Document:

exv10w2

Exhibit 10.2

Form of Additional Call Option Transaction Confirmation

[Dealer]1

[                    ]

[                    ]

[                    ]

[                    ]

March 26, 2010

To: Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 200

Foothill Ranch, CA 92610-2831

Attention:                Chief Financial Officer

Telephone No.:       (949) 614-1740

Facsimile No.:         (949) 614-1930

Re: Additional Call Option Transaction

     The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the call option transaction entered into between [                    ] (“Dealer”) and Kaiser
Aluminum Corporation (“Counterparty”) as of the Trade Date specified below (the “Transaction”).
This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement
specified below. This Confirmation shall replace any previous agreements and serve as the final
documentation for this Transaction.

     The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”) are incorporated into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms
used herein are based on terms that are defined in the Offering Memorandum dated March 23, 2010
(the “Offering Memorandum”) relating to the 4.5% Cash Convertible Senior Notes due April 1, 2015
(the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible
Note”) issued by Counterparty in an aggregate initial principal amount of USD 175,000,000 pursuant
to an Indenture to be dated March 29, 2010 between Counterparty and Wells Fargo Bank, National
Association, as trustee (the “Indenture”). In the event of any inconsistency between the terms
defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall
govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture which are also defined herein by
reference to the Indenture and (ii) sections of the Indenture that are referred to herein will
conform to the descriptions thereof in the Offering Memorandum. If any such definitions in the
Indenture or any such sections of the Indenture differ from the descriptions thereof in the
Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes
of this Confirmation. The parties further acknowledge that the Indenture section numbers used
herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this
Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties
will amend this Confirmation in good faith to preserve the intent of the parties. Subject to the
foregoing, references to the Indenture herein are references to the Indenture as in effect on the
date of its execution, and if the Indenture is amended following such date, any such amendment will
be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

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

1. This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as
to the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Dealer and

 

			
	1	 	On March 26, 2010, Kaiser Aluminum
Corporation entered into an agreement in substantially the form hereof with
each of Bank of America, N.A. (“BofA”), JPMorgan Chase Bank, National
Association (“JPM”) and Wells Fargo Bank, National Association (“Wells”).

 

Counterparty had executed an agreement in such form (but without any Schedule except for the
election of the laws of the State of New York as the governing law (without reference to choice of
law doctrine, other than Title 14 of the New York General Obligations Law)) on the Trade Date. In
the event of any inconsistency between provisions of the Agreement and this Confirmation, this
Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement. If there exists any ISDA Master Agreement between
Dealer and Counterparty or any confirmation or other agreement between Dealer and Counterparty
(other than this Confirmation) 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:
	 	March 26, 2010
	 
	 	 	 	 
	 

	 	Option Style:
	 	“Modified American”, as described under
“Procedures for Exercise” below
	 
	 	 	 	 
	 

	 	Option Type:
	 	Call
	 
	 	 	 	 
	 

	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Seller:
	 	Dealer
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Counterparty, par value USD
0.01 per share (Exchange symbol “KALU”).
	 
	 	 	 	 
	 

	 	Number of Options:
	 	25,000. For the avoidance of doubt, the Number
of Options shall be reduced by any Options
exercised by Counterparty. In no event will the
Number of Options be less than zero.
	 
	 	 	 	 
	 

	 	Applicable Percentage:
	 	[BofA, 33.00%; JPM, 40.00%; and Wells 27.00%]
	 
	 	 	 	 
	 

	 	Option Entitlement:
	 	A number equal to the product of the Applicable
Percentage and 20.6949.
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD 48.3210
	 
	 	 	 	 
	 

	 	Premium:
	 	USD [BofA, 1,596,375.00; JPM, 1,655,096.97; and
Wells, 1,233,463.50]
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	March 29, 2010
	 
	 	 	 	 
	 

	 	Exchange:
	 	The NASDAQ Global Select Market
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges
	 
	 	 	 	 
	 

	 	Excluded Provisions:
	 	Section 10.05 and Section 10.06 of the Indenture.
	 
	 	 	 	 
	Procedures for Exercise.	 	 
	 
	 	 	 	 
	 

	 	Conversion Date:
	 	With respect to any conversion of a Convertible
Note, the date on which the Holder (as such term
is defined in the

2

 

	 	 	 
	 

	 	Indenture) of such Convertible
Note satisfies all of the requirements for
conversion thereof as set forth in Section
10.02(a) of the Indenture.
	 
	 	 
	Free Convertibility Date:

	 	January 1, 2015
	 
	 	 
	Expiration Time:

	 	The Valuation Time
	 
	 	 
	Expiration Date:

	 	April 1, 2015, subject to earlier exercise, as
described under “Automatic Exercise” below.
	 
	 	 
	Multiple Exercise:

	 	Applicable, as described under “Automatic
Exercise” below.
	 
	 	 
	Automatic Exercise:

	 	Notwithstanding Section 3.4 of the Equity
Definitions, on each Conversion Date, a number
of Options equal to (i) the number of
Convertible Notes in denominations of USD 1,000
as to which such Conversion Date has occurred
minus (ii) the number of Options that are or are
deemed to be automatically exercised on such
Conversion Date under the Base Call Option
Transaction Confirmation letter agreement dated
March 23, 2010 between Dealer and Counterparty
(the “Base Call Option Confirmation”), shall be
deemed to be automatically exercised; provided
that such Options shall be exercised or deemed
exercised only if Counterparty has provided a
Notice of Exercise to Dealer in accordance with
“Notice of Exercise” below.
	 
	 	 
	 

	 	Notwithstanding the foregoing, in no event shall
the number of Options that are exercised or
deemed exercised hereunder exceed the Number of
Options.
	 
	 	 
	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the
Equity Definitions or under “Automatic Exercise”
above, in order to exercise any Options,
Counterparty must notify Dealer in writing
before 5:00 p.m. (New York City time) on the
Scheduled Valid Day immediately preceding the
scheduled first day of the Settlement Averaging
Period for the Options being exercised of (i)
the number of such Options and (ii) the
scheduled first day of the Settlement Averaging
Period and the scheduled Settlement Date;
provided that in respect of Options relating to
Convertible Notes with a Conversion Date
occurring on or after the Free Convertibility
Date, such notice may be given on or prior to
the second Scheduled Valid Day immediately
preceding the Expiration Date and need specify
only the number of such Options.
	 
	 	 
	Valuation Time:

	 	At the close of trading of the regular trading
session on the Exchange; provided that if the
principal trading session is extended, the
Calculation Agent shall determine the Valuation
Time in its reasonable discretion.
	 
	 	 
	Market Disruption Event:

	 	Section 6.3(a) of the Equity Definitions is
hereby replaced in its entirety by the
following:

3

 

	 	 	 	 	 
	 

	 	 	 	“‘Market Disruption Event’ means, in respect of
a Share, (i) a failure by the primary United
States national or regional securities exchange
or market on which the Shares are listed or
admitted for trading to open for trading during
its regular trading session or (ii) the
occurrence or existence prior to 1:00 p.m. (New
York City time) on any Scheduled Valid Day for
the Shares for more than one half-hour period in
the aggregate during regular trading hours of
any suspension or limitation imposed on trading
(by reason of movements in price exceeding
limits permitted by the relevant securities
exchange or otherwise) in the Shares or in any
options, contracts or future contracts relating
to the Shares.”
	 
	 	 	 	 
	Settlement Terms.	 	 
	 
	 	 	 	 
	 

	 	Settlement Method:
	 	Cash Settlement
	 
	 	 	 	 
	 

	 	Cash Settlement:
	 	In lieu of Section 8.1 of the Equity
Definitions, Dealer will pay to Counterparty, on
the relevant Settlement Date, the Option Cash
Settlement Amount in respect of any Option
exercised or deemed exercised hereunder. In no
event will the Option Cash Settlement Amount be
less than zero.
	 
	 	 	 	 
	 

	 	Option Cash Settlement
Amount:
	 	In respect of any Option exercised or deemed
exercised, an amount in cash equal to the sum of
the quotients, for each Valid Day during the
Settlement Averaging Period for such Option, of
(A)(x) the Option Entitlement on such Valid Day
multiplied by (y)(1) the Relevant Price on such
Valid Day less (2) the Strike Price, divided by
(B) the number of Valid Days in the Settlement
Averaging Period; provided that if the
calculation contained in clause (y) above
results in a negative number, such number shall
be replaced with the number “zero”; provided,
further that if any Option is exercised or
deemed exercised in connection with the
conversion of a Convertible Note for which
Counterparty is required to increase the
Conversion Rate (as defined in the Indenture)
pursuant to Section 10.06 of the Indenture,
then, notwithstanding the foregoing, the Option
Cash Settlement Amount for such Option will
equal an amount of cash equal to the lesser of
(i) the sum of the quotients, for each Valid Day
during the Settlement Averaging Period for such
Option, of (A)(x) the sum of (1) the Option
Entitlement that would be in effect on such
Valid Day but for the event requiring
Counterparty to increase the Conversion Rate (as
defined in the Indenture) pursuant to Section
10.06 of the Indenture and (2)(I) the Applicable
Percentage multiplied by (II) the increase in
the Conversion Rate (as defined in the
Indenture) that Counterparty is required to
make for such Convertible Note pursuant to
Section 10.06 of the Indenture multiplied by
(y)(1) the Relevant Price on such Valid Day less
(2) the Strike Price, divided by (B) the number
of Valid Days in the Settlement Averaging
Period, and (ii) the amount, as determined by
the

4

 

	 	 	 
	 

	 	Calculation Agent, that would be payable by
Dealer to Counterparty pursuant to Section 6 of
the Agreement if such Conversion Date were an
Early Termination Date resulting from an
Additional Termination Event with respect to
which the Transaction was the sole Affected
Transaction and Counterparty was the sole
Affected Party (except that, for purposes of
determining such amount, (x) the Number of
Options shall be deemed to equal one (1) and (y)
such amount payable will be determined as if
Section 10.06 of the Indenture were deleted).
	 
	 	 
	Valid Day:

	 	A day on which (i) there is no Market Disruption
Event and (ii) trading in the Shares generally
occurs on the Exchange or, if the Shares are not
then listed on the Exchange, on the principal
other United States national or regional
securities exchange, if any, on which the Shares
are then listed or, if the Shares are not then
listed on a United States national or regional
securities exchange, on the principal other
market, if any, on which the Shares are then
listed or admitted for trading. If the Shares
are not so listed or admitted for trading,
“Valid Day” means a Business Day.
	 
	 	 
	Scheduled Valid Day:

	 	A day that is scheduled to be a Valid Day on the
principal United States national or regional
securities exchange or market on which the
Shares are listed or admitted for trading. If
the Shares are not so listed or admitted for
trading, “Scheduled Valid Day” means a Business
Day.
	 
	 	 
	Business Day:

	 	Any day other than a Saturday, a Sunday or a day
on which the Federal Reserve Bank of New York is
authorized or required by law or executive order
to close or be closed.
	 
