of the Relevant Convertible Securities   for the relevant Conversion Date under the terms of the Indenture; provided that the Settlement Date shall not be prior to   the latest of (i) the date one Settlement Cycle following the final day of   the relevant Cash Settlement Averaging Period, (ii) the Exchange Business Day   immediately following the date on which Counterparty gives notice to Dealer   of such Settlement Date prior to 4:00 P.M., New York City time, or (iii) the   Exchange Business Day immediately following the date Counterparty provides   the Notice of Delivery Obligation prior to 4:00 P.M., New York City time.
    
	
 
    	
 
    	
 
    
	
Delivery   Obligation:
    	
 
    	
In   lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity   Definitions, and subject to “Notice of Exercise” above, in respect of an   Exercise Date, Dealer will deliver to Counterparty on the related Settlement   Date (the “Delivery Obligation”):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)   a number of Shares equal to the product of the Applicable Percentage and the   aggregate number of Shares included in the “Settlement Amount” (as defined in   the Indenture), if any, that Counterparty would be obligated to deliver to   the holder(s) of the Relevant Convertible Securities for such Conversion Date   pursuant to Section 4.03(a)(ii)(C) of the Indenture (except that such number   of Shares shall be determined without taking into consideration any rounding   pursuant to Section 4.03(b) of the Indenture), rounded down to the nearest   whole number, and cash in lieu of any fractional Share resulting from such   rounding;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)   cash equal to the product of the Applicable Percentage and the excess of (I) the   “Daily Principal Portion” (as defined in the Indenture but with relevant   references to “60” deemed replaced with a reference to the number of “VWAP   Trading Days” (as defined in the Indenture) comprising the relevant Cash   Settlement Averaging Period) over (II) USD1,000 divided by   the number of “VWAP Trading Days” (as defined in the Indenture) comprising   the relevant Cash Settlement Averaging Period, for each “VWAP Trading Day”   (as defined in the Indenture) during the relevant Cash Settlement Averaging   Period per Convertible Security (in denominations of USD1,000) that   Counterparty would be obligated to deliver to holder(s) of the Relevant   Convertible Securities for such Conversion Date pursuant to Section 4.03(a)(ii)(C)   of the
    

 

6

 

	
 
    	
 
    	
Indenture;   and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)   if the “Aggregate Share Cap” and the “Daily Share Cap” apply and the   “Uncapped Daily Share Amount” exceeds the “Daily Share Cap”, the product of   (I) the Applicable Percentage, (II) the excess of such “Uncapped Daily Share   Amount” over such “Daily Share Cap” and (III) the “Daily VWAP” (with defined   terms in this clause (iii) having the meanings assigned in the Indenture but   with relevant references to “60” deemed replaced with a reference to the   number of “VWAP Trading Days” (as defined in the Indenture) comprising the   relevant Cash Settlement Averaging Period), for each “VWAP Trading Day” (as   defined in the Indenture) during the relevant Cash Settlement Averaging   Period per Convertible Security (in denominations of USD1,000) that   Counterparty would be obligated to deliver to holder(s) of the Relevant   Convertible Securities for such Conversion Date pursuant to Section 4.03(a)(ii)(C)   of the Indenture,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
for   each of clauses (i), (ii) and (iii), determined as if Counterparty had   elected to satisfy its conversion obligation in respect of such Relevant   Convertible Securities by the Convertible Security Settlement Method,   notwithstanding any different actual election by Counterparty with respect to   the settlement of such Relevant Convertible Securities (collectively, the “Convertible Obligation”); provided that the Delivery Obligation shall be determined   excluding any Shares and/or cash that Counterparty is obligated to deliver to   holder(s) of the Relevant Convertible Securities as a direct or indirect   result of any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment and any interest payment that   Counterparty is (or would have been) obligated to deliver to holder(s) of the   Relevant Convertible Securities for such Conversion Date. Notwithstanding the   foregoing, in all events the Delivery Obligation shall be capped so that the   value of (x)(I) the number of Shares comprising the Delivery Obligation multiplied by the Share Obligation Value Price plus (II) the amount of cash comprising the Delivery   Obligation, does not exceed (y) the relevant Net Convertible Share Obligation   Value. For the avoidance of doubt, if the “Daily Conversion Value” (as   defined in the Indenture but with references therein to “60” deemed replaced   with a reference to the number of “VWAP Trading Days” (as defined in the   Indenture) comprising the relevant Cash Settlement Averaging Period) for any   “VWAP Trading Day” (as defined in the Indenture) occurring in the relevant   Cash Settlement Averaging Period is
    

 

7

 

	
 
    	
 
    	
less   than or equal to USD1,000 divided by   the number of “VWAP Trading Days” (as defined in the Indenture) comprising   the relevant Cash Settlement Averaging Period, Dealer will have no delivery   obligation hereunder in respect of the related Exercise Date and such VWAP   Trading Day.
    
