Document:

exv10w3

 

Exhibit 10.3

EXECUTION COPY

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

March 3, 2008

To: NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000

			
	Re:	 	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 JPMorgan Chase Bank, National
Association, London Branch (“Bank”) and NuVasive, Inc. (“Counterparty”) on 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 have the meanings assigned to them in the Offering Memorandum dated March 3, 2008 (the
"Offering Memorandum”) relating to the USD 200,000,000 principal amount of Senior Convertible Notes
due March 15, 2013 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Counterparty pursuant to an Indenture to be dated March 7,
2008 between Counterparty and U.S. 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 Bank
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. For the avoidance of doubt, 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 its
execution, 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

JPMorgan Chase Bank, National Association

Organized under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio, 43271

Registered as a branch in England & Wales branch number BR000746.

Registered branch address 125 London Wall, London, EC2Y 5AJ.

Authorized and regulated by the Financial Services Authority.

 

 

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 Bank 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 Bank and 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) on the Trade Date. In the event of any inconsistency between provisions of that Agreement and
this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby
agree that no Transaction other than the Transaction to which this Confirmation relates shall be
governed by the Agreement.

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

	 	 	 	 
	 	General Terms:
	 	 
	 	 
	 	 
	 	Trade Date:

	 	March 3, 2008 
	 	 
	 	 
	 	Option Style:

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

	 	Call
	 	 
	 	 
	 	Buyer:

	 	Counterparty
	 	 
	 	 
	 	Seller:

	 	Bank
	 	 
	 	 
	 	Shares:

	 	The common stock of Counterparty, par value USD 0.001 per Share (Exchange symbol
“NUVA”)
	 	 
	 	 
	 	Number of Options:

	 	 200,000. 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:

	 	 50% 
	 	 
	 	 
	 	Option Entitlement:

	 	As of any date, a number equal to the product of the Applicable
Percentage and the Conversion Rate as of such date (as defined in the Indenture, but
without regard to any adjustments to the Conversion Rate pursuant to Section 12.05(f) or
to Section 12.02 (b) of the Indenture), for each Convertible Note.
	 	 
	 	 
	 	Strike Price:

	 	USD 44.7397 
	 	 
	 	 
	 	Premium:

	 	 USD 19,895,000.00
	 	 
	 	 
	 	Premium Payment Date:

	 	 March 7, 2008
	 	 
	 	 
	 	Exchange:

	 	The NASDAQ Global Select Market
	 	 
	 	 
	 	Related Exchange(s):

	 	All Exchanges

Procedures for Exercise:

2

 

	 	 	 	 
	 	Exercise Period(s):

	 	Notwithstanding anything to the contrary in the Equity Definitions, an
Exercise Period shall occur with respect to an Option hereunder only if such Option is
an Exercisable Option (as defined below) and the Exercise Period shall be, in respect of
any Exercisable Option, the period commencing on, and including, the relevant Conversion
Date and ending on, and including, the Scheduled Valid Day immediately preceding the
first day of the relevant Settlement Averaging Period in respect of such Conversion
Date; provided that in respect of Exercisable Options relating to Convertible Notes for
which the relevant Conversion Date occurs on or after the 84th Scheduled
Valid Day preceding the Expiration Date, the final day of the Exercise Period
shall be the Scheduled Valid Day immediately
preceding the Expiration Date.
	 	 
	 	 
	 	Conversion Date:

	 	With respect to any conversion of Convertible Notes, the date on which the
Holder (as such term is defined in the Indenture) of such Convertible Notes satisfies
all of the requirements for conversion thereof as set forth in Section 12.03(b) of the
Indenture.
	 	 
	 	 
	 	Exercisable Options:

	 	Upon occurrence of a Conversion Date, a number of Options equal to the
number of Convertible Notes surrendered to Counterparty for conversion with respect to
such Conversion Date but no greater than the Number of Options.
	 	 
	 	 
	 	Expiration Time:

	 	The Valuation Time
	 	 
	 	 
	 	Expiration Date:

	 	March 15, 2013, subject to earlier exercise.
	 	 
	 	 
	 	Multiple Exercise:

	 	Applicable, as described under Exercisable Options above.
	 	 
	 	 
	 	Automatic Exercise:

	 	Applicable; and means that in respect of an Exercise Period, a number of
Options not previously exercised hereunder equal to the number of Exercisable Options
shall be deemed to be exercised on the final day of such Exercise Period for such
Exercisable Options; provided that such Options shall be deemed exercised only to the
extent that Counterparty has provided a Notice of Exercise to Bank.
	 	 
	 	 
	 	Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity Definitions, in
order to exercise any Exercisable Options, Counterparty must notify Bank in writing
before 5:00 p.m. (New York City time) on the Scheduled Valid Day prior to the scheduled
first day of the Settlement Averaging Period for the Exercisable 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
Exercisable Options relating to Convertible Notes with a Conversion Date occurring on or
after the 84th Scheduled Valid Day preceding the Expiration Date,

3

 

	 	 	 	 
	 	 

	 	such notice
may be given on or prior to the second Scheduled Valid Day immediately preceding the
Expiration Date and need only specify the number of such Exercisable 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)(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 determine is material.”
	 	 
	 	 
	 	 

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

Settlement Terms:

	 	 	 	 
	 	Settlement Method:

	 	Net Share Settlement
	 	 
	 	 
	 	Net Share Settlement:

	 	Bank will deliver to Counterparty, on the relevant Settlement
Date, a number of Shares equal to the Net Shares in respect of any Exercisable Option
exercised or deemed exercised hereunder. In no event will the Net Shares be less than
zero.
	 	 
	 	 
	 	 

	 	Bank will deliver cash in lieu of any fractional
Shares to be delivered with respect to any Net Shares
valued at the Relevant Price for the last Valid Day
of the Settlement Averaging Period.
	 	 
	 	 
	 	Net Shares:

	 	In respect of any Exercisable Option exercised or deemed exercised, a
number of Shares equal to the lesser of (i) (A) the Option Entitlement multiplied by (B)
the sum of the quotients, for each Valid Day during the Settlement Averaging Period for
such Exercisable Option, of (x) the Relevant Price on such Valid Day less the Strike
Price, divided by (y) such Relevant Price, divided by (C) the number of Valid Days in
the Settlement Averaging Period; provided, however, that if the calculation contained in
clause (x) above results in a negative number, such number shall be replaced with the
number “zero” and (ii) a number of Shares equal to the product of (A) the Applicable
Percentage and (B) Net Convertible Obligation for such Exercisable Option divided by the
Obligation Value Price.
	 	 
	 	 
	 	Net Convertible Obligation:

	 	With respect to an Exercisable Option, (i) the Total
Convertible Obligation for such Exercisable Option minus (ii) USD 1,000.

4

 

	 	 	 	 
	 	Total Convertible Obligation:

	 	With respect to an Exercisable Option, (i) the
Conversion Rate multiplied by (ii) the Obligation Value Price.
	 	 
	 	 
	 	Obligation Value Price:

	 	The opening price as displayed under the heading “Op” on Bloomberg
page NUVA.UQ <equity> (or any successor thereto) on the Settlement Date.
	 	 
	 	 
	 	Valid Day:

	 	A day on which (i) trading in the Shares generally occurs on the Exchange
or, if the Shares are not then listed on the Exchange, on the principal other U.S.
national or regional securities exchange on which the Shares are then listed or, if the
Shares are not then listed on a U.S. national or regional securities exchange, on the
principal other market on which the Shares are then traded and (ii) there is no Market
Disruption Event.
	 	 
	 	 
	 	Scheduled Valid Day:

	 	A day on which trading in the Shares is scheduled to occur on the
principal U.S. national or regional securities exchange or market on which the Shares
are listed or admitted for trading.
	 	 
	 	 
	 	Relevant Price:

	 	On any Valid Day, the per Share volume-weighted average price as displayed
under the heading
“Bloomberg VWAP” on Bloomberg page NUVA.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 of the
Exchange on such Valid Day (or if such
volume-weighted average price is unavailable, the
market value of one Share on such Valid Day, as
determined by the Calculation Agent using a
volume-weighted method).
	 	 
