Document:

exv10w4

EXHIBIT 10.4

FORM OF ISSUER WARRANT TRANSACTION

Opening Transaction

	 	 	 
	To:

	 	BorgWarner Inc.

3850 Hamlin Road

Auburn Hills, MI 48326
	 
	 	 
	From:

	 	Morgan Stanley & Co. Incorporated

as Agent for Morgan Stanley & Co. International plc

1585 Broadway

4th Floor

New York, NY 10036
	 
	 	 
	Re:

	 	Issuer Warrant Transaction
	 
	 	 
	Ref. No:

	 	99AH24K63
	 
	 	 
	Date:

	 	April 6, 2009

Dear Sir(s):

     The purpose of this communication (this “Confirmation”) is to set forth the terms and
conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between Morgan Stanley & Co. International plc (“Dealer”) and BorgWarner
Inc. (“Issuer”). This communication constitutes a “Confirmation” as referred to in the
ISDA Master Agreement specified below.

     This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006
ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002
ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006
Definitions, the “Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2006
Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the
Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call
Option or an Option, as context requires.

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

     This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall be
subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement
(Multicurrency—Cross Border) as if Dealer and Issuer had executed an agreement in such form on the
date hereof (but without any Schedule except for (i) the election of Loss and Second Method and US
Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word “third” in the last
line of Section 5(a)(i) of the Agreement with the word “second,” (iii) the election that the “Cross
Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold
Amount” of USD25 million and (iv) such other elections as set forth in this Confirmation.

1

 

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

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

     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:
	 	April 6, 2009
	 
	 	 	 	 
	 

	 	Effective Date:
	 	April 9, 2009, or such other date as agreed between the parties, subject to
Section 8(k) below.
	 
	 	 	 	 
	 

	 	Components:
	 	The Transaction will be divided into individual Components, each with the terms
set forth in this Confirmation, and, in particular, with the Number of Warrants and
Expiration Date set forth in this Confirmation. The payments and deliveries to be
made upon settlement of the Transaction will be determined separately for each
Component as if each Component were a separate Transaction under the Agreement.
	 
	 	 	 	 
	 

	 	Warrant Style:
	 	European
	 
	 	 	 	 
	 

	 	Warrant Type:
	 	Call
	 
	 	 	 	 
	 

	 	Seller:
	 	Issuer
	 
	 	 	 	 
	 

	 	Buyer:
	 	Dealer
	 
	 	 	 	 
	 

	 	Shares:
	 	The Common Stock of Issuer, par value USD0.01 per share (Ticker Symbol: “BWA”).
	 
	 	 	 	 
	 

	 	Number of Warrants:
	 	For each Component, as provided in Annex A to this Confirmation.
	 
	 	 	 	 
	 

	 	Warrant Entitlement:
	 	One Share per Warrant
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD38.61
	 
	 	 	 	 
	 

	 	Premium:
	 	USD13,584,999
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	The Effective Date
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange:
	 	All Exchanges located in the United States.

Procedures for Exercise:

In respect of any Component:

	 	 	 	 	 
	 

	 	Expiration Time:
	 	Valuation Time

2

 

	 	 	 	 	 
	 

	 	Expiration Date:
	 	As provided in Annex A to this Confirmation (or, if such date is
not a Scheduled Trading Day, the next following Scheduled Trading Day that is not
already an Expiration Date for another Component); provided that if that date is a
Disrupted Day, the Expiration Date for such Component shall be the first succeeding
Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an
Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further that if the Expiration Date has not occurred pursuant to the
preceding proviso as of the Final Disruption Date, the Calculation Agent shall have
the right to elect, in its reasonable discretion, that the Final Disruption Date shall
be the Expiration Date (irrespective of whether such date is an Expiration Date in
respect of any other Component for the Transaction). “Final Disruption Date” means
October 19, 2012. Notwithstanding the foregoing and anything to the contrary in the
Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the
Calculation Agent may reasonably determine that such Expiration Date is a Disrupted
Day only in part, in which case the Calculation Agent shall make adjustments to the
Number of Warrants for the relevant Component for which such day shall be the
Expiration Date and shall designate the Scheduled Trading Day determined in the manner
described in the immediately preceding sentence as the Expiration Date for the
remaining Warrants for such Component and shall determine the VWAP Price based on
transactions in the Shares effected before the relevant Market Disruption Event
occurred and/or after the relevant Market Disruption Event ended. Section 6.6 of the
Equity Definitions shall not apply to any Valuation Date occurring on an Expiration
Date.
	 