	
 
    	
 
    	
 
    
	
Convertible   Security Settlement Method:
    	
 
    	
For   any Relevant Convertible Securities, if (i) Counterparty has notified Dealer   in the related Notice of Exercise (or in the Notice of Final Convertible   Security Settlement Method, as the case may be) that it has elected to   satisfy its conversion obligation in respect of such Relevant Convertible   Securities in cash or in a combination of cash and Shares in accordance with   Section 4.03(a)(i) of the Indenture with a Specified Dollar Amount of at   least USD1,000 (a “Cash Election”)   and (ii) such Notice of Exercise (or such Notice of Final Convertible   Security Settlement Method, as the case may be) contains all of the   Settlement Method Election Provisions (to the extent required under the   “Settlement Method Election Provisions” below), the Convertible Security   Settlement Method shall be the settlement method actually so elected by Counterparty   in respect of such Relevant Convertible Securities; otherwise, the   Convertible Security Settlement Method shall (x) assume Counterparty had made   a Cash Election with respect to such Relevant Convertible Securities with a   Specified Dollar Amount of USD1,000 per Relevant Convertible Security and (y)   be calculated as if the relevant “Observation Period” pursuant to Section 4.03(a)(ii)(C)   of the Indenture consisted of 90 “VWAP Trading Days” (as defined in the   Indenture) commencing on (I) the second “Scheduled Trading Day” (as defined   in the Indenture) after the Conversion Date for conversions with a related   Conversion Date occurring prior to the Final Conversion Period or (II) the 92nd “Scheduled Trading Day” (as defined in the   Indenture) prior to the Maturity Date for conversions with a related   Conversion Date occurring during the Final Conversion Period (such   “Observation Period”, subject to the provisions of this clause (y), the “Cash Settlement Averaging Period” for such Relevant   Convertible Securities).
    
	
 
    	
 
    	
 
    
	
Settlement   Method Election Provisions:
    	
 
    	
In   order for the Convertible Security Settlement Method to be the settlement   method actually elected by Counterparty under the Indenture in respect of the   applicable Relevant Convertible Securities in accordance with “Convertible   Security Settlement Method” above, the related Notice of Exercise (or Notice   of Final Convertible Security Settlement Method, as the case may be) must   contain in writing the following representations, warranties and   acknowledgments from Counterparty to Dealer as of such notice delivery date   (except that such
    

 

8

 

	
 
    	
 
    	
representations,   warranties and acknowledgments will not be required in the case where the   Relevant Convertible Securities will be settled by Counterparty by delivery   of a combination of cash and Shares with a Specified Dollar Amount equal to   USD1,000 where Counterparty has either (x) failed to elect a settlement   method under the Indenture in respect of the applicable Relevant Convertible   Securities so that Counterparty is deemed to have elected such settlement   method pursuant to Section 4.03(a)(i) of the Indenture or (y) merely   confirmed such deemed election pursuant to Section 4.03(a)(i) of the   Indenture):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i) none of Counterparty and its officers or   directors, or any person that controls, potentially controls, or otherwise   exercises influence over, Counterparty’s decision to elect the Convertible   Security Settlement Method is aware   of any material nonpublic information regarding Counterparty or the Shares;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) Counterparty is electing the Convertible   Security Settlement Method in good   faith and not as part of a plan or scheme to evade compliance with the U.S.   federal securities laws; Counterparty is not electing the settlement method   under the Indenture for the Relevant Convertible Securities or the   Convertible Security Settlement Method to create actual or apparent trading   activity in the Shares (or any security convertible into or exchangeable for   Shares) or to raise or depress or otherwise manipulate the price of the   Shares (or any security convertible into or exchangeable for Shares) or   otherwise in violation of the Exchange Act; and Counterparty has not entered   into or altered any hedging transaction relating to the Shares corresponding   to or offsetting the Transaction;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii) Counterparty has the power to make such   election and to execute and deliver any documentation relating to such   election that it is required by this Confirmation to deliver and to perform   its obligations under this Confirmation and has taken all necessary action to   authorize such election, execution, delivery and performance;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv) such election and performance of its   obligations under this Confirmation do not violate or conflict with any law   applicable to it, any provision of its constitutional documents, any order or   judgment of any court or other agency of government applicable to it or any   of its assets or any contractual restriction binding on or affecting it or   any of its assets; and
    

 

9

 

	
 
    	
 
    	
(v) any transaction that Dealer makes with respect   to the Shares during the period beginning at the time that Counterparty   delivers such notice and ending at the close of business on the final day of   the Cash Settlement Averaging Period shall be made by Dealer at Dealer’s sole   discretion for Dealer’s own account and Counterparty shall not have, and   shall not attempt to exercise, any influence over how, when, whether or at   what price Dealer effects such transactions, including, without limitation,   the prices paid or received by Dealer per Share pursuant to such   transactions, or whether such transactions are made on any securities   exchange or privately.
    