	 	 
	 	Settlement Averaging Period:

	 	For any Exercisable Option, (x) if Counterparty has delivered a
Notice of Exercise to Bank with respect to such Exercisable Option with a Conversion
Date occurring prior to the 84th Scheduled Valid Day preceding the Expiration
Date, the eighty (80) consecutive Valid Days commencing on and including the third
Scheduled Valid Day following such Conversion Date, or (y) if Counterparty has, on or
following the 84th Scheduled Valid Day preceding the Expiration Date,
delivered a Notice of Exercise to Bank with respect to such Exercisable Option with a
Conversion Date occurring on or following the 84th Scheduled Valid Day
preceding the Expiration Date, the eighty (80) consecutive Valid Days commencing on, and
including, the eighty-second (82nd) Scheduled Valid Day immediately prior to
the Expiration Date.
	 	 
	 	 
	 	Settlement Date:

	 	For any Exercisable Option, the third Valid Day immediately following the
final Valid Day of the Settlement Averaging Period with respect to such Exercisable
Options.
	 	 
	 	 
	 	Settlement Currency:

	 	USD

5

 

	 	 	 
	Other Applicable Provisions:

	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.11 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 Option means that Net Share Settlement is
applicable to that Option.
	 
	 	 
	Restricted Certificated Shares:

	 	Notwithstanding anything to the contrary in the Equity
Definitions, Bank may, in whole or in part, deliver Shares in certificated form
representing the Number of Shares to be Delivered or the Payment Obligation to
Counterparty in lieu of delivery through the Clearance System.
	 
	 	 
	Representation and Agreement:

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

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
Section 12.05 of the Indenture that would result in an adjustment to the
Conversion Rate of the Convertible Notes; provided
that in no event shall there be any adjustment
hereunder as a result of an adjustment to the
Conversion Rate pursuant to Section 12.05(f) or
Section 12.02(b) of the Indenture.
	 	 
	 	 
	 	Method of Adjustment:

	 	Calculation Agent Adjustment, and means that, notwithstanding Section
11.2(c) of the Equity Definitions, upon any adjustment to the Conversion Rate of the
Convertible Notes pursuant to the Indenture (other than Section 12.05(f) and Section
12.02(b) of the Indenture), the Calculation Agent will make a corresponding adjustment to
any one or more of the Strike Price, Number of Options, the Option Entitlement and any
other variable relevant to the exercise, settlement or payment for the Transaction.

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 Section 12.11 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 Section 12.05(e) of the Indenture.
	 	Consequence of Merger Events
	 	 

6

 

	 	 	 	 
	 	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, Strike Price, Number of Options, the 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 for the issuance of additional shares as set forth
in Section 12.02(b) of the Indenture; provided further that if, with respect to a Merger
Event or a Tender Offer, 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,” Cancellation
and Payment 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 American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any of the New York
Stock Exchange, the American 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
	 	 
	 	 
	 	Failure to Deliver:

	 	Applicable
	 	 
	 	 
	 	Insolvency Filing:

	 	Applicable
	 	 
	 	 
	 	Hedging Disruption:

	 	Applicable
	 	 
	 	 
	 	Increased Cost of Hedging:

	 	Applicable
	 	 
	 	 
	 	Determining Party:

	 	For all applicable Extraordinary Events, Bank; provided that Bank shall
make all determinations required pursuant to this Transaction, in a commercially
reasonable manner, and such determinations shall be binding absent manifest error.
	 	 
	 	 
	Non-Reliance:

	 	Applicable
	 	 
	 	 
	Agreements and Acknowledgements
Regarding Hedging Activities:

	 	Applicable
	 	 
	 	 
	Additional Acknowledgments:

	 	Applicable

7

 

	 	 	 
	4. Calculation Agent:

	 	Bank; provided that Bank shall make all calculations, adjustments and
determinations required pursuant to this Transaction, in a commercially reasonable manner, and
such calculations, adjustments and determinations shall be binding absent manifest error.

5. Account Details:

	 	(a)	 	Account for payments to Counterparty:

To be provided by Counterparty.

Account for delivery of Shares to Counterparty:

To be provided by Counterparty.

	 	(b)	 	Account for payments to Bank:

JPMorgan Chase Bank, National Association, New York

ABA: 021 000 021

Favour: JPMorgan Chase Bank, National Association — London

A/C: 0010962009 CHASUS33

Account for delivery of Shares from Bank:

DTC 0060

6. Offices:

The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch
Party.

The Office of Bank for the Transaction is: London

7. Notices: For purposes of this Confirmation:

	 	(a)	 	Address for notices or communications to Counterparty:

NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000

	 	(b)	 	Address for notices or communications to Bank:

JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

Attention: Mariusz Kwasnik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No: (212) 622-6707

Facsimile No: (212) 622-8534

8

 

8. Representations, Warranties and Agreements of Counterparty and Bank

	 	(a)	 	The representations and warranties of Counterparty set forth in Section 1 of
the Purchase Agreement (the “Purchase Agreement”) dated as of March 3, 2008 between
Counterparty and Goldman, Sachs & Co. and J.P. Morgan Securities Inc., as the Initial
Purchasers are true and correct and are hereby deemed to be repeated to Bank as if set
forth herein. Counterparty hereby further represents and warrants to Bank that on the
Trade Date and the Premium Payment Date:

	 	(i)	 	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.
	 
	 	(ii)	 	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
applicable to Counterparty, 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.
	 
	 	(iii)	 	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.
	 
	 	(iv)	 	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.
	 
	 	(v)	 	It is an “eligible contract participant” (as such
term is defined in Section 1a(12) of the Commodity Exchange Act, as
amended).
	 
	 	(vi)	 	Neither Counterparty nor any “affiliate” or
“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) 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.

9

 

	 	(vii)	 	Without limiting the generality of Section 13.1 of
the Equity Definitions, Counterparty acknowledges that Bank is not making
any representations or warranties with respect to the treatment of the
Transaction under any accounting standards including FASB Statements 128,
133 ( as amended), 149 or 150, EITF Issue No. 00-19, 01-6 or 03-6 (or any
successor issue statements) or under FASB’s Liabilities & Equity Project.
	 
	 	(viii)	 	Without limiting the generality of Section 3(a)(iii) of the Agreement,
the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the
Exchange Act.
	 
	 	(ix)	 	Prior to the Trade Date, Counterparty shall deliver
to Bank a resolution of Counterparty’s board of directors authorizing the
Transaction and such other certificate or certificates as Bank shall
reasonably request.
	 
	 	(x)	 	Counterparty is not “insolvent” (as such term is
defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the
United States Code) (the “Bankruptcy Code”)) and Counterparty would be
able to purchase the Shares hereunder in compliance with the laws of the
jurisdiction of Counterparty’s incorporation.
	 
	 	(xi)	 	Counterparty understands no obligations of Bank to it
hereunder will be entitled to the benefit of deposit insurance and that
such obligations will not be guaranteed by any affiliate of Bank or any
governmental agency.

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

9. Other Provisions:

	 	(a)	 	Opinions. Counterparty shall deliver to Bank an opinion of counsel,
dated as of the Trade Date, with respect to the matters set forth in Sections 8(a)(i)
through (iii) of this Confirmation; provided with respect to “any agreement or
instrument” referred to in Section 8(a)(ii), such opinion shall only refer to
agreements and instruments filed as exhibits to Counterparty’s Annual Report on Form
10-K for the fiscal year ended
December 31, 2007, as updated by any exhibits to Current Reports on Form 8-K filed
on January 11, 2008, January 31, 2008 and February 29, 2008.
	 
	 	(b)	 	Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Bank a written notice of
such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the
quotient of (x) the

10

 

	 	 	 	product of (a) the Number of Options and (b) the Option
Entitlement divided by (y) the number of Counterparty’s outstanding Shares (such
quotient expressed as a percentage, the “Option Equity Percentage”) would be (i)
greater than 7.5% or (ii) 0.5% greater than the Option Equity Percentage included in
the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and
hold harmless Bank 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 Bank’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 Bank 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 Bank 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 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 (c) are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party 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 date hereof 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 Scheduled Trading Day
immediately following the Trade Date, engage in any such distribution.
	 