	 	 	 	 
	 

	 	Market Disruption Event:
	 	Section 6.3(a) of the Equity Definitions is hereby amended by
deleting the words “during the one hour period that ends at the relevant Valuation
Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as
the case may be,” in clause (ii) thereof.
	 
	 	 	 	 
	 

	 	 	 	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.
Any Scheduled Trading Day on which the
Exchange is scheduled to close prior to its
normal close of trading shall be deemed to be
a Disrupted Day in full.
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	Applicable; and means that the Number of Warrants for the corresponding
Expiration Date will be deemed to be automatically exercised at the Expiration Time on
such Expiration Date unless Dealer notifies Seller (by telephone or in writing) prior
to the Expiration

3

 

	 	 	 	 	 
	 

	 	 	 	Time on such Expiration Date that it does not
wish Automatic Exercise to occur, in which case
Automatic Exercise will not apply to such
Expiration Date.
	 
	 	 	 	 
	 

	 	Issuer’s Telephone Number
and Telex and/or
Facsimile Number
and Contact Details
for purpose of
Giving Notice:	 	 

	 	 	 	 	 
	 

	 	To:
	 	BorgWarner Inc.
	 

	 	Attn:
	 	Anthony D. Hensel,
	 

	 	 	 	Vice President and Treasurer
	 

	 	Telephone:
	 	248-754-0861
	 

	 	Facsimile:
	 	248-754-9069

Settlement Terms:

In respect of any Component:

	 	 	 	 	 
	 

	 	Settlement Currency:
	 	USD
	 
	 	 	 	 
	 

	 	Net Share Settlement:
	 	On each Settlement Date, Issuer shall deliver to Dealer a
number of Shares equal to the Number of Shares to be Delivered for such Settlement
Date to the account specified by Dealer and cash in lieu of any fractional Share
valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
If, in the reasonable judgment of Issuer or Dealer, based on advice of counsel, for
any reason, the Shares deliverable upon Net Share Settlement would not be immediately
freely transferable by Dealer under Rule 144 under the Securities Act of 1933, as
amended (the “Securities Act”), then Dealer may elect to either (x) accept delivery of
such Shares notwithstanding any restriction on transfer or (y) have the provisions set
forth in Section 8(b) below apply.
	 
	 	 	 	 
	 

	 	 	 	The Number of Shares to be Delivered shall be
delivered by Issuer to Dealer no later than 12:00
noon (local time in New York City) on the
relevant Settlement Date.
	 
	 	 	 	 
	 

	 	Number of Shares to be Delivered:
	 	In respect of any Exercise Date, subject to the last
sentence of Section 9.5 of the Equity Definitions, the product of (i) the number of
Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant
Entitlement and (iii) (A) the excess of the VWAP Price on the Valuation Date occurring
on such Exercise Date over the Strike Price (or, if there is no such excess, zero)
divided by (B) such VWAP Price.
	 