	
 
    	
 
    	
 
    
	
Notice   of Delivery Obligation:
    	
 
    	
No   later than the Exchange Business Day immediately following the last day of   the relevant Cash Settlement Averaging Period, Counterparty shall give Dealer   notice of the final number of Shares and/or amount of cash comprising the   settlement obligation under the Indenture in respect of the Relevant   Convertible Securities; provided   that, with respect to any Exercise Date occurring during the Final Conversion   Period, Counterparty may provide Dealer with a single notice of the aggregate   number of Shares and/or amount of cash comprising the settlement obligation   under the Indenture in respect of the Relevant Convertible Securities for all   Exercise Dates occurring during such period (it being understood, for the   avoidance of doubt, that the requirement of Counterparty to deliver such   notice shall not limit Counterparty’s obligations with respect to a Notice of   Exercise or Notice of Convertible Security Settlement Method, as the case may   be, as set forth above, in any way).
    
	
 
    	
 
    	
 
    
	
Net   Convertible Share Obligation Value:
    	
 
    	
With   respect to Relevant Convertible Securities as to a Conversion Date, (i) the   product of the Applicable Percentage and the Total Convertible Share   Obligation Value of such Relevant Convertible Securities for such Conversion   Date minus (ii) the product of the   Applicable Percentage and the aggregate principal amount of such Relevant   Convertible Securities for such Conversion Date.
    
	
 
    	
 
    	
 
    
	
Total   Convertible Share Obligation Value:
    	
 
    	
With   respect to Relevant Convertible Securities with respect to a Conversion Date,   (i) (A) the number of Shares equal to the aggregate number of Shares that   Counterparty is obligated to deliver to the holder(s) of Relevant Convertible   Securities for such Conversion Date pursuant to the Indenture (except that   such number of Shares shall be determined without taking into consideration   any rounding pursuant to Section 4.03(b) of the Indenture) multiplied by (B) the Share Obligation Value Price
    

 

10

 

	
 
    	
 
    	
plus (ii) an   amount of cash equal to (A) the fractional Shares, if any, that would   have resulted but for the rounding under (i)(A) above multiplied by (B) the Share Obligation Value Price plus (iii) an amount of cash equal to the aggregate   amount of cash that Counterparty is obligated to deliver to the   holder(s) of Relevant Convertible Securities for such Conversion Date   pursuant to the Indenture; provided   that, the Total Convertible Share Obligation Value shall be determined   excluding any Shares and/or cash that Counterparty is obligated to deliver to   holder(s) of the Relevant Convertible Securities as a direct or indirect   result of any adjustments to the Conversion Rate pursuant to a Fundamental   Change Adjustment or a Discretionary Adjustment and any interest payment that   Counterparty is (or would have been) obligated to deliver to   holder(s) of the Relevant Convertible Securities for such Conversion   Date.
    
	
 
    	
 
    	
 
    
	
Share   Obligation Value Price:
    	
 
    	
The   opening price as displayed under the heading “Op” on Bloomberg   page “ALJ.N <Equity>“ (or any successor thereto) (or if such   displayed price is unavailable or is manifestly incorrect, the market value   of one Share on such date, as determined by the Calculation Agent) on the   applicable Settlement Date.
    
	
 
    	
 
    	
 
    
	
Other   Applicable Provisions:
    	
 
    	
To   the extent Dealer is obligated to deliver Shares hereunder, the provisions of   Sections 9.8, 9.9, 9.10 and 9.11 of the Equity Definitions will be applicable   as if “Physical Settlement” applied to the Transaction; provided that the Representation and   Agreement contained in Section 9.11 of the Equity Definitions shall be   modified by excluding any representations therein relating to restrictions,   obligations, limitations or requirements under applicable securities laws   that exist as a result of the fact that Counterparty is the issuer of the   Shares.
    
	
 
    	
 
    	
 
    
	
Certificated   Shares:
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, Dealer may, in whole or   in part, deliver Shares required to be delivered to Counterparty hereunder in   certificated form in lieu of delivery through the Clearance System. With   respect to such certificated Shares, the Representation and Agreement   contained in Section 9.11 of the Equity Definitions shall be modified by   deleting the remainder of the provision after the word “encumbrance” in the   fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method   of Adjustment:
    	
 
    	
Notwithstanding   Section 11.2 of the Equity Definitions, upon the occurrence of any event   or condition set forth in Sections 4.04(a) through (e) of the   Indenture, the Calculation Agent shall make a corresponding adjustment in   respect of any one or more of the Strike Price, the Number of Options, the
    

 

11

 

	
 
    	
 