	 	(d)	 	No Manipulation. Counterparty is not entering into this Transaction
(i) on the basis of, and it is not aware of, any material non-public information with
respect to itself or the Shares (ii) in anticipation of, in connection with, or to
facilitate, a distribution of its securities, a self tender offer or a third-party
tender offer or (iii) to create actual or

11

 

	 	 	 	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 Bank 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(o) or 9(t) of this Confirmation;

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

(C) Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to, an
undertaking with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Bank, will not expose Bank 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 Bank;

(D) Bank will not, as a result of such transfer and assignment, be required to
pay the transferee on any payment date an amount under Section 2(d)(i)(4) of
the Agreement greater than an amount that Bank 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 Bank to permit Bank 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 Bank in connection with such
transfer or assignment.

(ii) Bank may, without Counterparty’s consent, transfer or assign all or any part
of its rights or obligations under the Transaction to any third party with a rating
for its long term, unsecured and unsubordinated indebtedness equal to or better
than the lesser of (1) the credit rating of Bank at the time of the transfer and
(2) 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 agency
rating mutually agreed by Counterparty and Bank. If after Bank’s commercially
reasonable efforts, Bank is unable to effect such a transfer or assignment on
pricing terms reasonably acceptable to Bank and within a time period reasonably
acceptable to Bank of a sufficient number of Options to reduce (1) Bank
Group’s “beneficial ownership” (within the meaning of Section 13 of the Exchange
Act and rules promulgated thereunder) to 8.0% of Counterparty’s outstanding Shares
or less or (2) the Option Equity Percentage to 14.5% or less, Bank may designate
any Exchange Business Day as an Early Termination Date with respect to a portion
(the “Terminated Portion”) of this Transaction, such that (1) Bank Group’s
“beneficial ownership” following such partial termination will be equal to or less
than 8.0% or (2) the Option Equity Percentage following such partial termination
will be equal to or less than 14.5%.

12

 

In the event that Bank so designates an Early
Termination Date with respect to a portion of this 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 Terminated Portion, (2)
Counterparty shall be the sole Affected Party with respect to such partial
termination and (3) such Transaction shall be the only Terminated Transaction (and,
for the avoidance of doubt, the provisions of Section 9(l) shall apply to any
amount that is payable by Bank to Counterparty pursuant to this sentence as if
Counterparty was not the Affected Party). “Bank Group” means Bank or any affiliate
of Bank subject to aggregation with Bank under such Section 13 of the Exchange Act
and rules promulgated thereunder and all persons who may form a “group” (within the
meaning of Rule 13d-5(b)(1) under the Exchange Act) with Bank. Bank shall provide
Counterparty with prompt written notice of assignment made pursuant to this Section
9(e)(ii), including the identity of the third party to whom such assignment is
made.

(iii) Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing Bank to purchase, sell, receive or deliver any shares or
other securities to or from Counterparty, Bank may designate any of its affiliates
to purchase, sell, receive or deliver such shares or other securities and otherwise
to perform Bank’s obligations in respect of this Transaction and any such designee
may assume such obligations. Bank shall be discharged of its obligations to
Counterparty to the extent of any such performance.

	 	(f)	 	Staggered Settlement. Bank may, by notice to Counterparty on or
prior to any Settlement Date (a “Nominal Settlement Date”), in a commercially
reasonable manner, elect to deliver the Shares on two or more dates (each, a
“Staggered Settlement Date”) as follows:

	 	(a)	 	in such notice, Bank will specify to Counterparty the related
Staggered Settlement Dates (which it shall choose in a commercially reasonable
manner, the last of which will be no later than the twentieth (20th) Exchange
Business Day following such Nominal Settlement Date) and the number of Shares
that it will deliver on each Staggered Settlement Date;
	 
	 	(b)	 	the aggregate number of Shares that Bank will deliver to
Counterparty hereunder on all such Staggered Settlement Dates will equal the
number of Shares that Bank would otherwise be required to deliver on such
Nominal Settlement Date; and
	 
	 	(c)	 	if the Net Share Settlement terms set forth above were to
apply on the Nominal Settlement Date, then the Net Share Settlement terms will
apply on each Staggered Settlement Date, except that the Net Shares will be
allocated among such Staggered Settlement Dates as specified by Bank in the
notice referred to in clause (a) above.

	 	(g)	 	Role of Agent. Each party agrees and acknowledges that (i) J.P.
Morgan Securities Inc., an affiliate of Bank (“JPMSI”), has acted solely as agent and
not as principal with respect to this Transaction and (ii) JPMSI has no obligation or
liability, by way of guaranty, endorsement or otherwise, in any manner in respect of
this Transaction
(including, if applicable, in respect of the settlement thereof). Each party agrees
it will look solely to the other party (or any guarantor in respect thereof) for
performance of such other party’s obligations under this Transaction.
	 
	 	(h)	 	[Reserved.]

13

 

	(i)	 	Additional Termination Events. (i) Notwithstanding anything to the
contrary in this Confirmation if an event of default with respect to Counterparty
shall occur under the terms of the Convertible Notes as set forth in Section 5.01 of
the Indenture, then such event of default shall constitute an Additional Termination
Event applicable to the Transaction and, with respect to such event of default (A)
Counterparty shall be deemed to be the sole Affected Party and the Transaction shall
be the sole Affected Transaction and (B) Bank shall be the party entitled to designate
an Early Termination Date pursuant to Section 6(b) of the Agreement.

	 	(ii)	Notwithstanding anything to the contrary in this Confirmation, the giving of
any Notice of Exercise shall constitute an Additional Termination Event hereunder
with respect to the number, if any, of Exercisable Options specified in such
Notice of Exercise as corresponding to a conversion of Convertible Notes in
compliance with Section 12.02(b) of the Indenture. Upon receipt of any such
Notice, Bank shall designate an Exchange Business Day as an Early Termination Date
(such day to occur as close as practicable, in Bank’s commercially reasonable
judgment, to the settlement date of the relevant Convertible Notes), with respect
to the portion of this Transaction corresponding to number of such Exercisable
Options so specified. Any payment hereunder with respect to such termination
shall be calculated pursuant to Section 6 of the Agreement; provided that for the
purposes of such calculation, (A) Counterparty shall be the sole Affected Party
with respect to such Additional Termination Event, (B) Bank shall be the party
entitled to designate an Early Termination Date pursuant to Section 6(b) of the
Agreement; and (C) for the avoidance of doubt, in determining the amount payable
pursuant to Section 6 of the Agreement, the Calculation Agent (i) shall take into
account the time value of this Transaction with respect to the Expiration Date and
(ii) shall not take into account any adjustments to the Option Entitlement that
result from corresponding adjustments to the Conversion Rate pursuant to Section
12.02(b) of the Indenture; provided further that (A) in case of a partial
termination, an Early Termination Date shall be designated in respect of a
Transaction having terms identical to this Transaction and a Number of Options
equal to the terminated portion and such Transaction shall be the only Terminated
Transaction; (B) any amount payable by Bank to Counterparty shall be satisfied
solely by delivery by Bank to Counterparty of a number of Shares and cash in lieu
of a fractional share equal to such amount calculated pursuant to Section 6
divided by a price per Share determined by the Calculation Agent; and (C) the
number of Shares deliverable in respect of such early termination by Bank to
Counterparty shall not be greater than the product of (x) the Applicable
Percentage and (y) the excess of (a) the total number of Shares underlying the
corresponding Convertible Notes (including the number of Additional Shares (as
defined in the Indenture) resulting from any adjustment set forth in Section
12.02(b) of the Indenture) deliverable with respect to such Convertible Notes over
(b) the number of Shares equal in value to the aggregate principal amount of the
corresponding Convertible Notes, as determined by the Calculation Agent in its
sole reasonable discretion.

	(j)	 	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) at Bank’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.”

	 	(ii)	Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1)
replacing “either party may elect” with “Bank may elect” and (2) replacing “notice
to the other party” with “notice to Counterparty” in the first sentence of such
section.
	 