	 	 	 	 
	 

	 	VWAP Price:
	 	For any Exchange Business Day, as reasonably determined by the
Calculation Agent based on the New York Stock Exchange Volume Weighted Average Price
per Share for the regular trading session (including any extensions thereof) of the
Exchange on such Exchange Business Day (without

4

 

	 	 	 	 	 
	 

	 	 	 	regard to pre-open or after hours trading outside
of such regular trading session), as published by
Bloomberg at 4:15 P.M., New York City time (or 15
minutes following the end of any extension of the
regular trading session), on such Exchange
Business Day, on Bloomberg page “BWA.N
<Equity> AQR” (or any successor thereto)
(or if such published volume weighted average
price is unavailable or is manifestly incorrect,
the market value of one Share on such Exchange
Business Day, as reasonably determined by the
Calculation Agent using a volume weighted
method).
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.10,
9.11 and 9.12 of the Equity Definitions will be applicable as if “Physical Settlement”
applied to the Transaction; provided that the Representation and Agreement contained
in Section 9.11 of the Equity Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations, limitations or
requirements under applicable securities laws that exist as a result of the fact that
Issuer is the issuer of the Shares.

Adjustments:

In respect of any Component:

	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	Calculation Agent Adjustment; provided that the parties agree that
open market Share repurchases at prevailing market prices or accelerated share
repurchases, forward contracts or similar transactions on customary terms (including
without limitation any discount to average VWAP prices) shall not be considered
Potential Adjustment Events. For the avoidance of doubt, Calculation Agent Adjustment
shall continue to apply until the obligations of the parties (including any
obligations of Issuer pursuant to Section 8(e) below) under the Transaction have been
satisfied in full.

Extraordinary Events:

	 	 	 	 	 
	 

	 	New Shares:
	 	In the definition of New Shares in Section 12.1(i) of the Equity
Definitions, the text in clause (i) shall be deleted in its entirety and replaced with
“publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ
Global Market or The NASDAQ Global Select Market (or their respective successors)”.

Consequences of Merger Events:

	 	 	 	 	 
	 

	 	(a) Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

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

	 	(c) Share-for-Combined:
	 	Cancellation and Payment (Calculation Agent
Determination); provided that the Calculation Agent

5

 

	 	 	 
	 

	 	may elect Component Adjustment for all or part of
the Transaction.
	 
	 	 
	Tender Offer:

	 	Applicable; provided that for the purposes of Section 12.1(d) of the Equity
Definitions, references in the definition of Tender Offer to 10% shall be replaced
with 20%.
	 
	 	 
	Consequences of Tender Offers:
	 	 
	 
	 	 
	(a) Share-for-Share:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	(b) Share-for-Other:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	(c) Share-for-Combined:

	 	Modified Calculation Agent Adjustment
	 
	 	 
	Modified Calculation
Agent Adjustment:

	 	Upon the occurrence of any Merger Event pursuant to which the
holders of Issuer’s Shares would be entitled to receive cash, securities or other
property for their Shares and for which Modified Calculation Agent Adjustment would
apply, if, as a result of such Merger Event, Issuer would be different from the issuer
of the Shares under this Confirmation, then, on or prior to the effective date of such
Merger Event, the Issuer and the issuer of the Shares under this Confirmation will
enter into a supplemental confirmation as a condition precedent to the adjustments
contemplated in Section 12.2(e)(i) of the Equity Definitions, with such supplemental
confirmation containing representations, warranties and agreements relating to
securities law and other issues as reasonably requested by Dealer that Dealer has
determined, in its reasonable discretion, to be reasonably necessary or appropriate to
allow Dealer 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 Dealer, and if such conditions are not met in all material
respects or if the Calculation Agent determines that no adjustment that it could make
under 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.
	 
	 	 
	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 shall also constitute a Delisting if the Exchange is located in the
United States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, The

6

 

	 	 	 
	 

	 	NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors); if the
Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation
system, such exchange or quotation system shall
thereafter be deemed to be the Exchange.
	 
	 	 
	Additional Disruption Events:
	 	 
	 
	 	 
	(a) Change in Law:

	 	Applicable; provided that Section 12.9(a)(ii) of the
Equity Definitions is hereby amended by (i) replacing the phrase “the
interpretation” in the third line thereof with the phrase “or announcement or
statement of the formal or informal interpretation” and (ii) immediately following
the word “Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by Hedging Party on the Trade Date.”
	 