	 	 
	Relevant Price:

	 	On any Valid Day, the per Share volume-weighted
average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page KALU.UQ
<equity> AQR (or its equivalent successor
if such page is not available) in respect of the
period from the scheduled open of trading until
the scheduled close of trading of the primary
trading session on such Valid Day (or if such
volume-weighted average price is unavailable at
such time, the market value of one Share on such
Valid Day, determined, using a volume-weighted
method, by the Calculation Agent).
	 
	 	 
	Settlement Averaging Period:

	 	For any Option:

	 	(i)	 	if the related Conversion Date occurs prior to
the Free Convertibility Date, the 50 consecutive
Valid Days commencing on, and including, the
third Valid Day following such Conversion Date;
or
	 
	 	(ii)	 	if the related Conversion Date occurs on or
following the Free Convertibility Date, the 50
consecutive Valid Days commencing on, and

5

 

	 	 	 	including, the 52nd Scheduled Valid Day
immediately prior to the Expiration Date.

	 	 	 
	Settlement Date:

	 	For any Option, the date cash will be paid under
the terms of the Indenture with respect to the
conversion of the Convertible Note related to
such Option.
	 
	Settlement Currency:

	 	USD

	3.	 	Additional Terms applicable to the Transaction.

	 	 	 	 	 
	Adjustments applicable to the Transaction:	 	 
	 
	 	 	 	 
	 

	 	Potential Adjustment
Events:
	 	Notwithstanding Section 11.2(e) of the Equity
Definitions, a “Potential Adjustment Event”
means an occurrence of any event or condition,
as set forth in any Dilution Adjustment
Provision, that would result in an adjustment
to the Conversion Rate (as defined in the
Indenture) of the Convertible Notes.
	 
	 	 	 	 
	 

	 	Method of Adjustment:
	 	Calculation Agent Adjustment, which means that,
notwithstanding Section 11.2(c) of the Equity
Definitions, upon any Potential Adjustment
Event, the Calculation Agent shall make a
corresponding adjustment to any one or more of
the Strike Price, Number of Options, Option
Entitlement and any other variable relevant to
the exercise, settlement or payment for the
Transaction; provided that, notwithstanding the
foregoing, if the Calculation Agent in good
faith disagrees with any adjustment to the
Convertible Notes that involves an exercise of
discretion by Counterparty or its board of
directors (including, without limitation,
pursuant to Sections 10.04(g) and 10.04(h) of
the Indenture or in connection with any
proportional adjustment or the determination of
the fair value of any securities, property,
rights or other assets), then in each such
case, the Calculation Agent will determine the
adjustment to be made to any one or more of the
Strike Price, Number of Options, Option
Entitlement and any other variable relevant to
the exercise, settlement or payment for the
Transaction in a commercially reasonable
manner.
	 
	 	 	 	 
	 

	 	Dilution Adjustment Provisions:
	 	Sections 10.04(a), 10.04(b), 10.04(c),
10.04(d), 10.04(e), 10.04(g), 10.04(h) and
10.04(i) of the Indenture.
	 
	 	 	 	 
	Extraordinary Events applicable
to the Transaction:
	 
	 	 	 	 
	 

	 	Merger Events:
	 	Applicable; provided that notwithstanding
Section 12.1(b) of the Equity Definitions, a
“Merger Event” means the occurrence of any
event or condition set forth in the definition
of “Merger Event” in Section 10.07 of the
Indenture.
	 
	 	 	 	 
	 

	 	Tender Offers:
	 	Applicable; provided that notwithstanding
Section 12.1(d) of the Equity Definitions, a
“Tender Offer” means the occurrence of any
event or condition set forth in Clause

6

 

	 	 	 	 	 
	 

	 	 	 	(i) of
the definition of “Fundamental Change”
contained in Section 1.01 of the Indenture.
	 
	 	 	 	 
	Consequence of Merger Events /

Tender Offers:	 	
Notwithstanding Section 12.2 and Section 12.3
of the Equity Definitions, upon the occurrence
of a Merger Event or a Tender Offer, the
Calculation Agent shall make a corresponding
adjustment in respect of any adjustment under
the Indenture to any one or more of the nature
of the Shares (in the case of a Merger Event),
Strike Price, Number of Options, Option
Entitlement and any other variable relevant to
the exercise, settlement or payment for the
Transaction; provided, however, that such
adjustment shall be made without regard to any
adjustment to the Conversion Rate pursuant to
any Excluded Provision; provided further that
if, with respect to a Merger Event or a Tender
Offer, (i) the consideration for the Shares
includes (or, at the option of a holder of
Shares, may include) shares of an entity or
person not organized under the laws of the
United States, any State thereof or the
District of Columbia or (ii) the Counterparty
to the Transaction following such Merger Event
or Tender Offer, will not be the Issuer
following such Merger Event or Tender Offer,
then Cancellation and Payment (Calculation
Agent Determination) shall apply.
	 
	 	 	 	 
	Nationalization, Insolvency or Delisting:	 	Cancellation and Payment (Calculation Agent
Determination); provided that, in addition to
the provisions of Section 12.6(a)(iii) of the
Equity Definitions, it will also constitute a
Delisting if the Exchange is located in the
United States and the Shares are not
immediately re-listed, re-traded or re-quoted
on any of the New York Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors);
if the Shares are immediately re-listed,
re-traded or re-quoted on any of the New York
Stock Exchange, The NASDAQ Global Select Market
or The NASDAQ Global Market (or their
respective successors), such exchange or
quotation system shall thereafter be deemed to
be the Exchange.
	 
	 	 	 	 
	Additional Disruption Events:	 	 
	 
	 	 	 	 
	 

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

	 	Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	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:

7

 

	 	 	 	 	 
	 

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

	 	 	 	(ii) Section 12.9(b)(iii) of the Equity
Definitions is hereby modified by inserting in
the third line thereof, after the words “to
terminate the Transaction”, the following
words:
	 
	 	 	 	 
	 

	 	 	 	“or a portion of the Transaction affected by
such Hedging Disruption”.
	 
	 	 	 	 
	 

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

	 	Determining Party:
	 	For all applicable Extraordinary Events, Dealer.
	 
	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and Acknowledgements

Regarding Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	 

	 	Additional Acknowledgments:
	 	Applicable
	 
	 	 	 	 
	4.

	 	Calculation Agent.
	 	Dealer; provided that all determinations
made by the Calculation Agent shall be made in
a good faith and in a commercially reasonable
manner. Following any calculation made
hereunder by the Calculation Agent,
Counterparty may request that the Calculation
Agent deliver to Counterparty, at an email
address specified by Counterparty, a report
displaying in reasonable detail the basis for
such calculation. Upon receipt of such
request, the Calculation Agent will provide
such a report to Counterparty by e-mail to the
e-mail address provided by Counterparty;
provided, however, that in no event will the
Calculation Agent be obligated to provide to
Counterparty any proprietary models used by it
or any other party.

	5.	 	Account Details.

	 	(a)	 	Account for payments to Counterparty:
	 
	 	 	 	[                    ]
	 
	 	(b)	 	Account for payments to Dealer:
	 
	 	 	 	[                    ]

	6.	 	Offices.

	 	(a)	 	The Office of Counterparty for the Transaction is: Inapplicable, Counterparty
is not a Multibranch Party.
	 
	 	(b)	 	The Office of Dealer for the Transaction is: [                    ]
	 
	 	 	 	[                    ]

8

 

	7.	 	Notices.

	 	(a)	 	Address for notices or communications to Counterparty:
	 
	 	 	 	To: Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 200

Foothill Ranch, CA 92610-2831

Attention:                  Chief Financial Officer

Telephone No.:          (949) 614-1740

Facsimile No.:            (949) 614-1930
	 
	 	(b)	 	Address for notices or communications to Dealer:
	 
	 	 	 	To: [                     ]

[                    ]

[                    ]

Attention:            [Title of contact]

Telephone No:       [                    ]

Facsimile No:       [                    ]

	8.	 	Representations and Warranties of Counterparty.
	 
	 	 	Each of the representations and warranties of Counterparty set forth in Section 3 of the
Purchase Agreement (the “Purchase Agreement”) dated as of March 23, 2010 between
Counterparty and J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated as representatives of the several Initial Purchasers party thereto, are true
and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
Counterparty hereby further represents and warrants to Dealer on the date hereof and on and
as of the Premium Payment Date that:

	 	(a)	 	Counterparty has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction; such execution,
delivery and performance have been
duly authorized by all necessary corporate action on Counterparty’s part; and this
Confirmation has been duly and validly executed and delivered by Counterparty and
constitutes its valid and binding obligation, enforceable against Counterparty in
accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’ rights
and remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in
equity) and except that rights to indemnification and contribution hereunder may be
limited by federal or state securities laws or public policy relating thereto.
	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the incurrence or
performance of obligations of Counterparty hereunder will conflict with or result in a
breach of the certificate of incorporation or by-laws (or any equivalent documents) of
Counterparty, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or instrument
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 constitute a default under, or result in the creation of any lien under,
any such agreement or instrument.
	 
	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the execution,
delivery or performance by Counterparty of this Confirmation, except such as have been
obtained or made and such as may be required under the Securities Act of 1933, as
amended (the “Securities Act”) or state securities laws.
	 
	 	(d)	 	Counterparty is not and will not be required to register as an “investment
company” as such term is defined in the Investment Company Act of 1940, as amended.

9

 

	 	(e)	 	Counterparty is an “eligible contract participant” (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended, other than a person that is
an eligible contract participant under Section 1a(12)(C) of the Commodity Exchange
Act).
	 
	 	(f)	 	Each of it and its affiliates is not, on the date hereof, in possession of any
material non-public information with respect to Counterparty or the Shares.

	9.	 	Other Provisions.

	 	(a)	 	Opinions. Counterparty shall deliver to Dealer an opinion of counsel,
dated as of the Trade Date, with respect to the matters set forth in Sections 8(a)
through (c) of this Confirmation. Delivery of such opinion to Dealer shall be a
condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect
to each obligation of Dealer under Section 2(a)(i) of the Agreement.
	 
	 	(b)	 	Counterparty Repurchases; Repurchase Notices.

	 	(i)	 	On the Trade Date, neither Counterparty nor any “affiliated
purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”))
shall directly or indirectly (including, without limitation, by means of any
cash-settled or other derivative instrument other than the Transaction or any
other substantially similar transactions that are entered into by Counterparty
contemporaneously with the Transaction) purchase, offer to purchase, place any
bid or limit order that would effect a purchase of, or commence any tender
offer relating to, any Shares (or an equivalent interest, including a unit of
beneficial interest in a trust or limited partnership or a depository share) or
any security convertible into or exchangeable or exercisable for Shares.
	 