	(k)	 	Setoff and No Collateral. Notwithstanding any provision of the
Agreement, the Confirmation or the Equity Definitions or any other agreement between
the parties to the contrary, the obligations of Company hereunder are not secured by
any collateral. In

14

 

	 	 	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, Bank (and only Bank)  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 or delivery of
Shares to Counterparty, against any obligation Counterparty may have to Bank under any
other agreement between Bank and Counterparty relating to Shares (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, Bank 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 provided in this Section 9(k), in
the event of bankruptcy or liquidation of Counterparty 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.
	 
	(l)	 	Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If in respect of this Transaction, an amount is payable by
Bank to Counterparty (i) pursuant to Section 12.2, 12.3, 12.6, 12.7 or Section 12.9 of
the Equity Definitions or (ii) pursuant to Sections 6(d) and 6(e) of the Agreement (a
“Payment Obligation”), Counterparty may request Bank to satisfy any such Payment
Obligation by the Share Termination Alternative (as defined below) (except that
Counterparty shall not make such an election in the event of a Nationalization,
Insolvency, a Merger Event or Tender Offer, in each case, in which the consideration
to be paid to holders of Shares consists solely of cash, or an Event of Default in
which Counterparty is the Defaulting Party or a Termination Event in which
Counterparty 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 Counterparty’s control) and shall give
irrevocable telephonic notice to Bank, confirmed in writing within one Currency
Business Day, no later than 12:00 p.m. New York local time on the Merger Date, the
Announcement Date (in the case of Nationalization, Insolvency or Delisting), the Early
Termination Date or, in the case of an Additional Disruption Event, the date of
cancellation, as applicable; provided that if Counterparty does not validly request
Bank to satisfy its Payment Obligation by the Share Termination Alternative, Bank
shall have the
right, in its sole discretion, to satisfy its Payment Obligation by the Share
Termination Alternative, notwithstanding Counterparty’s election to the contrary.

	 	 	 
	     Share Termination Alternative:

	 	Applicable and means that Bank
shall deliver to Counterparty the Share Termination Delivery Property on, or
within a commercially reasonable period of time after, the date when the
Payment Obligation

15

 

	 	 	 
	 

	 	would otherwise be due pursuant to Section 12.2, 12.3,
12.6, 12.7 or 12.9 of the Equity Definitions or Sections 6(d) and 6(e) of the
Agreement, as applicable (the “Share Termination Payment Date”), in
satisfaction of the Payment Obligation in the manner reasonably requested by
Counterparty 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 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 Bank of property
contained in one Share Termination Delivery Unit, as determined by the
Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Bank at the time of notification of the
Payment Obligation. For the avoidance of doubt, the parties agree that in
determining the Share Termination Delivery Unit Price the Calculation Agent
may consider the purchase price paid in connection with the purchase of Share
Termination Delivery Property.
	 
	 	 
	Share Termination Delivery Unit:

	 	One Share or, if a Merger Event
has occurred and a corresponding adjustment to this Transaction has been made,
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
Merger Event, as determined by the Calculation Agent.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other
applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections 9.8, 9.9, 9.11 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.

16

 

	 	(m)	 	Governing Law. New York law (without reference to choice of law
doctrine other than Title 14 of Article 5 of the New York General Obligations Law).
	 
	 	(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 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.
	 
	 	(o)	 	Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Bank, the Shares (“Hedge Shares”) acquired by Bank for the
purpose of hedging its obligations pursuant to this Transaction cannot be sold in the
public market by Bank without registration under the Securities Act, Counterparty
shall, at its election, either (i) in order to allow Bank to sell the Hedge Shares in
a registered offering, make available to Bank an effective registration statement
under the Securities Act and enter into an agreement, in form and substance
satisfactory to Bank, substantially in the form of an underwriting agreement for a
registered secondary offering; provided, however, that if Bank, 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 Bank 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 Bank (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 Bank for any
discount from the public market price of the Shares incurred on the sale of Hedge
Shares in a private placement), or (iii) purchase the Hedge Shares from Bank at the
Reference Price on such Exchange Business Days, and in the amounts, requested by Bank.
	 
	 	(p)	 	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.
	 
	 	(q)	 	Right to Extend. Bank may delay any Settlement Date or any other
date of delivery by Bank, with respect to some or all of the Options hereunder, if
Bank reasonably determines, in its discretion, that such extension is reasonably
necessary to enable Bank to effect purchases of Shares in connection with its hedging activity or settlement
activity hereunder in a manner that would, if Bank 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 Bank.
	 
	 	(r)	 	Status of Claims in Bankruptcy. Bank acknowledges and agrees that
this Confirmation is not intended to convey to Bank rights against Counterparty with
respect to the Transaction that are senior to the claims of common stockholders of
Counterparty in any U.S. bankruptcy proceedings of Counterparty; provided that nothing
herein shall limit or

17

 

	 	 	 	shall be deemed to limit Bank’s right to pursue remedies in the
event of a breach by Counterparty of its obligations and agreements with respect to
the Transaction; provided, further, that nothing herein shall limit or shall be deemed
to limit Bank’s rights in respect of any transactions other than the Transaction.
	 
	 	(s)	 	Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a “securities contract” and a “swap agreement” as defined in
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; (b) 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 (c) 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)	 	Additional Provisions. Counterparty covenants and agrees that, as
promptly as practicable following the public announcement 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 notify
Bank in writing 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.
	 
	 	(u)	 	Receipt or Delivery of Cash. For the avoidance of doubt, other than
payment of the Premium by Counterparty, nothing in this Confirmation shall be
interpreted as requiring Counterparty to receive or deliver cash in respect of the
settlement of the Transactions contemplated by this Confirmation, except in
circumstances where the cash settlement thereof is within Counterparty’s control
(including, without limitation, where Counterparty elects to receive or deliver cash
or fails timely to elect to receive or deliver Share Termination Delivery Property in
respect of the settlement of such Transactions or in those circumstances in which
holders of the Shares would also receive cash).
	 
	 	(v)	 	Payment by Counterparty. In the event that (a) 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
Bank an amount calculated under Section 6(e) of the Agreement, or (b) Counterparty
owes to Bank, 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

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
this Confirmation and returning it to EDG Confirmation Group, J.P. Morgan Securities Inc., 277 Park
Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

	 	 	 	 	 
	 	Very truly yours, 

          J.P. Morgan Securities Inc., as agent for 

          JPMorgan Chase Bank, National 

          Association

 	 
	 	     By:  	      Jason M. Wood
 	 
	 	     Authorized Signatory 	 
	 	     Name: Jason M. Wood 	 
	 

	 	 	 	 	 
	 	Accepted and confirmed

as of the Trade Date:

NuVasive, Inc.

 	 
	 	By:  	/s/ Alexis V. Lukianov
 	 
	 	Authorized Signatory 	 
	 	Name: Alexis V. Lukianov 	 
	 

JPMorgan Chase Bank, National Association

Organized under the laws of the United States as a National Banking Association

Main Office 1111 Polaris Parkway, Columbus, Ohio, 43271

Registered as a branch in England & Wales branch number BR000746.

Registered branch address 125 London Wall, London, EC2Y 5AJ.

Authorized and regulated by the Financial Services Authority.

19exv10w4

 

Exhibit 10.4

GOLDMAN, SACHS & CO.  ONE NEW YORK PLAZA | NEW YORK, NEW YORK 10004 |TEL: (212) 902-1000

EXECUTION COPY

March 3, 2008

To: NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.:     858-909-1800

Facsimile No.:     858-909-2000

Re: Warrants (Reference No. 1626958623)

          The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the Warrants issued by NuVasive, Inc. (“Company”) to Goldman, Sachs & Co. (“Bank”) on
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 Bank 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 Bank 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) on the
Trade Date. In the event of any inconsistency between provisions of that Agreement and this
Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this
Confirmation relates. The parties hereby agree that no Transaction other than the Transaction to
which this Confirmation relates shall be governed by the Agreement.