	 	 
	(b) Failure to Deliver:

	 	Not Applicable
	 
	 	 
	(c) Insolvency Filing:

	 	Applicable
	 
	 	 
	(d) Hedging Disruption:

	 	Applicable
	 
	 	 
	(e) Increased Cost of Hedging:

	 	Applicable
	 
	 	 
	(f) Loss of Stock Borrow:

	 	Applicable
	 
	 	 
	Maximum Stock Loan Rate:

	 	2.00% per annum
	 
	 	 
	(g) Increased Cost of Stock Borrow:

	 	 Applicable
	 
	 	 
	Initial Stock Loan Rate:

	 	0.25% per annum
	 
	 	 
	Hedging Party:

	 	Dealer for all applicable Additional Disruption Events.
	 
	 	 
	Determining Party:

	 	Dealer for all applicable Additional Disruption Events.
	 
	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable
	 
	 	 
	Calculation Agent:

	 	Dealer. All determinations made by the Calculation Agent shall
be made in good faith and in a commercially reasonable manner. Following any
calculation by the Calculation Agent hereunder, upon a prior written request by
Issuer, the Calculation Agent will provide to Issuer by e-mail to the e-mail address
provided by Issuer in such prior written request a report (in a commonly used file
format for the storage and manipulation of financial data) displaying in reasonable
detail the basis for such calculation, it being understood that the Calculation Agent
shall not be obligated to disclose any proprietary models used by it for such
calculation. No transferee of Dealer with respect to any Warrants in accordance with
the terms of this Confirmation shall act as Calculation Agent with respect to such
transferred Warrants without the prior consent of Issuer, such consent not to be unreasonably
withheld or delayed.

7

 

Account Details:

Dealer Payment Instructions:

To be provided by Dealer.

Account for delivery of Shares to Dealer:

To be provided by Dealer.

Issuer Payment Instructions:

To be provided by Issuer.

5. Offices:

The Office of Dealer for the Transaction is:

Morgan Stanley & Co. Incorporated, as agent for

Morgan Stanley & Co. International plc

1585 Broadway

4th Floor

New York, NY 10036

The Office of Issuer for the Transaction is:

Inapplicable. Issuer is not a Multibranch Party.

6. Notices: For purposes of this Confirmation:

(a) Address for notices or communications to Issuer:

	 	 	 	 	 
	 

	 	To:
	 	BorgWarner Inc.
	 

	 	 	 	3850 Hamlin Road
	 

	 	 	 	Auburn Hills, MI 48326
	 

	 	Attn:
	 	Anthony D. Hensel,
	 

	 	 	 	Vice President and Treasurer
	 

	 	Telephone:
	 	248-754-0861
	 

	 	Facsimile:
	 	248-754-9069

(b) Address for notices or communications to Dealer:

	 	 	 	 	 
	 

	 	To:
	 	Morgan Stanley & Co. Incorporated, as agent for
	 

	 	 	 	Morgan Stanley & Co. International plc
	 

	 	 	 	1585 Broadway
	 

	 	 	 	4th Floor
	 

	 	 	 	New York, NY 10036
	 

	 	Attn:
	 	Jonathan Ross
	 

	 	Telephone:
	 	212-761-2035
	 

	 	Facsimile:
	 	212-507-2441
	 

	 	Email:
	 	Jonathan.M.Ross@morganstanley.com
	 

	 	
With a copy to:
	 	
Morgan Stanley & Co. Incorporated, as agent for
	 

	 	 	 	Morgan Stanley & Co. International plc
	 

	 	 	 	1221 Avenue of the Americas
	 

	 	 	 	34th Floor
	 

	 	 	 	New York, NY 10020
	 

	 	Attn:
	 	Anthony Cicia
	 

	 	Telephone:
	 	212-762-4828
	 

	 	Facsimile:
	 	212-507-4338
	 

	 	Email:
	 	Anthony.Cicia@morganstanley.com

8

 