    	
Option   Entitlement and any other term relevant to the exercise, settlement or   payment of the Transaction. Immediately upon the occurrence of any such   adjustment event, Counterparty shall notify the Calculation Agent of such   adjustment event; and once the adjustments to be made to the terms of the Indenture   and the Convertible Securities in respect of such adjustment event have been   determined, Counterparty shall immediately notify the Calculation Agent in   writing of the details of such adjustments. In addition, the Calculation   Agent shall, to the extent the Calculation Agent determines practicable in   good faith and in its commercially reasonable discretion, make a   corresponding adjustment to the settlement terms of the Options (but without   duplication of any adjustment pursuant to the foregoing sentence) to the   extent an analogous adjustment would be made pursuant to   Section 4.04(f) or Section 4.05(a), as applicable, of the   Indenture; provided that the Calculation   Agent may limit or alter any such adjustment referenced in this sentence so   that the fair value of the Transaction to Dealer is not reduced as a result   of such adjustment. For the avoidance of doubt, Dealer shall not have any   delivery obligation hereunder in respect of any “Distributed Property”   delivered by Counterparty pursuant to the first paragraph under the first   formula under Section 4.04(c) of the Indenture or any payment   obligation in respect of any cash paid by Counterparty pursuant to the first   sentence of the second paragraph under the formula under Section 4.04(d) of   the Indenture (collectively, the “Dilution Adjustment   Fallback Provisions”), and no adjustment shall be made to the   terms of the Transaction on account of any event or condition described in   the Dilution Adjustment Fallback Provisions.
    
	
 
    	
 
    	
 
    
	
Dividends:
    	
 
    	
If   at any time during the period from and including the Trade Date, to but   excluding the Expiration Date, (i) an ex-dividend date for a regular   quarterly cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that dividend is less than the   Regular Dividend on a per Share basis or (ii) if no Ex-Dividend Date for   a regular quarterly cash dividend occurs with respect to the Shares in any   quarterly dividend period of Counterparty, then the Calculation Agent will   make a corresponding adjustment in respect of any one or more of the Strike   Price, the Number of Options, the Option Entitlement and any other term   relevant to the exercise, settlement or payment of the Transaction to   preserve the fair value of the Options to Dealer after taking into account   such dividend or lack thereof. “Regular Dividend”   shall mean USD0.06 per Share per quarter.
    

 

12

 

	
Extraordinary   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger   Events:
    	
 
    	
Notwithstanding   Section 12.1(b) of the Equity Definitions, a “Merger Event” means   any “Merger Event” as defined in Section 4.07(a) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Consequences   of Merger Events:
    	
 
    	
Notwithstanding   Section 12.2 of the Equity Definitions, upon the occurrence of a Merger   Event, the Calculation Agent shall make a corresponding adjustment in respect   of any one or more of the Strike Price, the Number of Options, the Option   Entitlement and any other term relevant to the exercise, settlement or   payment of the Transaction; provided that   such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to a Fundamental Change Adjustment or a   Discretionary Adjustment; and provided further   that the Calculation Agent may limit or alter any such adjustment referenced   in this paragraph so that the fair value of the Transaction to Dealer is not   reduced as a result of such adjustment; and provided   further that if, with respect to a Merger Event, (i) the   consideration for the Shares includes (or, at the option of a holder of   Shares, may include) shares of an entity or person that is not a corporation   organized under the laws of the United States, any state thereof or the   District of Columbia or (ii) the Counterparty to the Transaction   following such Merger Event will not be a corporation and/or will not be the   Issuer following such Merger Event, in either case, Dealer may elect (in its   sole discretion) for Cancellation and Payment (Calculation Agent   Determination) to apply.
    
	
 
    	
 
    	
 
    
	
Notice   of Merger Consideration and Consequences:
    	
 
    	
Upon   the occurrence of a Merger Event that causes the Shares to be converted into   the right to receive more than a single type of consideration (determined   based in part upon any form of stockholder election), Counterparty shall   reasonably promptly (but in any event prior to the relevant merger date)   notify the Calculation Agent of (i) the type and amount of consideration   that a holder of Shares would have been entitled to in the case of   reclassifications, consolidations, mergers, sales or transfers of assets or   other transactions that cause Shares to be converted into the right to   receive more than a single type of consideration, (ii) if holders of   Shares affirmatively make such an election, the weighted average of the types   and amounts of consideration to be received by the holders of Shares that   affirmatively make such an election, and (iii) the details of the   adjustment to be made under the Indenture in respect of such Merger Event.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation   and Payment (Calculation Agent Determination); provided that in addition to the provisions of   Section 12.6(a)(iii) of the Equity
    

 

13

 

	
 
    	
 
    	
Definitions,   it will also constitute a Delisting if the Shares are not immediately   re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The   NASDAQ Global Select Market or The NASDAQ Global Market (or their respective   successors); if the Shares are immediately re-listed, re-traded or re-quoted   on any such exchange or quotation system, such exchange or quotation system   shall thereafter be deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional   Termination Event(s):
    	
 
    	
Notwithstanding   anything to the contrary in the Equity Definitions, if, as a result of an   Extraordinary Event, any Transaction would be cancelled or terminated   (whether in whole or in part) pursuant to Article 12 of the Equity   Definitions, an Additional Termination Event (with such terminated   Transaction(s) (or portions thereof) being the Affected   Transaction(s) and Counterparty being the sole Affected Party) shall be   deemed to occur, and, in lieu of Sections 12.7, 12.8 and 12.9 of the Equity   Definitions, Section 6 of the Agreement shall apply to such Affected   Transaction(s).
    