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

General Terms:

	 	 	 	 	 
	 

	 	Trade Date:
	 	March 3, 2008
	 
	 	 	 	 
	 

	 	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:
	 	Bank
	 
	 	 	 	 
	 

	 	Shares:
	 	The common stock of Company, par value USD 0.001 per Share (Exchange symbol “NUVA”)
	 
	 	 	 	 
	 

	 	Number of Warrants:
	 	2,235,150, subject to adjustment as provided herein.
	 
	 	 	 	 
	 

	 	Warrant Entitlement:
	 	One Share per Warrant
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD 49.1260
	 
	 	 	 	 
	 

	 	Premium:
	 	USD 13,820,000.00
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	March 7, 2008
	 
	 	 	 	 
	 

	 	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 and to and including the 80th 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 make adjustments, if applicable, to the Daily Number of Warrants
or shall reduce such Daily Number of Warrants to zero for which such day shall be an
Expiration Date and shall designate a Scheduled Trading Day or a number of Scheduled
Trading Days as the Expiration Date(s) for the remaining Daily Number of Warrants or a
portion thereof for the originally scheduled Expiration Date; and provided further that
if such Expiration Date has not occurred pursuant to this clause as of the eighth
Scheduled Trading Day following the last scheduled Expiration Date under 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:
	 	June 17, 2013 (or if such day is not a Scheduled Trading Day, the
next following Scheduled Trading Day), subject to Market Disruption Event below.

2

 

	 	 	 	 	 
	 

	 	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 a number of Warrants for each Expiration Date
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; provided that
“In-the-Money” means that the Relevant Price for such Expiration Date exceeds the Strike
Price for such Expiration Date; and provided further that all references in Section
3.4(b) of the Equity Definitions to “Physical Settlement” shall be read as references to
“Net Share Settlement”.
	 
	 	 	 	 
	 

	 	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.”
	 
	 

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

Valuation:

	 	 	 	 	 
	 

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

	 	Valuation Date:
	 	Each Exercise Date.

Settlement Terms:

	 	 	 	 	 
	 

	 	Settlement Method:
	 	Net Share Settlement.
	 
	 	 	 	 
	 

	 	Net Share Settlement:
	 	On the relevant Settlement Date, Company shall deliver to Bank
the Share Delivery Quantity of Shares 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 for such Settlement 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

3

 

	 	 	 	 	 
	 

	 	 	 	Bloomberg page NUVA.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 or is, in the Calculation Agent’s reasonable
discretion, erroneous, 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 and subject to
Sections 9(k) and 9(m) of this Confirmation, the parties acknowledge that any Shares delivered
to Bank may be, upon delivery, subject to restrictions and limitations arising from Company’s
status as issuer of the Shares under applicable securities laws.

3. Additional Terms applicable to the Transaction:

     Adjustments applicable to the 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 by deleting the
text in clause (i) in its entirety and replacing it with the phrase “publicly quoted,
traded or listed on any of the New York Stock Exchange, the American Stock Exchange, The

4

 

	 	 	 	 	 
	 

	 	 	 	NASDAQ Global Select Market or The NASDAQ Global Market (or their respective
successors)”.
	 
	 	 	 	 
	Consequence of Merger Events:	 	 
	 
	 	 	 	 
	Merger Event:	 	Applicable: provided that if an event occurs that constitutes both a Merger
Event under Section 12.1(b) of the Equity Definitions and Additional Termination Event
under Section 9(h)(ii)(A) of this Confirmation, Bank may elect, in its commercially
reasonable judgment, whether the provisions of Section 12.1(b) of the Equity Definitions
or Section 9(h)(ii)(A) will apply.
	 
	 	 	 	 
	 

	 	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 Bank may elect, in its commercially reasonable judgment, Component Adjustment
(Calculation Agent Determination).
	 
	 	 	 	 
	Consequence of Tender Offers:	 	 
	 
	 	 	 	 
	Tender Offer:	 	Applicable; provided however that if an event occurs that constitutes both a
Tender Offer under Section 12.1(d) of the Equity Definitions and Additional Termination
Event under Section 9(h)(ii)(C) of this Confirmation, Bank may elect, in its commercially
reasonable judgment, whether the provisions of Section 12.3 of the Equity Definitions or
Section 9(h)(ii)(C) will apply.
	 
	 	 	 	 
	 

	 	Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	Modified Calculation 

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

5

 

	 	 	 	 	 
	 

	 	 	 	Section 12.2(e)(i) of the Equity Definitions will
produce a commercially reasonable result, then the consequences set forth in Section
12.2(e)(ii) of the Equity Definitions shall apply.
	 
	 	 	 	 
	 

	 	Reference Markets:
	 	For the avoidance of doubt, and without limiting the generality of the
foregoing provisions, any adjustment effected by the Calculation Agent pursuant to
Section 12.2(e) and/or Section 12.3(d) of the Equity Definitions may be determined by
reference to the adjustment(s) made in respect of Merger Events or Tender Offers, as the
case may be, in the convertible bond market.
	 
	 	 	 	 
	 

	 	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 American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any of the New York
Stock Exchange, the American 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
	 
	 	 	 	 
	 

	 	Failure to Deliver:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	Hedging Disruption:
	 	Applicable
	 
	 	 	 	 
	 

	 	Increased Cost of Hedging:
	 	Applicable
	 
	 	 	 	 
	 

	 	Loss of Stock Borrow:
	 	Applicable
	 
	 	 	 	 
	 

	 	Maximum Stock Loan Rate:
	 	100 basis points.
	 
	 	 	 	 
	 

	 	Increased Cost of Stock Borrow:
	Applicable
	 
	 	 	 	 
	 

	 	Initial Stock Loan Rate:
	 	25 basis points.
	 
	 	 	 	 
	Hedging Party:	 	Bank for all applicable Additional Disruption Events
	 
	 	 	 	 
	Determining Party:	 	Bank for all applicable Extraordinary Events; provided that Bank shall make
all determinations required pursuant to this Transaction, in a commercially reasonable
manner, and such determinations shall be binding absent manifest error.
	 
	 	 	 	 
	Non-Reliance:
	 	Applicable
	 
	 	 	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:
	 	Applicable
	 
	 	 	 	 
	Additional Acknowledgments:
	 	Applicable
	 
	 	 	 	 
	4. Calculation Agent:	 	Bank; provided that Bank shall make all calculations, adjustments and
determinations required pursuant to this Transaction, in a commercially reasonable manner, and
such calculations, adjustments and determinations shall be binding absent manifest error.

6

 

	 	 	 	 	 
	5. Account Details:
	 
	 	 	 	 
	 

	 	(a)
	 	Account for payments to Company:
	 
	 	 	 	 
	 

	 	 	 	To be provided by Company.
	 
	 	 	 	 
	 

	 	 	 	Account for delivery of Shares from Company:
	 
	 	 	 	 
	 

	 	 	 	To be provided by Company.
	 
	 	 	 	 
	 

	 	(b)
	 	Account for payments to Bank:
	 
	 	 	 	 
	 

	 	 	 	Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

ABA: 021-000021
	 
	 	 	 	 
	 

	 	 	 	Account for delivery of Shares to Bank:
	 
	 	 	 	 
	 

	 	 	 	To be provided by Bank.
	 
	 	 	 	 
	6. Offices:	 	 
	 
	 	 	 	 
	The Office of Company for the Transaction is: Inapplicable, Company is not a Multibranch Party.
	 
	 	 	 	 
	 

	 	 	 	The Office of Bank for the Transaction is: One New York Plaza, New York, New York
10004
	 
	 	 	 	 
	7. Notices: For purposes of this Confirmation:
	 
	 	 	 	 
	 

	 	(a)
	 	Address for notices or communications to Company:
	 
	 	 	 	 
	 

	 	 	 	NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000
	 
	 	 	 	 
	 

	 	(b)
	 	Address for notices or communications to Bank:
	 
	 	 	 	 
	 

	 	 	 	Bank notice information to follow:
	 
	 	 	 	 
	 

	 	 	 	Bank notice information to follow:
	 
	 	 	 	 
	 

	 	 	 	Goldman, Sachs & Co.