7. Representations, Warranties and Agreements:

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

     (i) On the Trade Date, and as of the date of any election by Issuer of the Share
Termination Alternative under (and as defined in) Section 8(a) below, none of Issuer and
its executive officers and directors is aware of any material nonpublic information
regarding Issuer or the Shares. On the Trade Date, all reports and other documents filed
by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), when considered as a whole (with the more
recent such reports and documents deemed to amend inconsistent statements contained in any
earlier such reports and documents), do not contain any untrue statement of a material fact
or any omission of a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances in which they were made, not
misleading.

     (ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer
acknowledges that neither Dealer nor any of its affiliates is making any representations or
warranties or taking a position or expressing any view 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, 03-6 or 07-5 (or any successor issue
statements) or under the FASB’s Liabilities & Equity Project.

     (iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s
board of directors authorizing the Transaction and such other certificate or certificates
as Dealer shall reasonably request.

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

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

     (vi) On the Trade Date and the Premium Payment Date (A) the assets of Issuer at their
fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the
capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the
ability to pay its debts and obligations as such debts mature and does not intend to, or
does not believe that it will, incur debt beyond its ability to pay as such debts mature.

     (vii) Issuer shall not take any action to decrease the number of Available Shares
below the Capped Number (each as defined below).

     (viii) Issuer understands no obligations of Dealer to it hereunder will be entitled to
the benefit of deposit insurance and that such obligations will not be guaranteed by any
governmental agency.

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

9

 

     (x) During the Settlement Period, neither Issuer 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 Dealer, other than purchases from its employees that
are not “Rule 10b-18 purchases” as defined in Rule 10b-18(a)(13).

     (xi) Issuer 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 Dealer 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 Dealer with written notice
specifying (i) Issuer’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18)
during the three full calendar months immediately preceding the announcement date that were
not effected through Dealer or its affiliates and (ii) the number of Shares purchased
pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full
calendar months preceding the announcement date. Such written notice shall be deemed to be
a certification by Issuer to Dealer that such information is true and correct. In
addition, Issuer shall promptly notify Dealer 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.

     (xii) The Shares of Issuer initially issuable upon exercise of the Warrants have been
reserved for issuance by all required corporate action of the Issuer. Any Shares issued or
delivered in connection with the Transaction shall be duly authorized and validly issued,
fully paid and non-assessable, and the issuance or delivery thereof shall not be subject to
any preemptive or similar rights.

     (b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract
participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

     (c) Each of Dealer and Issuer 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, Dealer represents and warrants to Issuer 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 without a view to the distribution or resale thereof, (iv) the assignment, transfer
or other disposition of the Transaction has not been and will not be registered under the
Securities Act and is restricted under this Confirmation, the Securities Act and state securities
laws, and (v) its financial condition is such that it has no need for liquidity with respect to its
investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing
or contemplated undertaking or indebtedness and is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of the Transaction.

     (d) Subject to Section 8(f): Each of Dealer and Issuer agrees and acknowledges that Dealer is
a “financial institution,” “swap participant” and “financial participant” within the meaning of
Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (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

10

 

delivery hereunder or in connection herewith is a “termination value,” “payment amount” or
“other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a
“settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap
agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to
which each payment and delivery hereunder or in connection herewith is a “termination value,”
“payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy
Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer
is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17),
362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

     (e) Issuer shall deliver to Dealer (i) an incumbency certificate, dated as of the Trade Date,
of Issuer in customary form and (ii) an opinion of counsel, dated as of the Trade Date and
reasonably acceptable to Dealer in form and substance, with respect to due incorporation, existence
and good standing of the Issuer in Delaware, its qualifications as a foreign corporation and good
standing in Michigan, the due authorization, execution and delivery of the Confirmation, and the
absence of conflict of the execution and delivery of the Confirmation with any material agreement
required to be filed as any exhibit to the Issuer’s Annual Report on Form 10-K and the Issuer’s
charter documents.