	
 
    	
 
    	
 
    
	
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 adding the phrase “and/or Hedge Position” after   the word “Shares” in clause (X) thereof, 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 (the   contemplation of which on the Trade Date the Hedging Party is able to   reasonably demonstrate) and the Hedging Party has determined in good faith   that it would not be practicable for it to hedge its exposure with respect to   such Transaction in any other manner due to materially increased costs,   greater liability exposure or greater exposure to market risk or for any   other reasonable reason”; 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 Protection Act of 2010 or any similar
    

 

14

 

	
 
    	
 
    	
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)   Hedging   Disruption:
    	
 
    	
Applicable;   provided that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             Section 12.9(a)(v) of   the Equity Definitions is hereby modified 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, the transactions or assets referred to in   phrases (A) or (B) above must be available on commercially   reasonable pricing and other terms.”;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(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”.
    
	
 
    	
 
    	
 
    
	
(e)   Increased   Cost of Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging   Party:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Determining   Party:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements   and Acknowledgments Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    

 

15

 

	
3.              Calculation   Agent:
    	
 
    	
Dealer; provided that all calculations   and determinations made by the Calculation Agent shall be made in good faith   and in a commercially reasonable manner; provided further   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 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.
    

 

	
4.              Account   Details:
    
	
 
    	
 
    	
 
    
	
Dealer   Payment Instructions:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Chase   Manhattan Bank New York
    	
 
    	
 
    
	
For   A/C Goldman, Sachs & Co.
    	
 
    	
 
    
	
A/C   #930-1-011483
    	
 
    	
 
    
	
ABA:   021-000021
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Counterparty   Payment Instructions:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
To   be provided by Counterparty.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
5.              Offices:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
The   Office of Dealer for the Transaction is:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
200 West Street, New York, New York 10282-2198
    
	
 
    	
 
    	
 
    
	
The   Office of Counterparty for the Transaction is:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
12700 Park Central Dr.,   Suite 1600
    	
 
    	
 
    
	
Dallas, TX 75251
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
6.              Notices: For   purposes of this Confirmation:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)                                 Address for   notices or communications to Counterparty:(1)
    
	
 
    	
 
    	
 
    
	
To:
    	
 
    	
 
    	
 
    
	
Attn:
    	
Shai Even
    	
 
    	
 
    
	
 
    	
Chief Financial Officer
    	
 
    	
 
    
	
Telephone:
    	
(972) 367-3669
    	
 
    	
 
    
	
Facsimile:
    	
(972) 367-3726
    	
 
    	
 
    
	
Email:
    	
shai.even@alonusa.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Attn:
    	
James Ranspot
    	
 
    	
 
    

 

(1)  Please provide.

 

16

 

	
 
    	
Chief Legal Counsel — Corporate
    
	
Telephone:
    	
(972) 367-3614
    	
 
    	
 
    
	
Email:
    	
james.ranspot@alonusa.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
With   a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Attn:
    	
David Stone
    	
 
    	
 
    
	
 
    	
Vinson & Elkins LLP
    	
 
    	
 
    
	
Telephone:
    	
(713) 758-2236
    	
 
    	
 
    
	
Email:
    	
dstone@velaw.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(b)                                 Address for   notices or communications to Dealer:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
To:
    	
Goldman, Sachs & Co.
    	
 
    	
 
    
	
 
    	
200 West Street
    	
 
    	
 
    
	
 
    	
New York, NY 10282-2198
    	
 
    	
 
    
	
Attn:
    	
Bennett Schachter,
    	
 
    	
 
    
	
 
    	
Structured Equity Group
    	
 
    	
 
    
	
Telephone:
    	
(212) 902-2568
    	
 
    	
 
    
	
Facsimile:
    	
(212) 650-5140
    	
 
    	
 
    
	
Email:
    	
bennett.schachter@gs.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Attn:
    	
Daniel Josephs
    	
 
    	
 
    
	
 
    	
Structured Equity Group
    	
 
    	
 
    
	
Telephone:
    	
(212) 902-8193
    	
 
    	
 
    
	
Facsimile:
    	
(917) 977-3943
    	
 
    	
 
    
	
Email:
    	
daniel.josephs@gs.com
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
And email notification to the   following address:
    
	
Eq-derivs-notifications@am.ibd.gs.com
    

 

7.              Representations, Warranties and Agreements:

 

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

 

(i)                                     On the Trade Date and as of the date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 8(c) below, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act, when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

 

(ii)                                  (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.

 

17

 

(iii)                               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 the 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 (or any successor issue statements).

 

(iv)                              Counterparty will not be engaged in an “issuer tender offer” as such term is defined in Rule 13e-4 under the Exchange Act nor is it aware of any third party tender offer with respect to the Shares within the meaning of Rule 13e-1 under the Exchange Act.

 

(v)                                 Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.  Based on such resolutions, neither Dealer nor any of its affiliates shall be subject to the restrictions under Section 203 of the Delaware General Corporation Law as an “interested stockholder” of Counterparty by virtue of (A) its role as initial purchaser of, or market-maker in, the Convertible Securities, (B) its entry into the Transaction and/or (C) any hedging transactions in Counterparty’s securities in connection with the Transaction.