	 	(ii)	 	Counterparty shall, on any day on which Counterparty effects
any repurchase of Shares, promptly give Dealer a written notice of such
repurchase (a “Repurchase Notice”) on such day if following such repurchase,
the number of outstanding Shares as determined on such day is (i) less than
[BofA, 17.4700; JPM, 17.7342; and Wells, 17.1447] million (in the case of the
first such notice) or (ii) thereafter more than [BofA, 0.0873; JPM, 0.0886; and
Wells, 0.0857] million (each number as adjusted by the Calculation Agent on
account of stock splits and similar events) less than the number of Shares
included in the immediately preceding Repurchase Notice. Counterparty agrees
to indemnify and hold harmless Dealer and its affiliates and their respective
officers, directors, employees, affiliates, advisors, agents and controlling
persons (each, an “Indemnified Person”) from and against any and all losses
(including losses relating to Dealer’s hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 “insider”, including without
limitation, any forbearance from hedging activities or cessation of hedging
activities and any losses in connection therewith with respect to this
Transaction), claims, damages, judgments, liabilities and expenses (including
reasonable attorney’s fees), joint or several, which an Indemnified Person may
become subject to, as a result of Counterparty’s failure to provide Dealer with
a Repurchase Notice on the day and in the manner specified in this paragraph,
and to reimburse, within 30 days, upon written request, each of such
Indemnified Persons for any reasonable legal or other expenses incurred in
connection with investigating, preparing for, providing testimony or other
evidence in connection with or defending any of the foregoing. If any suit,
action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified Person as
a result of Counterparty’s failure to provide Dealer with a Repurchase Notice
in accordance with this paragraph, such Indemnified Person shall promptly
notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Counterparty shall not be
liable for any settlement of any proceeding contemplated by this paragraph that
is effected without its written consent, but if settled with such consent or if
there be a final judgment for the

10

 

	 	 	 	plaintiff, Counterparty agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding
contemplated by this paragraph that is in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on
claims that are the subject matter of such proceeding on terms reasonably
satisfactory to such Indemnified Person. If the indemnification provided
for in this paragraph is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Counterparty hereunder, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities. The remedies provided for in this paragraph (b) are
not exclusive and shall not limit any rights or remedies that may otherwise
be available to any Indemnified Person at law or in equity. The indemnity
and contribution agreements contained in this paragraph shall remain
operative and in full force and effect regardless of the termination of this
Transaction.

	 	(c)	 	Regulation M. Counterparty is not on the Trade Date engaged in a
distribution, as such term is used in Regulation M under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), of any securities of Counterparty, other than a
distribution meeting the requirements of the exception set forth in Rules 101(b)(10)
and 102(b)(7) of Regulation M. Counterparty shall not, until the second Exchange
Business Day immediately following the Trade Date, engage in any such distribution.
	 
	 	(d)	 	No Manipulation. Counterparty is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the Shares)
or otherwise in violation of the Exchange Act.
	 
	 	(e)	 	Transfer or Assignment.

	 	(i)	 	Counterparty shall have the right to transfer or assign its
rights and obligations hereunder with respect to all, but not less than all, of
the Options hereunder (such Options, the “Transfer Options”); provided that
such transfer or assignment shall be subject to 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 9(b) or any obligations under Section
9(l) or 9(p) of this Confirmation;
	 
	 	(B)	 	Any Transfer Options shall be transferred or
assigned only to a third party that is a United States 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, an undertaking 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

11

 

	 	 	 	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 cause the transferee to make such Payee Tax
Representations and to provide such tax 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.

	 	(ii)	 	Dealer may, with prompt notice to Counterparty, but without
Counterparty’s consent, transfer or assign all or any part of its rights or
obligations under the Transaction to any third party that, on the date of such
transfer or assignment, (A) represents in writing to Dealer (I) that its
“Percentage Stock Ownership” (as determined in accordance with Section 4(d)(10)
of Article IV of the Charter, which determination will be made both before and
after giving effect to any applicable Prospective Change of Article IV Law) is
not, and, after such transfer, will not be, 4.5% or more and (II) that it does
not, and, after such transfer, will not, “beneficially own” (within the meaning
of Section 13) 4.5% or more of the Shares outstanding; (B) acknowledges in
writing to Dealer that it will be bound by the terms of this Confirmation,
including, without limitation, the provisions of Section 9(s); and (C) has a
rating for its long term, unsecured and unsubordinated indebtedness equal to or
better than the lesser of (x) the credit rating of Dealer at such time and (y)
A- by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”) or A3 by
Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases
to rate such debt, at least an equivalent rating or better by a substitute
rating agency mutually agreed by Counterparty and Dealer. If, at any time at
which (A) the Section 16 Percentage exceeds 7.5%, (B) the Option Equity
Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share
Limit (if any applies) (any such condition described in clauses (A), (B) or
(C), an “Excess Ownership Position”), Dealer is unable, after using its
commercially reasonable efforts to effect a transfer or assignment of Options
to a third party on pricing terms reasonably acceptable to Dealer and within a
time period reasonably acceptable to Dealer such that no Excess Ownership
Position exists, then Dealer may designate any Exchange Business Day as an
Early Termination Date with respect to a portion of the Transaction (the
“Terminated Portion”), such that following such partial termination no Excess
Ownership Position exists. In the event that Dealer so designates an Early
Termination Date with respect to a portion of the Transaction, a payment shall
be made pursuant to Section 6 of the Agreement as if (1) an Early Termination
Date had been designated in respect of a Transaction having terms identical to
this Transaction and a Number of Options equal to the number of Options
underlying the Terminated Portion, (2) Counterparty were the sole Affected
Party with respect to such partial termination and (3) the Terminated Portion
were the sole Affected Transaction. The “Section 16 Percentage” as of any day
is the fraction, expressed as a percentage, (A) the numerator of which is the
number of Shares that Dealer and each person subject to aggregation of Shares
with Dealer under Section 13 or Section 16 of the Exchange Act and rules
promulgated thereunder directly or indirectly beneficially own (as defined
under Section 13 or Section 16 of the Exchange Act and rules promulgated
thereunder) and (B) the denominator of which is the number of Shares
outstanding. The “Option Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the sum of (1) the
product of the Number of Options and the Option Entitlement and (2) the
aggregate number of Shares underlying any other call

12

 

	 	 	 	option transaction sold by Dealer to Counterparty, and (B) the denominator
of which is the number of Shares outstanding. The “Share Amount” as of any
day is the number of Shares that Dealer and any person whose ownership
position would be aggregated with that of Dealer (Dealer or any such person,
a “Dealer Person”) under Section 203 of the Delaware General Corporation Law
or any other law, rule, regulation, regulatory order or organizational
documents or contracts of Counterparty that are, in each case, applicable to
ownership of Shares (“Applicable Restrictions”), owns, beneficially owns,
constructively owns, controls, holds the power to vote or otherwise meets a
relevant definition of ownership under any Applicable Restriction, as
determined by Dealer in its reasonable discretion. The “Applicable Share
Limit” means a number of Shares equal to (A) the minimum number of Shares
that could give rise to reporting or registration obligations or other
requirements (including obtaining prior approval from any person or entity)
of a Dealer Person, or could result in an adverse effect on a Dealer Person,
under any Applicable Restriction, as determined by Dealer in its reasonable
discretion, minus (B) 1% of the number of Shares outstanding.
	 
	 	(iii)	 	Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing Dealer to purchase, sell, receive or deliver
any Shares or other securities, or make or receive any payment in cash, to or
from Counterparty, Dealer may designate any of its affiliates to purchase,
sell, receive or deliver such Shares or other securities, or to make or receive
such payment in cash, and otherwise to perform Dealer’s obligations in respect
of this Transaction and any such designee may assume such obligations. Dealer
shall be discharged of its obligations to Counterparty to the extent of any
such performance.

	 	(f)	 	[Boilerplate agency provision of Dealer, if applicable.]
	 
	 	(g)	 	Dividends. If at any time during the period from and including the
Effective 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 to any one or more of the Strike Price,
Number of Options, Option Entitlement and/or any other variable relevant to the
exercise, settlement or payment for 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 USD 0.24 per Share per quarter. Upon any adjustment to the
Initial Dividend Threshold (as defined in the Indenture) for the Convertible Notes
pursuant to the Indenture, the Calculation Agent will make a corresponding adjustment
to the Regular Dividend for the Transaction.
	 
	 	(h)	 	Additional Termination Events. Notwithstanding anything to the
contrary in this Confirmation, if an event of default with respect to Counterparty
occurs under the terms of the Convertible Notes as set forth in Section 6.01(a) of the
Indenture and the principal amount of the Convertible Notes becomes due and payable
under the indenture, then the occurrence of such declaration of acceleration shall
constitute an Additional Termination Event applicable to the Transaction and, with
respect to such Additional Termination Event, (A) Counterparty shall be deemed to be
the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and
(C) Dealer shall be the party entitled to designate an Early Termination Date pursuant
to Section 6(b) of the Agreement.
	 
	 	(i)	 	Amendments to Equity Definitions.

	 	(i)	 	Section 12.6(a)(ii) of the Equity Definitions is hereby amended
by (1) deleting from the fourth line thereof the word “or” after the word
“official” and inserting a comma therefor, and (2) deleting the semi-colon at
the end of subsection (B) thereof and inserting the following words therefor
“or (C) the occurrence of any of the events specified in Section 5(a)(vii)(1)
through (9) of the ISDA Master Agreement with respect to that Issuer.”

13

 

	 	(ii)	 	Section 12.9(b)(i) of the Equity Definitions is hereby amended
by (1) replacing “either party may elect” with “Dealer may elect” and (2)
replacing “notice to the other party” with “notice to Counterparty” in the
first sentence of such section.

	 	(j)	 	Setoff. In addition to and without limiting any rights of set-off that
a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the
occurrence of an Early Termination Date, Dealer (and only Dealer) shall have the right
to set off any obligation that it may have to Counterparty under this Confirmation,
including without limitation any obligation to make any payment of cash, against any
obligation Counterparty may have to Dealer under any other agreement between Dealer and
Counterparty (each such contract or agreement, a “Separate Agreement”), including
without limitation any obligation to make a payment of cash or a delivery of Shares or
any other property or securities. For this purpose, Dealer shall be entitled to convert
any obligation (or the relevant portion of such obligation) denominated in one currency
into another currency at the rate of exchange at which it would be able to purchase the
relevant amount of such currency, and to convert any obligation to deliver any non-cash
property into an obligation to deliver cash in an amount calculated by reference to the
market value of such property as of the Early Termination Date, as determined by the
Calculation Agent in its sole discretion; provided that in the case of a set-off of any
obligation to release or deliver assets against any right to receive fungible assets,
such obligation and right shall be set off in kind and; provided further that in
determining the value of any obligation to deliver Shares, the value at any time of
such obligation shall be determined by reference to the market value of the Shares at
such time, as determined in good faith by the Calculation Agent. If an obligation is
unascertained at the time of any such set-off, the Calculation Agent may in good faith
estimate the amount or value of such obligation, in which case set-off will be effected
in respect of that estimate, and the relevant party shall account to the other party at
the time such obligation or right is ascertained. For the avoidance of doubt, and
notwithstanding anything to the contrary in this Section 9(j), in the event of
bankruptcy or liquidation of either Counterparty or Dealer neither party shall have the
right to set off any obligation that it may have to the other party under this
Transaction against any obligation such other party may have to it, whether arising
under the Agreement, this Confirmation or any other agreement between the parties
hereto, by operation of law or otherwise.
	 