     (f) 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.

     8. Other Provisions:

     (a) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary
Events. If Issuer shall owe Dealer any amount pursuant to Section 12.2, 12.3, 12.6, 12.7 or 12.9
of the Equity Definitions (except in the event of a Tender Offer, Merger Event, Insolvency or
Nationalization, in each case, in which the consideration or proceeds to be paid to holders of
Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the
event of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in
which Issuer is the Affected Party that resulted from an event or events within Issuer’s control)
(a “Payment Obligation”), Issuer 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 Dealer, confirmed in writing within one Scheduled Trading Day, between the
hours of 9:00 A.M. and 4:00 P.M., New York City time, on the Merger Date, Tender Offer Date,
Announcement Date, Early Termination Date or other date the Transaction is cancelled or terminated,
as applicable (“Notice of Share Termination”). Upon such Notice of Share Termination, the
following provisions shall apply on the Scheduled Trading Day immediately following the Merger
Date, the Tender Offer Date, Announcement Date, Early Termination Date or other date the
Transaction is cancelled or terminated, as applicable:

	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Issuer shall
deliver to Dealer the Share Termination
Delivery Property on the date on which
the Payment Obligation would otherwise be
due pursuant to Section 12.2, 12.3, 12.6,
12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as
applicable (the “Share Termination
Payment Date”), in satisfaction of the
Payment Obligation.
	 
	 	 
	Share Termination Delivery 

Property:

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

	 	The value of property contained in one
Share Termination Delivery Unit, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent
to Issuer at the time of notification of the Payment Obligation.

11

 

	 	 	 
	Share Termination Delivery Unit:

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

	 	Applicable
	 
	 	 
	Other Applicable Provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 and 9.12 of the
Equity Definitions will be applicable as
if “Physical Settlement” applied to the
Transaction, except that all references
to “Shares” shall be read as references
to “Share Termination Delivery Units”;
provided that the Representation and
Agreement contained in Section 9.11 of
the Equity Definitions shall be modified
by excluding any representations therein
relating to restrictions, obligations,
limitations or requirements under
applicable securities laws as a result of
the fact that Issuer is the issuer of any
Share Termination Delivery Units (or any
security forming a part thereof). If, in
the reasonable judgment of Issuer or
Dealer, based on advice of counsel, for
any reason, any securities comprising the
Share Termination Delivery Units
deliverable pursuant to this Section 8(a)
would not be immediately freely
transferable by Dealer under Rule 144
under the Securities Act, then Dealer may
elect to either (x) permit delivery of
such securities notwithstanding any
restriction on transfer or (y) have the
provisions set forth in Section 8(b)
below apply.

     (b) Registration/Private Placement Procedures. (i) With respect to the Transaction, the
following provisions shall apply to the extent provided for above opposite the caption “Net Share
Settlement” in Section 2 or in paragraph (a) of this Section 8. If so applicable, then, at the
election of Issuer by notice to Dealer within one Exchange Business Day after the relevant delivery
obligation arises, but in any event at least one Exchange Business Day prior to the date on which
such delivery obligation is due, either (A) all Shares or Share Termination Delivery Units, as the
case may be, delivered by Issuer to Dealer shall be covered by an effective registration statement
of Issuer for immediate resale by Dealer (such registration statement and the corresponding
prospectus (the “Prospectus”) (including, without limitation, any sections describing the plan of
distribution) in form and content commercially reasonably satisfactory to Dealer) or (B) Issuer
shall deliver additional Shares or Share Termination Delivery Units, as the case may be, so that
the value of such Shares or Share Termination Delivery Units, as determined by the Calculation
Agent to reflect an appropriate commercially reasonable liquidity discount, equals the value of the
number of Shares or Share Termination Delivery Units that would otherwise be deliverable if such
Shares or Share Termination Delivery Units were freely tradeable (without prospectus delivery) upon
receipt by Dealer (such value, the “Freely Tradeable Value”); provided that, if requested by
Dealer, Issuer shall make the election described in this clause (B) with respect to Shares
delivered on all Settlement Dates no later than one Exchange Business Day prior to the first
Exercise Date, and the applicable procedures described below shall apply to all Shares delivered on
the Settlement Dates on an aggregate basis. (For the avoidance of doubt, as used in this paragraph
(b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall
require.)