 

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

 

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

 

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

 

(ix)                              The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Sections 1(g), (h), (j), (m), (p), (t), (u), (v), (w), (x), (y), (z), (bb), (cc), (dd), (ee), (gg) and (hh) of the Purchase Agreement, dated as of September 10, 2013, between the Initial Purchasers (as defined therein) and Counterparty (the “Purchase Agreement”) are true and correct as of the Trade Date and the Effective Date and are hereby deemed to be repeated to Dealer as if set forth herein.

 

(x)                                 To Counterparty’s knowledge, based on due inquiry, no state or local (including non-U.S. jurisdictions) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

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

 

(xii)                           Without limiting the generality of Sections 3(a)(i), (ii), (iv) and (v) of the Agreement, neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will (A) conflict with or result in a breach of (w) the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, (x) to Counterparty’s knowledge, based on due inquiry, any applicable law or regulation, (y) any

 

18

 

order, writ, injunction or decree of any court or governmental authority or agency, or (z) any agreement or instrument filed as an exhibit to Counterparty’s Annual Report on Form 10-K for the year ended December 31, 2012, as updated by any subsequent filings, to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or (B) constitute a default under, or result in the creation of any lien under, any such agreement or instrument referred to in clause (A)(z) above.

 

(b)                                 Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in the U.S. Commodity Exchange Act, as amended, and is entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.

 

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

 

(d)                                 Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is 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), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)                                  As a condition to the effectiveness of the Transaction, Counterparty shall deliver to Dealer (i) an incumbency certificate, dated as of the Trade Date, of Counterparty in customary form and (ii) one or more opinions of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement (provided that solely for such purpose, the phrase “any law applicable to it,” shall be deemed to be deleted from clause (iii) thereof), Sections 7(a)(vii) and 7(a)(xii)(A)(w) and (z) hereof and such other matters as Dealer may reasonably request.

 

(f)                                   Counterparty understands that notwithstanding any other relationship between Counterparty and Dealer and its affiliates, in connection with this Transaction and any other over-the-counter derivative transactions between Counterparty and Dealer or its affiliates, Dealer or its affiliates is acting as principal and is not a fiduciary or advisor in respect of any such transaction, including any entry, exercise, amendment, unwind or termination thereof.

 

19

 

(g)                                  Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.

 

(h)                                 Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.

 

(i)                                     Counterparty represents and warrants that the assets used in the Transaction (i) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (ii) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.

 

8.  Other Provisions:

 

(a)                                 Right to Extend.  Dealer may postpone, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, that such extension or addition is reasonably necessary or appropriate to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock borrow market or other relevant market or to enable Dealer to effect purchases and/or sales of Shares or Share Termination Delivery Units in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer generally in its corporate equity derivatives business with respect to transactions similar to the Transaction).

 

(b)                                 Additional Termination Events.

 

(i)                                     The occurrence of (A) an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the Indenture, or (B) an Amendment Event, in each case, shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party, and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement.

 

“Amendment Event” means that Counterparty amends, modifies, supplements or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, absence of redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions) (in each case, other than any term that Counterparty is required to amend, modify or supplement under the terms of the Indenture that would not require the consent of any holder of the Convertible Securities to so amend, modify or supplement), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend, in each case without the prior consent of Dealer.

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty, within the applicable time period set forth under “Notice of Exercise” above, of any Notice of Exercise in respect of Options that relate to Make-Whole Convertible Securities shall constitute an Additional Termination Event as provided in this clause (ii).  Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange Business Day following such Additional Termination Event (which Exchange Business Day shall be as soon as

 

20

 

commercially reasonably practicable on or after the related settlement date under the Indenture for such Make-Whole Convertible Securities) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Make-Whole Options”) equal to the lesser of (A) the aggregate principal amount of such Make-Whole Convertible Securities specified in such Notice of Exercise, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Make-Whole Options.  Any payment hereunder with respect to such termination (the “Make-Whole Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a number of Options equal to the number of Make-Whole Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any Fundamental Change Adjustment); provided that the Make-Whole Unwind Payment shall not be greater than the excess of (x) (I) the Applicable Percentage, multiplied by (II) the number of Make-Whole Options multiplied by (III) the Conversion Rate (determined after taking into account any applicable Fundamental Change Adjustment) multiplied by (IV) the Share Obligation Value Price on the applicable settlement date for the cash and/or Shares to be delivered pursuant to Section 4.03(a)(ii) of the Indenture in respect of the relevant Make-Whole Convertible Securities over (y) the product of (I) the Applicable Percentage, (II) USD1,000 and (III) the number of such Make-Whole Options, as determined by the Calculation Agent in a commercially reasonable manner.