	 	(k)	 	Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of either 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 this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.
	 
	 	(l)	 	Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Dealer, the Shares (“Hedge Shares”) acquired by Dealer for the
purpose of hedging its obligations pursuant to this Transaction cannot be sold in the
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 and enter into an agreement, in form and substance satisfactory to
Dealer, substantially in the form of an underwriting agreement for a registered
secondary offering; provided, however, that if Dealer, in its sole reasonable
discretion, is not satisfied with access to due diligence materials, the results of its
due diligence investigation, or the procedures and documentation for the registered
offering referred to above, then clause (ii) or clause (iii) of this paragraph 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 satisfactory to Dealer (in which case, the
Calculation Agent shall make any adjustments to the terms of this 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

14

 

	 	 	 	sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares
from Dealer at the Relevant Price on such Exchange Business Days, and in the
amounts, requested by Dealer.
	 
	 	(m)	 	Tax 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.
	 
	 	(n)	 	Right to Extend. Dealer may postpone or add, in whole or in part, any
Valid Day or Valid Days during the Settlement Averaging Period or any other date of
valuation, payment or delivery by Dealer, with respect to some or all of the Options
hereunder, if Dealer reasonably determines, in its discretion, that such action is
reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind
activity hereunder in light of existing liquidity conditions or to enable Dealer to
effect purchases of Shares in connection with its hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Dealer were 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.
	 
	 	(o)	 	Securities Contract; Swap Agreement. The parties hereto intend for (i)
the Transaction to be a “securities contract” and a “swap agreement” as defined in the
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the
parties hereto to be entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code,
(ii) a party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to the
other party to constitute a “contractual right” as described in the Bankruptcy Code,
and (iii) each payment and delivery of cash, securities or other property hereunder to
constitute a “margin payment” or “settlement payment” and a “transfer” as defined in
the Bankruptcy Code.
	 
	 	(p)	 	Notice of Certain Other Events. Counterparty covenants and agrees that:

	 	(i)	 	promptly following the public announcement of the results of
any election by the holders of Shares with respect to the consideration due
upon consummation of any consolidation, merger and binding share exchange to
which Counterparty is a party, or any sale of all or substantially all of
Counterparty’s assets, in each case pursuant to which the Shares will be
converted into cash, securities or other property, Counterparty shall give
Dealer written notice of the types and amounts of consideration that holders of
Shares have elected to receive upon consummation of such transaction or event
(the date of such notification, the “Consideration Notification Date”);
provided that in no event shall the Consideration Notification Date be later
than the date on which such transaction or event is consummated; and
	 
	 	(ii)	 	promptly following any adjustment to the Convertible Notes in
connection with any Potential Adjustment Event, Merger Event or Tender Offer,
Counterparty shall give Dealer written notice of the details of such
adjustment.

	 	(q)	 	Early Unwind. In the event the sale of the “Option Securities” (as
defined in the Purchase Agreement) is not consummated with the Initial Purchasers for
any reason, or Counterparty fails to deliver to Dealer the opinions of counsel as
required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on
the Premium Payment Date, or such later date as agreed upon by the parties (the Premium
Payment Date or such later date the “Early Unwind Date”), the Transaction shall
automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of Dealer and Counterparty
under the Transaction shall be cancelled and terminated and (ii) each party shall be
released and discharged by the other party from and agrees not to make any claim
against the other party with respect to any obligations or liabilities of the other
party arising out of and to be performed in connection with the Transaction either
prior to or after the Early Unwind Date. Each of Dealer and

15

 

	 	 	 	Counterparty represent and acknowledge to the other that, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and finally
discharged.

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

	 	(i)	 	Counterparty acknowledges and represents to Dealer, with the
knowledge and approval of Counterparty’s Board of Directors acting pursuant to
Section 4(c) of Article IV of Counterparty’s certificate of incorporation (the
“Charter”), that during the period commencing on the Trade Date and ending on
the 180th Exchange Business Day following the Expiration Date (the “Relevant
Period”), the Counterparty and its Board of Directors shall interpret Section
4(d)(9) of Article IV of the Charter (or any successor provision) so as not to
include (x) Dealer or any of its affiliates or (y) any person transacting with
Dealer or any of its affiliates that has not filed a Schedule 13D or Schedule
13G (or any successor form) under Section 13 of the Exchange Act and the rules
promulgated thereunder (“Section 13”) with respect to its ownership of Shares,
unless and until either:

	 	(x)	 	the Dealer Group (as defined below)
“beneficially owns” (within the meaning of Section 13) 5.00% or more of
the Shares outstanding; or

	(y)    	(A)	 	one of the following occurs that affects
Treasury Regulation 1.382-2T(g), (h), (j) and (k) or any successor
provisions or the definition of “beneficial ownership” (within the
meaning of Section 13) or any successor provision:

	 	(I)	 	the adoption or
taking effect of any law, rule, regulation or treaty;
	 
	 	(II)	 	any change in any
law, rule, regulation or treaty or in the
administration, interpretation or application thereof
by any governmental authority; or
	 
	 	(III)	 	the making or
issuance of any request, guideline or directive (whether
or not having the force of law) by any governmental
authority;

	 	 	 	in each case, that either Counterparty or Dealer, after
consultation with counsel, reasonably determines (a) imposes
an obligation to publicly report ownership of Shares in a
manner that would expose Dealer Group to the risk of being
required to publicly report, at some point during the
Relevant Period, even if the Dealer Group “beneficially owns”
(within the meaning of Section 13 as currently in effect)
less than 5.00% of the Shares outstanding, ownership (however
defined) of 5.00% or more of the Shares outstanding or (b) is
otherwise inconsistent with the interpretation of Section
4(d)(9) of Article IV of the Charter set forth above (a
“Change of Article IV Law”);
	 
	 	(B)	 	such Change of Article IV Law becomes effective; and

16

 

	 	(C)	 	Dealer’s “Percentage Stock
Ownership” (as determined in accordance with Section 4(d)(10) of
the Charter, after giving effect to such Change of Article IV
Law) is equal to or exceeds 5.00% of the Shares outstanding such
that Dealer becomes a “Five-Percent Shareholder” (under Section
4(d)(9) of Article IV of the Charter, after giving effect to
such Change of Article IV Law).

	 	 	 	In the event that Counterparty or Dealer makes a determination
contemplated by clause (A) above, it shall provide written notice of
such determination to the other party as promptly as practicable (a
“Change in Article IV Law Notice”).

	 	(ii)	 	Dealer shall use its good faith reasonable efforts:

	 	(x)	 	at any time the Dealer Group “beneficially
owns” (within the meaning of Section 13) more than 3.00% of the Shares
outstanding, to engage in hedging activities with respect to the
Transaction that do not involve the “beneficial ownership” (within the
meaning of Section 13) of Shares to the fullest extent commercially
reasonable;
	 
	 	(y)	 	not to permit the Notice Percentage (as defined
below) to equal or exceed 5.00% or any Notice Percentage specified in
an Agreed Waiver (as defined below); and
	 
	 	(z)	 	to provide Counterparty with a prompt written
notice that the Notice Percentage has become equal to or greater than
4.5% or any Notice Percentage specified in any Agreed Waiver (an
“Excess Ownership Notice”);

	 	 	 	provided that Dealer shall not have any liability to Counterparty or any
other person asserting claims on behalf of or in right of Counterparty if,
notwithstanding its good faith reasonable efforts, the Notice Percentage
does equal or exceed 5.00% or any other Notice Percentage specified in any
Agreed Waiver or it fails to timely provide Counterparty with an Excess
Ownership Notice; provided further, however, that, if the Notice Percentage
does equal or exceed 5.00% or any other Notice Percentage specified in any
Agreed Waiver, then, subject to any Agreed Waiver, all provisions of Section
4 of Article IV of the Charter shall apply to the transaction in which the
Notice Percentage became equal to or greater than 5.00% or the Notice
Percentage specified in an Agreed Waiver, and to all transactions of Dealer
involving Company Securities (as defined in the Charter) occurring
thereafter.
	 
	 	(iii)	 	(x) Within five Business Days following its receipt from
Dealer or its delivery to Dealer of a Change of Article IV Law Notice relating
to a Prospective Change of Article IV Law (as defined below) or (y) within five
Business Days following the receipt by Counterparty of an Excess Ownership
Notice, Counterparty may, at its option, either:

	 	(A)	 	provide notice to Dealer that it is electing to
have clause (iv) below apply thereto (an “Excess Ownership Transfer
Election Notice”); or
	 
	 	(B)	 	provide to Dealer a written approval of
Counterparty’s Board of Directors, adopted pursuant to Section
4(a)(2)(A) of Article IV of the Charter, exempting transactions by
Dealer involving Company Securities from the application of Section
4(a)(1) of Article IV of the Charter or otherwise concluding that
Section 4(a)(1) of Article IV of the Charter does not apply to such
transactions, in any case to the extent and on the terms set forth
therein, with such approval to be in form and substance reasonably
satisfactory to Dealer (an “Agreed Waiver”).

17

 

	 	(iv)	 	Upon receipt by Dealer of an Excess Ownership Transfer Election
Notice, Dealer shall use commercially reasonable efforts to transfer, on
pricing terms reasonably acceptable to Dealer and within a reasonable time
period, a portion of its rights and obligations under the Transaction that
would (x) in the case of a Prospective Change of Article IV Law, decrease its
“Percentage Stock Ownership” (as determined in accordance with Section 4(d)(10)
of Article IV of the Charter, after giving effect to the Prospective Change of
Article IV Law) to a level, which may be less than 4.00%, that Dealer
determines in good faith and in a commercially reasonable manner will ensure
that its “Percentage Stock Ownership” (as determined in accordance with Section
4(d)(10) of Article IV of the Charter, after giving effect to the Prospective
Change of Article IV Law) will not exceed 4.00% at any point during the
Relevant Period (taking into account in connection with any such determination
commercially reasonable hedging strategies, if any, that do not affect
“Percentage Stock Ownership” (as determined in accordance with Section 4(d)(10)
of Article IV of the Charter, after giving effect to the Prospective Change of
Article IV Law)) and (y) in the case of an Excess Ownership Notice, decrease
the Notice Percentage to no more than 4.00% (the “Excess Portion”), to any
third party that:

	 	(A)	 	represents in writing to Dealer (I) in the case
of a Prospective Change of Article IV Law, that its “Percentage Stock
Ownership” (as determined in accordance with Section 4(d)(10) of
Article IV of the Charter, before and after giving effect to the
Prospective Change of Article IV Law) is not, and, after such transfer,
will not be, 4.5% or more and (II) in the case of an Excess Ownership
Notice, that it does not, and, after such transfer, will not,
“beneficially own” (within the meaning of Section 13) 4.5% or more of
the Shares outstanding;
	 
	 	(B)	 	acknowledges in writing to Dealer that it will
be bound by the terms of this Confirmation, including, without
limitation, the provisions of this Section 9(s); and
	 
	 	(C)	 	has a rating for its long term, unsecured and
unsubordinated indebtedness equal to or better than the lesser of (x)
the credit rating of Dealer at such time and (y) A- by S&P or A3 by
Moody’s or, if either S&P or Moody’s ceases to rate such debt, at least
an equivalent rating or better by a substitute rating agency mutually
agreed by Counterparty and Dealer

	 	 	 	(the conditions in clauses (A) through (C), the “Transferee Eligibility
Conditions”).
	 