One New York Plaza

New York, NY 10004

				
	 	Attn:
	 	Equity Operations: Options and Derivatives
	 	Telephone:
	 	(212) 902-1981
	 	Facsimile:
	 	(212) 428-1980/1983
	 	 	 	 
	 	With a copy to:	 	 
	 	 	 	 
	 	Attn:	 	Tracey McCabe
	 	 	 	Equity Capital Markets
	 	Telephone:
	 	(212) 357-0428
	 	Facsimile:
	 	(212) 902-3000

7

 

8. Representations, Warranties and Agreements of Company and Bank

	 	(a)	 	The representations and warranties of Company set forth in Section 1 of the
Purchase Agreement (the “Purchase Agreement”) dated as of March 3, 2008 between Company
and Goldman, Sachs & Co. and J.P. Morgan Securities Inc., as the Initial Purchasers are
true and correct and are hereby deemed to be repeated to Bank as if set forth herein.
Company hereby further represents and warrants to Bank that on the Trade Date and the
Premium Payment Date:

	 	(i)	 	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.
	 
	 	(ii)	 	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 applicable to the Company, 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.
	 
	 	(iii)	 	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.
	 
	 	(iv)	 	The Shares of Company initially issuable upon exercise
of the Warrant by the net share settlement method (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 Warrant following
the exercise of the Warrant in accordance with the terms and conditions of
the Warrant, will be validly issued, fully-paid and non-assessable, and the
issuance of the Warrant Shares will not be subject to any preemptive or
similar rights. The Warrant Shares have been approved for listing on The
NASDAQ Global Select Market, subject to official notice of issuance.
	 
	 	(v)	 	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.

8

 

	 	(vi)	 	Company is an “eligible contract participant” (as such
term is defined in Section 1a(12) of the Commodity Exchange Act, as
amended).
	 
	 	(vii)	 	During the period starting on the first Expiration
Date and ending on the last Expiration Date (the “Settlement Period”),
neither Company nor any “affiliate” or “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) 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, except through Bank.
	 
	 	(viii)	 	Without limiting the generality of Section 13.1 of the Equity
Definitions, Company acknowledges that Bank is not making any
representations or warranties with respect to the treatment of the
Transaction under FASB Statements 128, 133 (as amended), 149 or 150, EITF
Issue No. 00-19, 01-6 or 03-6 (or any successor issue statements) or under
any accounting standards including FASB’s Liabilities & Equity Project.
	 
	 	(ix)	 	Prior to the Trade Date, Company shall deliver to Bank
a resolution of Company’s board of directors authorizing the Transaction
and such other certificate or certificates as Bank shall reasonably
request.
	 
	 	(x)	 	Company is not “insolvent” (as such term is defined
under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United
States Code) (the “Bankruptcy Code”)).
	 
	 	(xi)	 	Company understands no obligations of Bank to it
hereunder will be entitled to the benefit of deposit insurance and that
such obligations will not be guaranteed by any affiliate of Bank or any
governmental agency.
	 
	 	(xii)	 	Company agrees that it (A) will not during the
Settlement Period make, or permit to be made, any public announcement (as
defined in Rule 165(f) under the Securities Act) of any Merger Transaction
or potential Merger Transaction unless such public announcement is made
prior to the opening or after the close of the regular trading session on
the Exchange for the Shares; (B) shall promptly (but in any event prior to
the next opening of the regular trading session on the Exchange) notify
Bank following any such announcement that such announcement has been made;
and (C) shall promptly (but in any event prior to the next opening of the
regular trading session on the Exchange) provide Bank with written notice
specifying (i) Company’s average daily Rule 10b-18 Purchases (as defined in
Rule 10b-18) during the three full calendar months immediately preceding
the announcement date that were not effected through Bank or its affiliates
and (ii) the number of Shares purchased pursuant to the proviso in Rule
10b-18(b)(4) under the Exchange Act for the three full calendar months
preceding the announcement date. Such written notice shall be deemed to be
a certification by Company to Bank that such information is true and
correct. In addition, Company shall promptly notify Bank of the earlier to
occur of the completion of such transaction and the completion of the vote
by target shareholders. “Merger Transaction” means any merger, acquisition
or similar transaction involving a recapitalization as contemplated by Rule
10b-18(a)(13)(iv) under the Exchange Act.

	 	(b)	 	Each of Bank and Company acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act,
by virtue of Section 4(2) thereof. Accordingly, Bank represents and warrants to
Company that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment and
its investments in and liabilities in respect of the Transaction, which it understands
are not readily marketable, are not disproportionate to its net worth, and it is able
to bear any loss

9

 

	 	 	 	in connection with the Transaction, including the loss of its entire
investment in the Transaction, (ii) it is an “accredited investor” as that term is
defined in Regulation D as promulgated under the Securities Act, (iii) it is entering
into the Transaction for its own account without a view to the distribution or resale
thereof, (iv) the assignment, transfer or other disposition of the Transaction has not
been and will not be registered under the Securities Act and is restricted under this
Confirmation, the Securities Act and state securities laws, (v) its financial condition
is such that it has no need for liquidity with respect to its investment in the
Transaction and no need to dispose of any portion thereof to satisfy any existing or
contemplated undertaking or indebtedness and is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of the Transaction.
	 
	 	(c)	 	Each party acknowledges and agrees to be bound by the Conduct Rules of the
National Association of Securities Dealers, Inc. applicable to transactions in options,
and further agrees not to violate the position and exercise limits set forth therein.
	 
	 	(d)	 	Company represents and warrants that it has received, read and understands the
OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet
prepared by The Options Clearing Corporation entitled “Characteristics and Risks of
Standardized Options”.

9. Other Provisions:

	 	(a)	 	Opinions. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to Bank with respect to the matters set forth in Sections 8(a)(i) through
(iv) of this Confirmation; provided that, with respect to “any agreement or instrument”
referred to in Section 8(a)(ii), such opinion shall only refer to agreements and
instruments filed as exhibits to Counterparty’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, as updated by any exhibits to Current Reports on
Form 8-K filed on January 11, 2008, January 31, 2008 and February 29, 2008.
	 
	 	(b)	 	Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give Bank a written notice of such repurchase (a
“Repurchase Notice”) on such day if following such repurchase, the quotient of (x) the
product of (a) the Number of Warrants and (b) the Warrant Entitlement divided by (y)
the number of Company’s outstanding Shares (such quotient expressed as a percentage,
the “Warrant Equity Percentage”) would be (i) greater than 7.5% or (ii) 0.5% greater
than the Warrant Equity Percentage included in the immediately preceding Repurchase
Notice. Company agrees to indemnify and hold harmless Bank 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 Bank’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 actually may become subject to, as a result of Company’s
failure to provide Bank with a Repurchase Notice on the day and in the manner specified
in this paragraph, and to reimburse, within 30 days, upon written request, each of such
Indemnified Persons for any reasonable legal or other expenses incurred in connection
with investigating, preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or asserted
against the Indemnified Person, such Indemnified Person shall promptly notify Company
in writing, and Company, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified Person
and any others Company may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Company shall not be liable for
any settlement of any proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the plaintiff, Company agrees to
indemnify any Indemnified Person from and against any loss or liability by reason of

10

 

	 	 	 	such settlement or judgment. Company shall not, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is 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 Company under such paragraph, in lieu
of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any Indemnified
Person at law or in equity. The indemnity and contribution agreements contained in
this paragraph shall remain operative and in full force and effect regardless of the
termination of this Transaction.
	 
	 	(c)	 	Regulation M. Company shall not, during the period starting on the
first Expiration Date and ending on second Scheduled Trading Day immediately following
the last Expiration 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.
	 