 

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

 

	
Share   Termination Alternative:
    	
 
    	
Applicable   and means that Dealer shall deliver to Counterparty the Share Termination   Delivery Property on the date on which the Payment Obligation would otherwise   be due pursuant to “Consequences of Merger Events” above or   Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or   Section 6(d)(ii) of the Agreement, as applicable, or such later   date as the Calculation Agent may reasonably determine (the “Share Termination Payment Date”), in satisfaction of the   Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share   Termination Delivery Property:
    	
 
    	
A   number of Share Termination Delivery Units, as calculated by the
    

 

21

 

	
 
    	
 
    	
Calculation   Agent, equal to the Payment Obligation divided by the Share Termination Unit   Price. The Calculation Agent shall adjust the Share Termination Delivery   Property by replacing any fractional portion of the aggregate amount of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    	
 
    
	
Share   Termination Unit Price:
    	
 
    	
The   value of property contained in one Share Termination Delivery Unit on the   date such Share Termination Delivery Units are to be delivered as Share   Termination Delivery Property, as determined by the Calculation Agent in its   discretion by commercially reasonable means and notified by the Calculation   Agent to Dealer at the time of notification of the Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share   Termination Delivery Unit:
    	
 
    	
In   the case of a Termination Event, Event of Default, Delisting or Additional   Disruption Event, one Share or, in the case of an Insolvency, Nationalization   or Merger Event, one Share or a unit consisting of the number or amount of   each type of property received by a holder of one Share (without   consideration of any requirement to pay cash or other consideration in lieu   of fractional amounts of any securities) in such Insolvency, Nationalization   or Merger Event, as applicable. If such Insolvency, Nationalization or Merger   Event involves a choice of consideration to be received by holders, such   holder shall be deemed to have elected to receive the maximum possible amount   of cash.
    
	
 
    	
 
    	
 
    
	
Failure   to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Other   Applicable Provisions:
    	
 
    	
If   Share Termination Alternative is applicable, the provisions of Sections 9.8,   9.9, 9.10 and 9.11 of the Equity Definitions will be applicable as if   “Physical Settlement” applied to the Transaction, except that all references   to “Shares” shall be read as references to “Share Termination Delivery   Units”; provided that the   Representation and Agreement contained in Section 9.11 of the Equity   Definitions shall be modified by excluding any representations therein   relating to restrictions, obligations, limitations or requirements under   applicable securities laws as a result of the fact that Counterparty is the   issuer of any Share Termination Delivery Units (or any part thereof).
    

 

(d)                                 Disposition of Hedge Shares.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer based on the advice of counsel, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the U.S. public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure letters of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided, however, that if Counterparty elects clause (i) above but the items referred to therein are not completed in a timely manner, or if Dealer, in its commercially reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(d) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements

 

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customary for private placements of equity securities, in form and substance reasonably satisfactory to Dealer, including 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 Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the “Daily VWAP” (as defined in the Indenture) on such Exchange Business Days, and in the amounts, requested by Dealer.  This Section 8(d) shall survive the termination, expiration or early unwind of the Transaction.

 

(e)                                  Repurchase and Conversion Rate Adjustment Notices.  Counterparty shall, at least two Exchange Business Days prior to any day on which Counterparty effects any repurchase of Shares or consummates or otherwise engages in any transaction or event that could reasonably be expected to lead to an increase in the Conversion Rate (other than as a result of a Fundamental Change Adjustment) (a “Conversion Rate Adjustment Event”), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) on such day if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage would reasonably be expected to be (i) greater than 9.9% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and , if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material nonpublic information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice.  The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day.  In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses (including losses relating to the 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 this Transaction), claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act or under any state or federal law, regulation or regulatory order, relating to or arising out of such failure.  If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.  In addition, Counterparty will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty.  This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

 

(f)                                    Transfer and Assignment.  Either party may transfer or assign any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed; provided that Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder, in whole or in part, to (i) any affiliate of Dealer of credit quality equivalent to or better than Dealer’s (or its guarantor’s) or whose obligations would be guaranteed by Dealer (or its guarantor or The Goldman Sachs Group, Inc.), or (ii) if Dealer has, or prior to giving effect to such a transfer or assignment, would have, an Excess Ownership Position, any person, or any person whose obligations would be guaranteed by a person, in either case of this clause (ii), of credit quality equivalent to Dealer’s (or, if Dealer’s obligations are then guaranteed by another party, such guarantor’s). If at any time at which (1) the Equity Percentage exceeds 8.5% or (2) Dealer, Dealer Group

 

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(as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware General Corporation Law or other federal, state or local law, rule, regulation or regulatory order or organizational documents or contracts of Counterparty 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 in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting, registration, filing or notification obligations (other than to file a Schedule 13D or Schedule 13G under the Exchange Act) or other requirements (including obtaining prior approval by a state or federal regulator) of a Dealer Person under Applicable Restrictions and with respect to which such requirements have not been met or the relevant approval has not been received minus (y) 1% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), Dealer, in its commercially reasonable discretion, is unable to effect a transfer or assignment to a third party after its commercially reasonable efforts on pricing and terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess Ownership Position no longer exists following such partial termination.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(c) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty were the sole Affected Party with respect to such partial termination, (iii) such portion of the Transaction were the only Terminated Transaction and (iv) Dealer were the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement. The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own” (within the meaning of Section 13 of the Exchange Act) without duplication on such day and (B) the denominator of which is the number of Shares outstanding on such day.  In the case of a transfer or assignment by Counterparty of its rights and obligations hereunder and under the Agreement, in whole or in part (any such Options so transferred or assigned, the “Transfer Options”), to any party, withholding of such consent by Dealer shall not be considered unreasonable if such transfer or assignment does not meet the reasonable conditions that Dealer may impose including, but not limited, to the following conditions:

 

(A)                           With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 8(e) or any obligations under Section 2 (regarding Extraordinary Events) or 8(d) of this Confirmation;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to the 10th Exchange Business Day after such Nominal Settlement Date, but not prior to the earlier of the relevant Conversion Date and the first day of the relevant Cash Settlement Averaging Period) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

 

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

 

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

 

(i)                                      No Netting and Set-off.  The provisions of Section 2(c) of the Agreement shall not apply to the Transaction.  Each party waives any and all rights it may have to set-off delivery or payment obligations it owes to the other party under the Transaction against any delivery or payment obligations owed to it by the other party, whether arising under the Agreement, under any other agreement between parties hereto, by operation of law or otherwise.

 

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

 

(k)                                 Early Unwind.  In the event the sale by Counterparty of the Firm Securities is not consummated pursuant to the Purchase Agreement for any reason by the close of business in New York on September 16, 2013 (or such later date as agreed upon by the parties, which in no event shall be later than September 23, 2013) (September 16, 2013 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty hereunder shall be cancelled and terminated and Counterparty shall pay to Dealer, other than in cases involving a breach of the Purchase Agreement by Dealer as the Initial Purchaser, an amount in cash equal to the aggregate amount of costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities, unless Counterparty agrees to purchase any such Shares at the cost at which Dealer purchased such Shares) or, at the election of Counterparty, deliver to Dealer Shares with a value equal to such amount, as determined by the Calculation Agent, in which event the parties shall enter into customary and commercially reasonable documentation relating to the registered or exempt resale of such

 

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Shares; provided that, if Counterparty makes such election to deliver Shares, notwithstanding the foregoing, the number of Shares so delivered will not exceed a number of Shares equal to two multiplied by the Number of Shares.  Following such termination, cancellation and payment or delivery, each party shall be released and discharged by the other party from, and agrees not to make any claim against the other party with respect to, any obligations or liabilities of either party arising out of, and to be performed in connection with, the Transaction either prior to or after the Early Unwind Date.  Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(l)             Wall Street Transparency and Accountability Act of 2010.  The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein or the Agreement (including, but not limited to, rights arising from a Change in Law, a Failure to Deliver, a Hedging Disruption, an Increased Cost of Hedging, an Excess Ownership Position or Illegality (as defined in the Agreement)).

 

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

 

(n)         Governing Law.  THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION 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 LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

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

 

(p)         Counterparts.  This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

9.  Arbitration.

 

(a)         All parties to this Confirmation are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.

 

(b)         Arbitration awards are generally final and binding; a party’s ability to have a court reverse or modify an arbitration award is very limited.

 

(c)          The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.

 

(d)         The arbitrators do not have to explain the reason(s) for their award.

 

(e)          The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry, unless Counterparty is a member of the organization sponsoring the arbitration facility, in which case all arbitrators may be affiliated with the securities industry.

 

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(f)           The rules of some arbitration forums may impose time limits for bringing a claim in arbitration.  In some cases, a claim that is ineligible for arbitration may be brought in court.

 

(g)         The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Confirmation.

 

(h)         Counterparty agrees that any and all controversies that may arise between Counterparty and Dealer, including, but not limited to, those arising out of or relating to the Agreement or the Transaction hereunder, shall be determined by arbitration conducted before FINRA Dispute Resolution (“FINRA-DR”), or, if the FINRA-DR declines to hear the matter, before the American Arbitration Association, in accordance with their arbitration rules then in force.  The award of the arbitrator shall be final, and judgment upon the award rendered may be entered in any court, state or federal, having jurisdiction.

 

(i)            No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) Counterparty is excluded from the class by the court.

 

(j)            Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Confirmation except to the extent stated herein.

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Goldman, Sachs & Co., Equity Derivatives Documentation Department, Facsimile No. (212) 428-1980/83.

 

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GOLDMAN,   SACHS & CO.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Daniela A. Rouse
    
	
 
    	
 
    	
Name:   Daniela A. Rouse
    
	
 
    	
 
    	
Title:   Vice President
    

 

 

	
Agreed   and Accepted By:
    	
 
    
	
 
    	
 
    
	
ALON USA ENERGY, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Shai Even
    	
 
    
	
 
    	
Name:   Shai Even
    	
 
    
	
 
    	
Title:   Senior Vice President and
    	
 
    
	
 
    	
Chief   Financial Officer

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