	 	(v)	 	If Counterparty fails to timely deliver an Excess Ownership
Transfer Election Notice or an Agreed Waiver and Dealer reasonably determines,
after consultation with counsel, that transactions by it could be restricted by
Section 4(a)(1) of Article IV of the Charter because the then-existing Notice
Percentage or a Prospective Change of Article IV Law make the occurrence of an
event described in clause (i)(x) or (y) above reasonably possible, Dealer may
unilaterally decide to use commercially reasonable efforts to transfer the
Excess Portion to any third party that satisfies the Transferee Eligibility
Conditions on pricing terms reasonably acceptable to Dealer and within a
reasonable time period.
	 
	 	(vi)	 	If Dealer is unable to effect a transfer contemplated under
clause (iv) or (v) above, then Dealer shall (in the case of clause (iv) above)
or may (in the case of clause (v) above) designate any Exchange Business Day as
an Early Termination Date with respect to the Excess Portion. In the event
that Dealer so designates an Early Termination Date with respect to the Excess
Portion, a payment shall be made pursuant to Section 6 of the Agreement as if
(1) an Early Termination Date had been designated in respect of a Transaction
having terms identical to this Transaction and a Number of Options equal to 

18

 

	 	 	 	the number of Options underlying the Excess Portion, (2) Counterparty were the sole
Affected Party with respect to such partial termination and (3) the Excess
Portion were the sole Affected Transaction.
	 
	 	(vii)	 	Upon and following the occurrence of a Change of Article IV
Law other than a Prospective Change of Article IV Law (an “Immediate Change of
Article IV Law”), unless Counterparty grants Dealer an Agreed Waiver, Dealer
may terminate the Excess Portion, if any, in the manner contemplated in clause
(vi) above; provided that, unless Counterparty and Dealer otherwise agree,
notwithstanding Section 4(a)(1) of Article IV of the Charter to the extent it
might be applicable, Counterparty shall purchase from Dealer at the prevailing
market prices any Shares, securities or derivatives that Dealer or any of its
affiliates may want to sell in connection with the unwind of its hedge
positions in respect of the Excess Portion.
	 
	 	(viii)	 	For the purposes of this Section 9(s):

	 	(x)	 	“Dealer Group” means collectively Dealer and
each person subject to aggregation of Shares with Dealer for purposes
of determining “beneficial ownership” under Section 13;
	 
	 	(y)	 	the “Notice Percentage” means, as of any day, the
fraction, expressed as a percentage, (x) the numerator of which is the
number of Shares that the Dealer Group “beneficially owns” (within the
meaning of Section 13) and (y) the denominator of which is the number of
Shares outstanding; and
	 
	 	(z)	 	“Prospective Change of Article IV Law” means,
with respect to any Change of Article IV Law Notice, a Change of Article
IV Law identified therein that has not become effective as of the date
of such Change of Article IV Law Notice and will not become effective
within 10 Business Days following such date.

	 	(ix)	 	Counterparty shall indemnify and hold harmless Dealer, its
affiliates and its assignees and their respective directors, officers,
employees, agents and controlling persons (Dealer and each such person being an
“Indemnified Party”) from and against any and all losses, claims, damages and
liabilities, joint or several, to which such Indemnified Party may become
subject, arising out of (x) any action by Dealer in reliance on clause (i)
above and (y) any Immediate Change of Article IV Law, and shall reimburse any
Indemnified Party for all expenses (including reasonable counsel fees and
expenses) as they are incurred 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.
Counterparty shall not be liable under the foregoing indemnification provision
to the extent that any loss, claim, damage, liability or expense is found in a
nonappealable judgment by a court of competent jurisdiction to have resulted
from Dealer’s willful misconduct or gross negligence. 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 (but only to the extent that
such harm was not caused by Dealer’s willful misconduct or gross negligence),
to the amount paid or payable by the Indemnified Party as a result of such
loss, claim, damage or liability. No Indemnified Party shall have any
liability to Counterparty or any person asserting claims on behalf of or in
right of Counterparty as a result of (x) any action by Dealer in reliance on
clause (i) above or (y) any Immediate Change of Article IV Law, except, in each
case, to the extent that any losses, claims, damages, liabilities or expenses
incurred by Counterparty result from Dealer’s gross negligence or willful
misconduct. The provisions of this Section 9(s)(ix) and the provisos to
Section 9(s)(ii) above will survive the completion of the 

19

 

	 	 	 	Transaction
contemplated hereunder and any transfer or assignment of the Transaction or portion thereof hereunder. For the avoidance of doubt, any permitted
transferee or assignee of rights and obligations hereunder with respect to
Options hereunder shall have the benefit of this clause (ix) with respect to
its own actions.

20

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
this Confirmation and returning it to [                    ].

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	[Dealer]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	Authorized Signatory	 	 
	 

	 	 	 	Name:	 	 	 	 

Accepted and confirmed

as of the Trade Date:

	 	 	 	 	 
	Kaiser Aluminum Corporation	 	 
	 
	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Authorized Signatory	 	 
	Name:
	 	 	 	 

[Signature Page to the Additional Call Option Transaction]exv10w3

Exhibit 10.3

Form of Base Warrant Transaction Confirmation

THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO RESTRICTIONS PURSUANT TO
SECTION 4 OF ARTICLE IV OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF KAISER ALUMINUM
CORPORATION. KAISER ALUMINUM CORPORATION WILL FURNISH A COPY OF ITS AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO ANY HOLDER OF SUCH SECURITIES WITHOUT CHARGE UPON WRITTEN REQUEST
ADDRESSED TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.

[Dealer]1

[                    ]

[                    ]

[                    ]

March 23, 2010

To: Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 200

Foothill Ranch, CA 92610-2831

Attention:            Chief Financial Officer

Telephone No.:   (949) 614-1740

Facsimile No.:     (949) 614-1930

Re: Base Warrants

     The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the Warrants issued by Kaiser Aluminum Corporation (“Company”) to [                    ]
(“Dealer”) as of the Trade Date specified below (the “Transaction”). This letter agreement
constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous agreements and serve as the final documentation for this
Transaction.

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

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

1. This Confirmation evidences a complete and binding agreement between Dealer and Company as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if Dealer and Company had executed an agreement in such form (but
without any Schedule except for the election of the laws of the State of New York as the governing
law (without reference to choice of law doctrine, other than Title 14 of the New York General
Obligations Law)) on the Trade Date. In the event of any inconsistency between provisions of that
Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction
to which this Confirmation relates. The parties hereby agree that no Transaction other than the
Transaction to which this Confirmation relates shall be governed by the Agreement. If there exists
any ISDA Master Agreement between Dealer and Company or any confirmation or other agreement between
Dealer and Company (other than this Confirmation) pursuant to which an ISDA Master Agreement is
deemed to exist between Dealer and Company, then notwithstanding anything to the contrary in such
ISDA Master Agreement, such confirmation or agreement or any

 

			
	1	 	On March 23, 2010, Kaiser Aluminum
Corporation entered into an agreement in substantially the form hereof with
each of Bank of America, N.A. (“BofA”), JPMorgan Chase Bank, National
Association (“JPM”) and Wells Fargo Bank, National Association (“Wells”).

 

 

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

     General Terms.

	 	 	 	 	 
	 

	 	Trade Date:
	 	March 23, 2010 
	 
	 	 	 	 
	 

	 	Warrants:
	 	Equity call warrants, each giving the holder
the right to purchase one Share at the
Strike Price, subject to the Settlement
Terms set forth below. For the purposes of
the Equity Definitions, each reference to a
Warrant herein shall be deemed to be a
reference to a Call Option.
	 
	 	 	 	 
	 

	 	Warrant Style:
	 	European
	 
	 	 	 	 
	 

	 	Seller:
	 	Company
	 
	 	 	 	 
	 

	 	Buyer:
	 	Dealer
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Company, par value USD
0.01 per Share (Exchange symbol “KALU”) 
	 
	 	 	 	 
	 

	 	Number of Warrants:
	 	[BofA, 1,024,398; JPM, 1,241,694; and Wells,
838,143], subject to adjustment as provided
herein. For the avoidance of doubt, the
Number of Warrants shall be reduced by any
Warrants deemed exercised or expired
unexercised as provided in “Automatic
Exercise.” In no event will the Number of
Warrants be less than zero. 
	 
	 	 	 	 
	 

	 	Warrant Entitlement:
	 	One Share per Warrant
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD 61.3600, subject to Section 9(v). 
	 
	 	 	 	 
	 

	 	Premium:
	 	USD [BofA, 4,730,220.00; JPM, 4,053,899.23;
and Wells, 3,434,211.00] 
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	March 29, 2010 
	 
	 	 	 	 
	 

	 	Exchange:
	 	The NASDAQ Global Select Market
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges

     Procedures for Exercise.

	 	 	 	 	 
	 

	 	Expiration Time:
	 	The Valuation Time
	 
	 	 	 	 
	 

	 	Expiration Date(s):
	 	Each Scheduled Trading Day during the period
from, and including, the First Expiration
Date to, but excluding, the 120th Scheduled
Trading Day following the First Expiration
Date shall be an “Expiration Date” for a
number of Warrants equal to the Daily Number
of Warrants on such date; provided that,
notwithstanding anything to the contrary in
the Equity Definitions, if any such date is
a Disrupted Day, the Calculation Agent shall

2

 

	 	 	 	 	 
	 

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

	 	First Expiration Date:
	 	July 1, 2015 (or if such day is not a
Scheduled Trading Day, the next following
Scheduled Trading Day), subject to Market
Disruption Event below.
	 
	 	 	 	 
	 

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

	 	Automatic Exercise:
	 	Applicable; and means that for each
Expiration Date, a number of Warrants equal
to the Daily Number of Warrants (as adjusted
pursuant to the terms hereof) for such
Expiration Date will be deemed to be
automatically exercised at the Exercise Time
on such Expiration Date unless Dealer
notifies Company prior to the Expiration
Time on such Expiration Date that it does
not wish Automatic Exercise to occur, in
which case Automatic Exercise will not apply
to such Expiration Date and the Daily Number
of Warrants for such Expiration Date will
expire unexercised.
	 
	 	 	 	 
	 

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

     Valuation Terms.