	 	(d)	 	No Manipulation. Company is not entering into this Transaction (i) on
the basis of, and it is not aware of, any material non-public information with respect
to itself or the Shares (ii) in anticipation of, in connection with, or to facilitate,
a distribution of its securities, a self tender offer or a third-party tender offer or
(iii) to create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible into or exchangeable
for the Shares) 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 Bank. Bank may,
without Company’s consent, transfer or assign all or any part of its rights or
obligations under this Transaction to any third party. If after Bank’s commercially
reasonable efforts, Bank is unable to effect such a transfer or assignment on pricing
terms reasonably acceptable to Bank and within a time period reasonably acceptable to
Bank of a sufficient number of Warrants to reduce (i) Bank Group’s “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and rules promulgated
thereunder) to 8.0% of Company’s outstanding Shares or less or (ii) the Warrant Equity
Percentage to 14.5% or less, Bank may designate any Exchange Business Day as an Early
Termination Date with respect to a portion (the “Terminated Portion”) of this
Transaction, such that (i) Bank Group’s “beneficial ownership” following such partial
termination will be equal to or less than 8.0% or (ii) the Warrant Equity Percentage
following such partial termination will be equal to or less than 14.5%. In the event
that Bank so designates an Early Termination Date with respect to a portion of this
Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i)
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 Terminated Portion,
(ii) Company shall be the sole Affected Party with respect to such partial termination
and (iii) such Transaction shall be the only Terminated Transaction (and, for the
avoidance of doubt, the provisions of paragraph 9(j) shall apply to any amount that is
payable by Company to Bank pursuant to this sentence). Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing Bank to purchase,
sell, receive or deliver any Shares or other securities to or from Company, Bank may
designate any of its affiliates to purchase, sell, receive or deliver such Shares or
other securities and otherwise to perform Bank’s obligations in respect of this
Transaction and any such designee may assume such obligations. Bank shall be
discharged of its obligations to Company to the extent of any such performance. “Bank
Group” means Bank or any affiliate of Bank subject to aggregation with Bank under such
Section 13 of the Exchange Act

11

 

	 	 	 	and rules promulgated thereunder and all persons who
may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with
Bank.
	 
	 	(f)	 	Dividends. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, an ex-dividend date for a cash
dividend or distribution occurs with respect to the Shares, 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 Bank after taking into account such
dividend or distribution or lack thereof.
	 
	 	(g)	 	[Reserved.]
	 
	 	(h)	 	Additional Provisions.

(i) Amendments to the Equity Definitions:

(A) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the
words “a diluting or concentrative” and replacing them with the words “an”; 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 Shares)” and replacing it with the phrase
“(and, for the avoidance of doubt, adjustments may be made to account solely
for changes in volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares).”

(C) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by
deleting the words “a diluting or concentrative” and replacing them with the
word “an”; 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
Bank’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, in a commercially reasonable manner, determine
the Cancellation Amount payable by one party to the other.”

12

 

(ii) Notwithstanding anything to the contrary in this Confirmation, upon the
occurrence of one of the following events, with respect to this Transaction, (1)
Bank 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,
and (2) Company shall be deemed the sole Affected Party and the Transaction shall be
deemed the sole Affected Transaction:

(A) Company (i) merges or consolidates with or into any other person, other
than a subsidiary, another person merges with or into Company, or Company
conveys, sells, transfers or leases all or substantially all of its assets to
another person or (ii) engages in any recapitalization, reclassification or
other transaction in which all or substantially all its Shares are exchanged
for or converted into cash, securities or other property, in each case, other
than any merger or consolidation:

(x) that does not result in a reclassification, conversion, exchange or
cancellation of outstanding Shares and pursuant to which the
consideration received by holders of Shares immediately prior to the
transaction entitles such holders to exercise, directly or indirectly,
50% or more of the voting power of all shares of capital stock entitled
to vote generally in the election of directors of the continuing or
surviving corporation immediately after such transaction; or

(z) which is effected solely to change Company’s jurisdiction of
incorporation and results in a reclassification, conversion or exchange
of outstanding Shares solely into shares of common stock of the
surviving entity;

(B) There is a default by Company or any subsidiary in the payment of the
principal or interest on any mortgage, agreement or other instrument under
which there may be outstanding, or by which there may be secured or evidenced
any indebtedness for money borrowed in excess of $15 million in the aggregate
of Company and/or any subsidiary, whether such indebtedness now exists or shall
hereafter be created resulting in such indebtedness becoming or being declared
due and payable, and such acceleration shall not have been rescinded or
annulled within 10 days after written notice of such acceleration has been
received by Company or such subsidiary.

(C) Any person acquires beneficial ownership, directly or indirectly, through a
purchase, merger or other acquisition transaction or series of transactions, of shares of Company’s capital stock entitling the person to exercise 50% or more of the total voting power of all shares of Company’s capital stock entitled to
vote generally in elections of directors, other than an acquisition by Company
or any of its subsidiaries. For purposes of this provision, whether a person is
a “beneficial owner” will be determined in accordance with Rule 13d-3 under the
Exchange Act, and “person” includes any syndicate or group that would be deemed
to be a “person” under Section 13(d)(3) of the Exchange Act.

(D) Company is liquidated or dissolved or holders of Shares approve any plan or
proposal for Company’s liquidation or dissolution.

(E) if Shares (or shares of any other capital stock or American Depositary
Receipts in respect of shares of capital stock into which Company’s notes are
convertible), are not listed for trading on any of the New York Stock Exchange,
the NASDAQ Global Market or the NASDAQ Global Select Market (or any of their
respective successors).

(F) the first day on which a majority of the members of Company’s board of
directors does not consist of continuing directors. “Continuing directors”
means (i) individuals who on the date hereof constituted Company’s board of
directors and (ii) any new directors whose election to Company’s board of
directors or whose nomination for election by Company’s stockholders was
approved by at least a majority of its directors then still in office (or a
duly

13

 

constituted committee thereof), either who were directors on the date
hereof or whose election or nomination for election was previously so approved.

(G) Bank, despite using commercially reasonable efforts, is unable or
reasonably determines that it is impractical or illegal, to hedge its
obligations pursuant 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 Bank).

Notwithstanding the forgoing, any event set forth in clause (A) or any merger
or consolidation set forth in clause (C) above will not constitute an
Additional Termination Event if at least at least 90% of the consideration paid
for the Shares (excluding cash payments for fractional Shares and cash payments
made pursuant to dissenters’ appraisal rights and cash dividends) in connection
with such event consists of shares of capital stock traded or to be traded
immediately following the completion of the merger or consolidation or such
other transaction on any of the New York Stock Exchange, the NASDAQ Global
Market or the NASDAQ Global Select Market (or any of their respective
successors).

	 	(i)	 	No Collateral or Setoff. Notwithstanding any provision of the
Agreement, the Confirmation or the Equity Definitions 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 or the Equity Definitions, 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 Bank’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 Bank in the same currency and in
the same Transaction. In calculating any amounts under Section 6(e) of the Agreement or
Section 12 of the Equity Definitions, notwithstanding anything to the contrary in the
Agreement or the Equity Definitions, (1) separate amounts shall be calculated as set
forth in Section 6(e) of the Agreement or Section 12 of the Equity Definitions, as
applicable, with respect to this Transaction, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement or Section 12 of the Equity
Definitions. For the avoidance of doubt and notwithstanding anything to the contrary
provided in this Section 9(i), in the event of bankruptcy or liquidation of Company
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, the Equity Definitions 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 Bank, (i) pursuant to Section 12.2, 12.3, 12.6, 12.7 or Section 12.9 of the
Equity Definitions (except in the event of an Insolvency, Nationalization, Tender Offer
or Merger Event in which the consideration or proceeds to be paid to holders of shares
consists solely of cash) or (ii) pursuant to Sections 6(d) and 6(e) of the Agreement
(except in the event of 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 (x) Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or (y) a Termination Event of the type described in Section 5(b) of the
Agreement, in the case of both (x) and (y), resulting from an event or events outside
Company’s control) (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) by giving irrevocable telephonic notice to Bank, confirmed in
writing within one Scheduled Trading Day, no later than 12:00 p.m. New York local time
on the Merger Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination Date or, in the case of an
Additional Disruption Event, date of cancellation, as applicable; provided that if

14

 

	 	 	 	Company does not validly elect to satisfy its Payment Obligation by the Share
Termination Alternative, Bank shall have the right to require Company to satisfy its
Payment Obligation by the Share Termination Alternative. Notwithstanding the
foregoing, Company’s or Bank’s right to elect satisfaction of a Payment Obligation in
the Share Termination Alternative as set forth in this clause shall only apply to
Transactions under this Confirmation.