	 	 	 	 	 
	 

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

	 	Valuation Date:
	 	Each Exercise Date

3

 

     Settlement Terms.

	 	 	 	 	 
	 

	 	Settlement Method:
	 	Net Share Settlement
	 
	 	 	 	 
	 

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

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

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

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

	 	Settlement Date(s):
	 	As determined in reference to Section 9.4 of
the Equity Definitions, subject to Section
9(k)(i) hereof.
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	The provisions of Sections 9.1(c), 9.8, 9.9,
9.11, 9.12 and 10.5 of the Equity
Definitions will be applicable, except that
all references in such provisions to
“Physically-settled” shall be read as
references to “Net Share Settled.” “Net
Share Settled” in relation to any Warrant
means that Net Share Settlement is
applicable to that Warrant.
	 
	 	 	 	 
	

	 	Representation and Agreement:
	 	Notwithstanding Section 9.11 of the Equity
Definitions, the parties acknowledge that
any Shares delivered to Dealer may be, upon
delivery, subject to (a) restrictions

4

 

	 	 	 	 	 
	 

	 	 	 	and
limitations arising from Company’s status as
issuer of the Shares under applicable
securities laws; (b) applicable provisions
with respect to transfers of Company’s
securities imposed by Company’s certificate
of incorporation, as such provisions may
have been agreed to be interpreted in any
other agreement between Dealer and Company;
and (c) applicable provisions with respect
to transfer of Company’s securities imposed
by this Confirmation or any other agreement
between Dealer and Company.

3. Additional Terms applicable to the Transaction.

     Adjustments applicable to the Warrants:

	 	 	 	 	 
	 

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

     Extraordinary Events applicable to the Transaction:

	 	 	 	 	 
	 

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

     Consequence of Merger Events:

	 	 	 	 	 
	 

	 	Merger Event:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

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

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

5

 

     Consequence of Tender Offers:

	 	 	 	 	 
	 

	 	Tender Offer:
	 	Applicable
	 
	 	 	 	 
	 

	 	     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

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

     Additional Disruption Events:

	 	 	 	 	 
	 

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

	 	Failure to Deliver:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	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, any such transactions or assets
referred to in phrases (A) or (B) above must be
available on commercially reasonable pricing
terms.”; and
	 
	 	 	 	 
	 

	 	 	 	(ii) Section 12.9(b)(iii) of the Equity
Definitions is hereby modified by inserting in
the third line thereof, after the words “to
terminate the Transaction”, the following
words:
	 
	 	 	 	 
	 

	 	 	 	“or a portion of the Transaction affected by
such Hedging Disruption”.
	 
	 	 	 	 
	 

	 	Increased Cost of Hedging:
	 	Not Applicable

6

 

	 	 	 	 	 
	 

	 	     Loss of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	          Maximum Stock Loan Rate:
	 	200 basis points
	 
	 	 	 	 
	 

	 	     Increased Cost of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	          Initial Stock Loan Rate:
	 	25 basis points
	 
	 	 	 	 
	 

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

	 	Determining Party:
	 	For all applicable Extraordinary Events, Dealer.
	 
	 	 	 	 
	 

	 	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	 

	 	Agreements and Acknowledgments	 	 
	 

	 	Regarding Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	 

	 	Additional Acknowledgments:
	 	Applicable

	 	 	 	 	 
	4.

	 	Calculation Agent.
	 	Dealer; provided that all determinations made by the Calculation
Agent shall be made in a good faith and in a commercially reasonable manner. Following any
calculation made hereunder by the Calculation Agent, Company may request that the Calculation
Agent deliver to Company, at an email address specified by Company, a report displaying in
reasonable detail the basis for such calculation. Upon receipt of such request, the
Calculation Agent will provide such a report to Company by e-mail to the e-mail address
provided by Company; provided, however, that in no event will the Calculation Agent be
obligated to provide to Company any proprietary models used by it or any other party.

	5.	 	Account Details.

	 	(a)	 	Account for payments to Company:
	 
	 	 	 	[                    ]
	 
	 	 	 	Account for delivery of Shares from Company:
	 
	 	 	 	[                    ]
	 
	 	(b)	 	Account for payments to Dealer:
	 
	 	 	 	[                    ]
	 
	 	 	 	Account for delivery of Shares to Dealer:
	 
	 	 	 	[                    ]

	6.	 	Offices.

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

7

 

	 	 	 	[                    ]
	 
	 	 	 	[                    ]

	7.	 	Notices.

	 	(a)	 	Address for notices or communications to Company:
	 
	 	 	 	Kaiser Aluminum Corporation

27422 Portola Parkway, Suite 200

Foothill Ranch, CA 92610-2831

Attention:           Chief Financial Officer

Telephone No.:   (949) 614-1740

Facsimile No.:     (949) 614-1930
	 
	 	(b)	 	Address for notices or communications to Dealer:
	 
	 	 	 	[                    ]

Attention:          [Title of contact]

Telephone No:     [                    ]

Facsimile No:      [                    ]

	8.	 	Representations and Warranties of Company.
	 
	 	 	Each of the representations and warranties of Company set forth in Section 3 of the Purchase
Agreement (the “Purchase Agreement”) dated as of March 23, 2010 between Company and J.P.
Morgan Securities Inc. and Merrill Lynch, Pierce Fenner & Smith Incorporated, as
representatives of the several Initial Purchasers party thereto, are true and correct and
are hereby deemed to be repeated to Dealer as if set forth herein. Company hereby further
represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date
and, in the case of the representations in Section 8(d), at all times until termination of
the Transaction, that:

	 	(a)	 	Company has all necessary corporate power and authority to execute, deliver and
perform its obligations in respect of this Transaction; such execution, delivery and
performance have been duly authorized by all necessary corporate action on Company’s
part; and this Confirmation has been duly and validly executed and delivered by Company
and constitutes its valid and binding obligation, enforceable against Company in
accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution hereunder may be limited by
federal or state securities laws or public policy relating thereto.
	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the incurrence or
performance of obligations of Company hereunder will conflict with or result in a
breach of the certificate of incorporation or by-laws (or any equivalent documents) of
Company, or any applicable law or regulation, or any order, writ, injunction or decree
of any court or governmental authority or agency, or any agreement or instrument to
which Company or any of its subsidiaries is a party or by which Company or any of its
subsidiaries is bound or to which Company or any of its subsidiaries is subject, or
constitute a default under, or result in the creation of any lien under, any such
agreement or instrument.
	 
	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the execution,
delivery or performance by Company of this Confirmation, except such as have been
obtained or made and such as may be required under the Securities Act of 1933, as
amended (the “Securities Act”) or state securities laws.

8

 

	 	(d)	 	A number of Shares equal to the Maximum Number of Shares (the “Warrant Shares”)
have been reserved for issuance by all required corporate action of Company. The
Warrant Shares have been duly authorized and, when delivered against payment therefor
(which may include Net Share Settlement in lieu of cash) and otherwise as contemplated
by the terms of the Warrants following the exercise of the Warrants in accordance with
the terms and conditions of the Warrants, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be subject to any
preemptive or similar rights.
	 
	 	(e)	 	Company is not and will not be required to register as an “investment company”
as such term is defined in the Investment Company Act of 1940, as amended.
	 
	 	(f)	 	Company is an “eligible contract participant” (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended, other than a person that is
an eligible contract participant under Section 1a(12)(C) of the Commodity Exchange
Act).
	 
	 	(g)	 	Company and each of its affiliates is not, on the date hereof, in possession of
any material non-public information with respect to Company.

	9.	 	Other Provisions.

	 	(a)	 	Opinions. Company shall deliver to Dealer an opinion of counsel, dated
as of the Trade Date, with respect to the matters set forth in Sections 8(a) through
(d) of this Confirmation. Delivery of such opinion to Dealer shall be a condition
precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each
obligation of Dealer under Section 2(a)(i) of the Agreement.
	 
	 	(b)	 	Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares other than an Excluded Repurchase, promptly give Dealer a
written notice of such repurchase (a “Repurchase Notice”) on such day if following such
repurchase, the number of outstanding Shares on such day, subject to any adjustments
provided herein, is (i) less than [BofA, 17.4700; JPM, 17.7342; and Wells, 17.1447]
million (in the case of the first such notice) or (ii) thereafter more than [BofA,
0.0873; JPM, 0.0886; and Wells, 0.0954] million (each number as adjusted by the
Calculation Agent on account of stock splits and similar events) less than the number
of Shares included in the immediately preceding Repurchase Notice.
	 
	 	(c)	 	Regulation M. Company is not on the Trade Date engaged in a
distribution, as such term is used in Regulation M under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), of any securities of Company, other than a
distribution meeting the requirements of the exception set forth in Rules 101(b)(10)
and 102(b)(7) of Regulation M. Company shall not, until the second Exchange Business
Day immediately following the Trade Date, engage in any such distribution.
	 
	 	(d)	 	No Manipulation. Company is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the Shares)
or otherwise in violation of the Exchange Act.
	 
	 	(e)	 	Transfer or Assignment. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent of Dealer. Dealer
may, without Company’s consent, transfer or assign all or any part of its rights or
obligations under this Transaction to any third party. Dealer will promptly provide
Company with notice of any such transfer or assignment. If at any time at which (A)
the Section 16 Percentage exceeds 4.5%, (B) the Warrant Equity Percentage exceeds
14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any
such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”),
Dealer is unable after using its commercially reasonable efforts to effect a transfer
or assignment of Warrants to a third party on pricing terms reasonably acceptable to
Dealer and within a time period reasonably acceptable to Dealer such that no Excess
Ownership Position exists, then Dealer may designate any Exchange Business Day as an
Early Termination Date with respect to a portion of the Transaction (the “Terminated
Portion”), such that following such

9

 

	 	 	 	partial termination no Excess Ownership Position exists. In the event that Dealer
so designates an Early Termination Date with respect to a Terminated Portion, a
payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early
Termination Date had been designated in respect of a Transaction having terms
identical to this Transaction and a Number of Warrants equal to the number of
Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party
with respect to such partial termination and (3) the Terminated Portion were the
sole Affected Transaction (and, for the avoidance of doubt, the provisions of
Section 9(j) shall apply to any amount that is payable by Company to Dealer pursuant
to this sentence as if Company was not the Affected Party). The “Section 16
Percentage” as of any day is the fraction, expressed as a percentage, (A) the
numerator of which is the number of Shares that Dealer and each person subject to
aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act
and rules promulgated thereunder (the “Dealer Group”) directly or indirectly
beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and
rules promulgated thereunder) and (B) the denominator of which is the number of
Shares outstanding. The “Warrant Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the sum of (1) the product
of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number
of Shares underlying any other warrants purchased by Dealer from Company, and (B)
the denominator of which is the number of Shares outstanding. The “Share Amount” as
of any day is the number of Shares that Dealer and any person whose ownership
position would be aggregated with that of Dealer (Dealer or any such person, a
“Dealer Person”) under Section 203 of the Delaware General Corporation Law or any
other law, rule, regulation, regulatory order or organizational documents or
contracts of Company that are, in each case, applicable to ownership of Shares
(“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls,
holds the power to vote or otherwise meets a relevant definition of ownership under
any Applicable Restriction, as determined by Dealer in its reasonable discretion.
The “Applicable Share Limit” means a number of Shares equal to (A) the minimum
number of Shares that could give rise to reporting or registration obligations or
other requirements (including obtaining prior approval from any person or entity) of
a Dealer Person, or could result in an adverse effect on a Dealer Person, under any
Applicable Restriction, as determined by Dealer in its reasonable discretion, minus
(B) 1% of the number of Shares outstanding. Notwithstanding any other provision in
this Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities, or make or receive any payment in
cash, to or from Company, Dealer may designate any of its affiliates to purchase,
sell, receive or deliver such Shares or other securities, or make or receive such
payment in cash, and otherwise to perform Dealer’s obligations in respect of this
Transaction and any such designee may assume such obligations. Dealer shall be
discharged of its obligations to Company to the extent of any such performance.
	 
	 	(f)	 	Dividends. If at any time during the period from and including the
Trade Date, to and including the final Expiration Date, (i) an ex-dividend date for a
cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that
dividend differs from the Regular Dividend on a per Share basis or (ii) if no
Ex-Dividend Date for a cash dividend occurs with respect to the Shares in any quarterly
dividend period of Company, then the Calculation Agent will adjust any of the Strike
Price, Number of Warrants and/or Daily Number of Warrants to preserve the fair value of
the Warrants to Dealer after taking into account such dividend or lack thereof.
“Regular Dividend” shall mean for any calendar quarter, USD 0.24 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date falls within such
calendar quarter, and zero for any subsequent dividend or distribution on the Shares
for which the Ex-Dividend Date falls within the same calendar quarter.
	 
	 	(g)	 	[Boilerplate agency provision of Dealer, if applicable.]
	 
	 	(h)	 	Additional Provisions.

	 	(i)	 	Amendments to the Equity Definitions:

10

 

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

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

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

	 	(x)	 	adding the word “or” immediately
before subsection “(B)” and deleting the comma at the end of
subsection (A); and
	 
	 	(y)	 	(1) deleting subsection (C) in
its entirety, (2) deleting the word “or” immediately preceding
subsection (C) and (3) deleting the penultimate sentence in its
entirety and replacing it with the sentence “The Hedging Party
will determine the Cancellation Amount payable by one party to
the other.”

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

	 	(A)	 	A “person” or “group” within the meaning of
Section 13(d) of the Exchange Act, other than Company, its subsidiaries
and its and their employee benefit plans, has become the direct or
indirect “beneficial owner,” as defined in Rule

11

 

	 	 	 	13d-3 under the Exchange Act, of shares of the common equity of
Company representing more than 50% of the voting power of such common
equity.
	 
	 	(B)	 	Consummation of (I)(i) any recapitalization,
reclassification or change of the Shares (other than changes resulting
from a subdivision or combination or changes in par value) as a result
of which the Shares would be converted into, or exchanged for, stock,
other securities, other property or assets or (ii) any share exchange,
consolidation or merger of Company pursuant to which the Shares will be
converted into cash, securities or other property (in each of clauses
(i) and (ii), other than any such transaction which is effected solely
to change the Company’s jurisdiction of incorporation to another State
within the United States of America or the District of Columbia and
that results in a reclassification, conversion or exchange of
outstanding Shares solely into shares of common stock of the surviving
entity) or (II) any sale, lease or other transfer in one transaction or
a series of transactions of all or substantially all of the
consolidated assets of Company and its subsidiaries, taken as a whole,
to any person; provided, however, that a transaction where the holders
of all classes of Company’s common equity immediately prior to such
transaction that is a share exchange, consolidation or merger own, as a
result of such transaction, directly or indirectly, more than 50% of
all classes of common equity of the continuing or surviving corporation
or transferee or the parent thereof immediately after such event shall
not constitute an Additional Termination Event. Notwithstanding the
foregoing, any event set forth in this clause (B) shall not constitute
an Additional Termination Event if 90% or more of the consideration
received or to be received by holders of the Shares, excluding cash
payments for fractional Shares or pursuant to appraisal rights, in
connection with such event consists of shares of common stock traded on
a national securities exchange or which will be so traded or quoted
when issued or exchanged in connection with such event.
	 
	 	(C)	 	Dealer, despite using commercially reasonable
efforts, is unable or reasonably determines that, during the period
beginning on, and including, the fourth Exchange Business Day
immediately following the Trade Date and ending on, and including, the
one-year anniversary of the fourth Exchange Business Day immediately
following the Trade Date, it is impractical or illegal, to hedge its
exposure with respect to this Transaction in the public market without
registration under the Securities Act or as a result of any legal,
regulatory or self-regulatory requirements or related policies and
procedures (whether or not such requirements, policies or procedures
are imposed by law or have been voluntarily adopted by Dealer).

	 	(i)	 	No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary, the obligations
of Company hereunder are not secured by any collateral. Obligations under this
Transaction shall not be set off by Company against any other obligations of the
parties, whether arising under the Agreement, this Confirmation, under any other
agreement between the parties hereto, by operation of law or otherwise. Any provision
in the Agreement with respect to the satisfaction of Company’s payment obligations to
the extent of Dealer’s payment obligations to Company in the same currency and in the
same Transaction (including, without limitation Section 2(c) thereof) shall not apply
to Company and, for the avoidance of doubt, Company shall fully satisfy such payment
obligations notwithstanding any payment obligation to Company by Dealer in the same
currency and in the same Transaction. In calculating any amounts under Section 6(e) of
the Agreement, notwithstanding anything to the contrary in the Agreement, (1) separate
amounts shall be calculated as set forth in such Section 6(e) with respect to (a) this
Transaction and (b) all other Transactions, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement. For the avoidance of doubt and
notwithstanding anything to the contrary provided in this Section 9(i), in the event of

12

 

	 	 	 	bankruptcy or liquidation of either Company or Dealer, neither party shall have the
right to set off any obligation that it may have to the other party under this
Transaction against any obligation such other party may have to it, whether arising
under the Agreement, this Confirmation or any other agreement between the parties
hereto, by operation of law or otherwise.

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

	 	 	 	 	 
	 

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

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

	 	Share Termination Unit Price:
	 	The value to Dealer of property
contained in one Share Termination Delivery Unit on the date such Share
Termination Delivery Units are to be delivered as Share Termination Delivery
Property, as determined by the Calculation Agent in its discretion by
commercially reasonable means. The Calculation Agent shall notify Company of
such Share Termination Unit Price at the time of notification of the Payment
Obligation. In the case of a Private Placement of Share Termination Delivery
Units that are Restricted Shares (as defined below), as set forth

13

 

	 	 	 	 	 
	 

	 	 	 	in Section 9(k)(i) below, the Share
Termination Unit Price shall be determined by
the discounted price applicable to such Share
Termination Delivery Units. In the case of a
Registration Settlement of Share Termination
Delivery Units that are Restricted Shares (as
defined below) as set forth in Section
9(k)(ii) below, the Share Termination Unit
Price shall be the Settlement Price on the
Merger Date, the Tender Offer Date, the
Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), the
date of cancellation or the Early Termination
Date, as applicable.
	 
	 	 	 	 
	 

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

	 	Failure to Deliver:
	 	Inapplicable
	 
	 	 	 	 
	 

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

	 	(k)	 	Registration/Private Placement Procedures. If, in the reasonable
opinion of Dealer, following any delivery of Shares or Share Termination Delivery
Property to Dealer hereunder, such Shares or Share Termination Delivery Property would
be in the hands of Dealer subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery requirement for such
Shares or Share Termination Delivery Property pursuant to any applicable federal or
state securities law (including, without limitation, any such requirement arising under
Section 5 of the Securities Act as a result of such Shares or Share Termination
Delivery Property being “restricted securities”, as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule 145 under the
Securities Act) (such Shares or Share Termination Delivery Property, “Restricted
Shares”), then delivery of such Restricted Shares shall be effected pursuant to either
clause (i) or (ii) below at the election of Company, unless Dealer waives the need for
registration/private placement procedures set forth in (i) and (ii) below.
Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants
exercised or deemed exercised on

14

 

	 	 	 	any Expiration Date, Company shall elect, prior to the first Settlement Date for the
First Expiration Date, a Private Placement Settlement or Registration Settlement for
all deliveries of Restricted Shares for all such Expiration Dates which election
shall be applicable to all Settlement Dates for such Warrants and the procedures in
clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares
on an aggregate basis commencing after the final Settlement Date for such Warrants.
The Calculation Agent shall make reasonable adjustments to settlement terms and
provisions under this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered hereunder.

	 	(i)	 	If Company elects to settle the Transaction pursuant to this
clause (i) (a “Private Placement Settlement”), then delivery of Restricted
Shares by Company shall be effected in customary private placement procedures
with respect to such Restricted Shares reasonably acceptable to Dealer;
provided that Company may not elect a Private Placement Settlement if, on the
date of its election, it has taken, or caused to be taken, any action that
would make unavailable either the exemption pursuant to Section 4(2) of the
Securities Act for the sale by Company to Dealer (or any affiliate designated
by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1)
or Section 4(3) of the Securities Act for resales of the Restricted Shares by
Dealer (or any such affiliate of Dealer). The Private Placement Settlement of
such Restricted Shares shall include customary representations, covenants, blue
sky and other governmental filings and/or registrations, indemnities to Dealer,
due diligence rights (for Dealer or any designated buyer of the Restricted
Shares by Dealer), opinions and certificates, and such other documentation as
is customary for private placement agreements, all reasonably acceptable to
Dealer. In the case of a Private Placement Settlement, Dealer shall determine
the appropriate discount to the Share Termination Unit Price (in the case of
settlement of Share Termination Delivery Units pursuant to Section 9(j) above)
or any Settlement Price (in the case of settlement of Shares pursuant to
Section 2 above) applicable to such Restricted Shares in a commercially
reasonable manner and appropriately adjust the number of such Restricted Shares
to be delivered to Dealer hereunder; provided that, in no event shall Company
deliver a number of Restricted Shares greater than 2.0 times the Number of
Shares (the “Maximum Number of Shares”). Notwithstanding the Agreement or
this Confirmation, the date of delivery of such Restricted Shares shall be the
Exchange Business Day following notice by Dealer to Company, of such applicable
discount and the number of Restricted Shares to be delivered pursuant to this
clause (i). For the avoidance of doubt, delivery of Restricted Shares shall be
due as set forth in the previous sentence and not be due on the Share
Termination Payment Date (in the case of settlement of Share Termination
Delivery Units pursuant to Section 9(j) above) or on the Settlement Date for
such Restricted Shares (in the case of settlement in Shares pursuant to Section
2 above).
	 