	 	 	 	 	 
	 

	 	Share Termination Alternative:
	 	If applicable, Company shall deliver
to Bank 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 12.2, 12.3, 12.6, 12.7 or Section 12.9 of the Equity
Definitions and Sections 6(d) and 6(e) of the Agreement, as applicable, subject
to paragraph (k)(i) below, in satisfaction, subject to paragraph (k)(ii) below,
of the Payment Obligation in the manner reasonably requested by Bank 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 Bank of property
contained in one Share Termination Delivery Unit on the date such Share
Termination Delivery Units are to be delivered as Share Termination Delivery
Property, as determined by the Calculation Agent in its discretion by
commercially reasonable means. The Calculation Agent shall notify Company of
such Share Termination Unit Price at the time of notification of the Payment
Obligation. In the case of a Private Placement of Share Termination Delivery
Units that are Restricted Shares (as defined below), as set forth in paragraph
(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 paragraph (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

15

 

	 	 	 	 	 
	 

	 	 	 	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 Bank, following any delivery of Shares or Share Termination Delivery
Property to Bank hereunder, such Shares or Share Termination Delivery Property would be
in the hands of Bank 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 Bank waives the need for
registration/private placement procedures set forth in (i) and (ii) below.
Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants
exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the
first Settlement Date for the first Expiration Date, a Private Placement Settlement or
Registration Settlement for all deliveries of Restricted Shares for all such Expiration
Dates which election shall be applicable to all Settlement Dates for such Warrants and
the procedures in clause (i) or clause (ii) below shall apply for all such delivered
Restricted Shares on an aggregate basis commencing after the final Settlement Date for
such Warrants. The Calculation Agent shall make reasonable adjustments to settlement
terms and provisions under this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered hereunder.

	 	(i)	 	If Company elects to settle the Transaction pursuant to this
clause (i) (a “Private Placement Settlement”), then delivery of Restricted
Shares by Company shall be effected in customary private placement procedures
with respect to such Restricted Shares of similar size, in form and substance
reasonably acceptable to Bank, in its good faith and commercially reasonable
discretion; 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 Bank (or any affiliate
designated by Bank) of

16

 

	 	 	 	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 Bank (or any such affiliate of Bank). The Private
Placement Settlement of such Restricted Shares shall include customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Bank, due diligence rights (for Bank or any
designated buyer of the Restricted Shares by Bank), opinions and certificates,
and such other documentation as is customary for private placement agreements,
all reasonably acceptable to Bank. In the case of a Private Placement
Settlement, Bank shall, in a commercially reasonable manner, determine the
appropriate discount to the Share Termination Unit Price (in the case of
settlement of Share Termination Delivery Units pursuant to paragraph (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 Bank hereunder; provided that in no event shall such number
be greater than two times the Number of Shares (the “Maximum Amount”).
Notwithstanding the Agreement or this Confirmation, the date of delivery of
such Restricted Shares shall be the Exchange Business Day following notice by
Bank 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 paragraph (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 Amount (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 Bank 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.
	 
	 	(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 Bank, 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 Bank. If Bank, in its sole reasonable discretion, is
not satisfied with such procedures and documentation Private Placement
Settlement shall apply. If Bank 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 paragraph (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

17

 

	 	 	 	Day on which Bank 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)(1) or (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)(3) (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 Bank 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 Amount.
	 
	 	(iii)	 	Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Bank, as purchaser of such
Restricted Shares, (i) may be transferred by and among Bank and its affiliates
and Company shall effect such transfer without any further action by Bank 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 the 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 Bank (or such affiliate of Bank) 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 Bank (or such affiliate of
Bank).
	 
	 	If (x) Company shall fail to effectuate the Private Placement Settlement as set
forth in clause (i) or (y) Company shall fail to effectuate the Registration
Settlement as set forth in clause (ii) and Company shall fail to effectuate the
Private Placement Settlement following its failure to effectuate the Registration
Settlement, then either the failure set forth in clause (x) or the failure set forth
in clause (y) 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, Bank 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, the
Bank Group would directly or indirectly beneficially own (as such term is defined for
purposes of Section 13(d) of the Exchange Act) in excess of 8.0% of the outstanding
Shares. Any purported delivery hereunder shall be void and have no effect to the
extent (but only to the extent) that, after such delivery, the Bank Group would
directly or indirectly so beneficially own in excess of 8.0% of the outstanding Shares.
If any delivery owed to Bank 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, Bank gives notice to Company that, after such
delivery, the Bank Group would not directly or indirectly so beneficially own in excess
of 8.0% of the outstanding Shares.

18

 

	 	(m)	 	Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been an affiliate for
90 days (it being understood that Bank 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 the 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 the Company), may be
transferred by and among Bank and its affiliates and Company shall effect such transfer
without any further action by Bank. 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)	 	Governing Law. New York law (without reference to choice of law
doctrine other than Title 14 of Article 5 of the New York General Obligations Law).
	 
	 	(o)	 	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.
	 
	 	(p)	 	Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees, representatives, or
other agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to Company relating to
such tax treatment and tax structure.
	 
	 	(q)	 	Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will Company be required to deliver more
than the Maximum Amount of Shares in the aggregate to Bank in connection with this
Transaction, subject to the provisions regarding Deficit Restricted Shares
	 
	 	(r)	 	Right to Extend. Bank 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 Bank determines, in its commercially reasonable judgment, that such extension
is reasonably necessary or appropriate to preserve Bank’s hedging or hedge unwind
activity hereunder in light of existing liquidity conditions or to enable Bank to
effect purchases of Shares in connection with its hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Bank were Issuer or an affiliated
purchaser of Issuer, be in

19

 

	 	 	 	compliance with applicable legal, regulatory or
self-regulatory requirements, or with related policies and procedures applicable to
Bank.
	 
	 	(s)	 	Status of Claims in Bankruptcy. Bank acknowledges and agrees that this
Confirmation is not intended to convey to Bank rights against Company with respect to
the Transaction that are senior to the claims of common stockholders of Company in any
U.S. bankruptcy proceedings of Company; provided that nothing herein shall limit or
shall be deemed to limit Bank’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 Bank’s rights in
respect of any transactions other than the Transaction.
	 
	 	(t)	 	Securities Contract; Swap Agreement. Each of Bank and Company agrees
and acknowledges that Bank is a “financial institution,” “swap participant” and
“financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A)
of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that
this Confirmation is (i) a “securities contract,” as such term is defined in Section
741(7) of the Bankruptcy Code, with respect to which each payment and delivery
hereunder is a “settlement payment,” as such term is defined in Section 741(8) of the
Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section
101(53B) of the Bankruptcy Code, with respect to which each payment and delivery
hereunder is a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy
Code, and (B) that Bank is 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.
	 
	 	(u)	 	Delivery or Receipt of Cash. For the avoidance of doubt, other than
receipt of the Premium by Company, nothing in this Confirmation shall be interpreted as
requiring Company to deliver or receive cash in respect of the settlement of the
Transactions contemplated by this Confirmation, except in circumstances where the cash
settlement thereof is within Company’s control (including, without limitation, where
Company elects to deliver or receive cash or fails timely to elect to deliver or
receive Share Termination Delivery Property in respect of the settlement of such
Transactions or in those circumstances in which holders of the Shares would also
receive cash).
	 
	 	(v)	 	Payment by Bank. In the event that (a) 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, Bank owes to Company an amount calculated
under Section 6(e) of the Agreement, or (b) Bank 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.

20

 

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

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	Goldman, Sachs & Co.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	David G. Goldenberg
 

	 	 
	 	 	Authorized Signatory

Name: David G. Goldenberg	 	 

Accepted and confirmed

as of the Trade Date:

NuVasive, Inc.

	 	 	 	 	 
	By:

	 	/s/ Alexis V. Lukianov
 

	 	 
	Authorized Signatory

Name: Alexis V. Lukianov	 	 

21

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