	 	 	 	In the event Company shall not have delivered the full number of Restricted
Shares otherwise applicable as a result of the proviso above relating to the
Maximum Number of Shares (such deficit, the “Deficit Restricted Shares”),
Company shall be continually obligated to deliver, from time to time until
the full number of Deficit Restricted Shares have been delivered pursuant to
this paragraph, Restricted Shares when, and to the extent, that (i) Shares
are repurchased, acquired or otherwise received by Company or any of its
subsidiaries after the Trade Date (whether or not in exchange for cash, fair
value or any other consideration), (ii) authorized and unissued Shares
reserved for issuance in respect of other transactions prior to such date
which prior to the relevant date become no longer so reserved and (iii)
Company additionally authorizes any unissued Shares that are not reserved
for other transactions. Company shall immediately notify Dealer of the
occurrence of any of the foregoing events (including the number of Shares
subject to clause (i), (ii) or (iii) and the corresponding number of
Restricted Shares to be delivered) and promptly deliver such Restricted
Shares thereafter.

15

 

	 	(ii)	 	If Company elects to settle the Transaction pursuant to this
clause (ii) (a “Registration Settlement”), then Company shall promptly (but in
any event no later than the beginning of the Resale Period) file and use its
reasonable best efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding registration
statement in form and substance reasonably satisfactory to Dealer, to cover the
resale of such Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions, representations,
underwriting discounts (if applicable), commissions (if applicable),
indemnities due diligence rights, opinions and certificates, and such other
documentation as is customary for equity resale underwriting agreements, all
reasonably acceptable to Dealer. If Dealer, in its sole reasonable discretion,
is not satisfied with such procedures and documentation Private Placement
Settlement shall apply. If Dealer is satisfied with such procedures and
documentation, it shall sell the Restricted Shares pursuant to such
registration statement during a period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Restricted Shares (which, for
the avoidance of doubt, shall be (x) the Share Termination Payment Date in case
of settlement in Share Termination Delivery Units pursuant to Section 9(j)
above or (y) the Settlement Date in respect of the final Expiration Date for
all Daily Number of Warrants) and ending on the earliest of (i) the Exchange
Business Day on which Dealer completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds of such sales equals or
exceeds the Payment Obligation (as defined above), (ii) the date upon which all
Restricted Shares have been sold or transferred pursuant to Rule 144 (or
similar provisions then in force) or Rule 145(d)(2) (or any similar provision
then in force) under the Securities Act and (iii) the date upon which all
Restricted Shares may be sold or transferred by a non-affiliate pursuant to
Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any
similar provision then in force) under the Securities Act. If the Payment
Obligation exceeds the realized net proceeds from such resale, Company shall
transfer to Dealer by the open of the regular trading session on the Exchange
on the Exchange Trading Day immediately following the last day of the Resale
Period the amount of such excess (the “Additional Amount”) in cash or in a
number of Shares (“Make-whole Shares”) in an amount that, based on the
Settlement Price on the last day of the Resale Period (as if such day was the
“Valuation Date” for purposes of computing such Settlement Price), has a dollar
value equal to the Additional Amount. The Resale Period shall continue to
enable the sale of the Make-whole Shares. If Company elects to pay the
Additional Amount in Shares, the requirements and provisions for Registration
Settlement shall apply. This provision shall be applied successively until the
Additional Amount is equal to zero. In no event shall Company deliver a number
of Restricted Shares greater than the Maximum Number of Shares.
	 
	 	(iii)	 	Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Dealer, as purchaser of such
Restricted Shares, (i) may be transferred by and among Dealer and its
affiliates and Company shall effect such transfer without any further action by
Dealer and (ii) after the period of 6 months from the Trade Date (or 1 year
from the Trade Date if, at such time, informational requirements of Rule 144(c)
are not satisfied with respect to Company) has elapsed after any Settlement
Date for such Restricted Shares, Company shall promptly remove, or cause the
transfer agent for such Restricted Shares to remove, any legends referring to
any such restrictions or requirements from such Restricted Shares upon request
by Dealer (or such affiliate of Dealer) to Company or such transfer agent,
without any requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by Dealer (or such
affiliate of Dealer).

	 	 	 	If the Private Placement Settlement or the Registration Settlement shall not be
effected as set forth in clauses (i) or (ii), as applicable, then failure to effect
such Private Placement Settlement or such

16

 

	 	 	 	Registration Settlement shall constitute an Event of Default with respect to which
Company shall be the Defaulting Party.

	 	(l)	 	Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery
of any Shares deliverable hereunder, and Automatic Exercise shall not apply with
respect to any Warrant hereunder, to the extent (but only to the extent) that, after
such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder,
(i) the Section 16 Percentage would exceed 4.5%, or (ii) the Share Amount would exceed
the Applicable Share Limit. Any purported delivery hereunder shall be void and have no
effect to the extent (but only to the extent) that, after such delivery, the Section 16
Percentage would exceed 4.5%, or (ii) the Share Amount would exceed the Applicable
Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in
part, as a result of this provision, Company’s obligation to make such delivery shall
not be extinguished and Company shall make such delivery as promptly as practicable
after, but in no event later than one Business Day after, Dealer gives notice to
Company that, after such delivery, (i) the Section 16 Percentage would not exceed 4.5%,
and (ii) the Share Amount would not exceed the Applicable Share Limit.
	 
	 	(m)	 	Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been an affiliate for
three months days (it being understood that Dealer will not be considered an affiliate
under this paragraph solely by reason of its receipt of Shares pursuant to this
Transaction), and otherwise satisfies all holding period and other requirements of Rule
144 of the Securities Act applicable to it, any delivery of Shares or Share Termination
Delivery Property hereunder at any time after 6 months from the Trade Date (or 1 year
from the Trade Date if, at such time, informational requirements of Rule 144(c) are not
satisfied with respect to Company) shall be eligible for resale under Rule 144 of the
Securities Act and Company agrees to promptly remove, or cause the transfer agent for
such Shares or Share Termination Delivery Property, to remove, any legends referring to
any restrictions on resale under the Securities Act from the Shares or Share
Termination Delivery Property. Company further agrees that any delivery of Shares or
Share Termination Delivery Property prior to the date that is 6 months from the Trade
Date (or 1 year from the Trade Date if, at such time, informational requirements of
Rule 144(c) are not satisfied with respect to Company), may be transferred by and among
Dealer and its affiliates and Company shall effect such transfer without any further
action by Dealer. Notwithstanding anything to the contrary herein, Company agrees that
any delivery of Shares or Share Termination Delivery Property shall be effected by
book-entry transfer through the facilities of DTC, or any successor depositary, if at
the time of delivery, such class of Shares or class of Share Termination Delivery
Property is in book-entry form at DTC or such successor depositary. Notwithstanding
anything to the contrary herein, to the extent the provisions of Rule 144 of the
Securities Act or any successor rule are amended, or the applicable interpretation
thereof by the Securities and Exchange Commission or any court change after the Trade
Date, the agreements of Company herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of Company, to comply with Rule 144 of the
Securities Act, as in effect at the time of delivery of the relevant Shares or Share
Termination Delivery Property.
	 
	 	(n)	 	Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this 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 this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.
	 
	 	(o)	 	Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees, representatives, or
other agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the

17

 

	 	 	 	Transaction and all materials of any kind (including opinions or other tax analyses)
that are provided to Company relating to such tax treatment and tax structure.
	 
	 	(p)	 	Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will Company at any time be required to
deliver more than the Maximum Number of Shares to Dealer in connection with this
Transaction, subject to the provisions regarding Deficit Restricted Shares in Section
9(k).
	 
	 	(q)	 	Right to Extend. Dealer may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with respect to some or all
of the relevant Warrants (in which event the Calculation Agent shall make appropriate
adjustments to the Daily Number of Warrants with respect to one or more Expiration
Dates) if Dealer determines, in its commercially reasonable judgment, that such
extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge
unwind activity hereunder in light of existing liquidity conditions or to enable Dealer
to effect purchases of Shares in connection with its hedging, hedge unwind or
settlement activity hereunder in a manner that would, if Dealer were Issuer or an
affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable to
Dealer.
	 
	 	(r)	 	Status of Claims in Bankruptcy. Dealer acknowledges and agrees that
this Confirmation is not intended to convey to Dealer rights against Company with
respect to the Transaction that are senior to the claims of common stockholders of
Company in any United States bankruptcy proceedings of Company; provided that nothing
herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the
event of a breach by Company of its obligations and agreements with respect to the
Transaction; provided, further, that nothing herein shall limit or shall be deemed to
limit Dealer’s rights in respect of any transactions other than the Transaction.
	 
	 	(s)	 	Securities Contract; Swap Agreement. The parties hereto intend for (i)
the Transaction to be a “securities contract” and a “swap agreement” as defined in the
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the
parties hereto to be entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code,
(ii) a party’s right to liquidate the Transaction and to exercise any other remedies
upon the occurrence of any Event of Default under the Agreement with respect to the
other party to constitute a “contractual right” as described in the Bankruptcy Code,
and (iii) each payment and delivery of cash, securities or other property hereunder to
constitute a “margin payment” or “settlement payment” and a “transfer” as defined in
the Bankruptcy Code.
	 
	 	(t)	 	Early Unwind. In the event the sale of the “Underwritten Securities”
(as defined in the Purchase Agreement) is not consummated with the Initial Purchasers
for any reason, or Company fails to deliver to Dealer opinions of counsel as required
pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium
Payment Date, or such later date as agreed upon by the parties (the Premium Payment
Date or such later date the “Early Unwind Date”), the Transaction shall automatically
terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and
all of the respective rights and obligations of Dealer and Company under the
Transaction shall be cancelled and terminated and (ii) each party shall be released and
discharged by the other party from and agrees not to make any claim against the other
party with respect to any obligations or liabilities of the other party arising out of
and to be performed in connection with the Transaction either prior to or after the
Early Unwind Date. Each of Dealer and Company represent and acknowledge to the other
that, upon an Early Unwind, all obligations with respect to the Transaction shall be
deemed fully and finally discharged.
	 
	 	(u)	 	Payment by Dealer. In the event that (i) an Early Termination Date
occurs or is designated with respect to the Transaction as a result of a Termination
Event or an Event of Default (other than an Event of Default arising under Section
5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an
amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company,
pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount
calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to
be zero.

18

 

	 	(v)	 	Strike Price Adjustment. Notwithstanding anything to the contrary in the Agreement,
this Confirmation or the Equity Definitions, in no event shall the Strike Price be adjusted or
reduced to less than USD 44.56, other than in connection with stock splits or similar changes to
the Issuer’s capitalization.

19

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
this Confirmation and returning it to [                    ].

Very truly yours,

	 	 	 	 	 	 	 
	 	 	[Dealer]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	Authorized Signatory	 	 
	 

	 	Name:	 	 	 	 

Accepted and confirmed

as of the Trade Date:

Kaiser Aluminum Corporation

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Authorized Signatory	 	 
	Name:	 	 

[Signature Page to the Base Warrant Transaction]

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