     (ii) If Issuer makes the election described in clause (b)(i)(A) above:

     (A) Dealer (or an affiliate of Dealer designated by Dealer) shall be afforded a
reasonable opportunity to conduct a due diligence investigation with respect to Issuer that
is

12

 

customary in scope for underwritten follow-on offerings of equity securities of
companies of comparable size, maturity and lines of business and that yields results that
are commercially reasonably satisfactory to Dealer or such affiliate, as the case may be,
in its discretion; and

     (B) Dealer (or an affiliate of Dealer designated by Dealer) and Issuer shall enter
into an agreement (a “Registration Agreement”) on commercially reasonable terms in
connection with the public resale of such Shares or Share Termination Delivery Units, as
the case may be, by Dealer or such affiliate substantially similar to underwriting
agreements customary for underwritten follow-on offerings of equity securities of companies
of comparable size, maturity and lines of business, in form and substance commercially
reasonably satisfactory to Dealer or such affiliate and Issuer, which Registration
Agreement shall include, without limitation, provisions substantially similar to those
contained in such underwriting agreements relating to the indemnification of, and
contribution in connection with the liability of, Dealer and its affiliates and Issuer,
shall provide for the payment by Issuer of all registration expenses in connection with
such resale, including all registration costs and all fees and expenses of counsel for
Dealer, and shall provide for the delivery of accountants’ “comfort letters” to Dealer or
such affiliate with respect to the financial statements and certain financial information
contained in or incorporated by reference into the Prospectus as are customarily requested
in comfort letters covering follow-on offerings of equity securities of companies of
comparable size, maturity and lines of business.

     (iii) If Issuer makes the election described in clause (b)(i)(B) above:

     (A) Dealer (or an affiliate of Dealer designated by Dealer) and any potential
institutional purchaser of any such Shares or Share Termination Delivery Units, as the case
may be, from Dealer or such affiliate identified by Dealer shall be afforded a commercially
reasonable opportunity to conduct a due diligence investigation in compliance with
applicable law with respect to Issuer customary in scope for private placements of equity
securities of companies of comparable size, maturity and lines of business (including,
without limitation, the right to have made available to them for inspection all financial
and other records, pertinent corporate documents and other information reasonably requested
by them), subject to execution by such recipients of customary confidentiality agreements
reasonably acceptable to Issuer;

     (B) Dealer (or an affiliate of Dealer designated by Dealer) and Issuer shall enter
into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in
connection with the private placement of such Shares or Share Termination Delivery Units,
as the case may be, by Issuer to Dealer or such affiliate and the private resale of such
shares by Dealer or such affiliate, substantially similar to private placement purchase
agreements customary for private placements of equity securities of companies of comparable
size, maturity and lines of business, in form and substance commercially reasonably
satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without
limitation, provisions substantially similar to those contained in such private placement
purchase agreements relating to the indemnification of, and contribution in connection with
the liability of, Dealer and its affiliates and Issuer, shall provide for the payment by
Issuer of all expenses in connection with such resale, including all fees and expenses of
counsel for Dealer, shall contain representations, warranties and agreements of Issuer
reasonably necessary or advisable to establish and maintain the availability of an
exemption from the registration requirements of the Securities Act for such resales, and
shall use commercially reasonable efforts to provide for the delivery of accountants’
“comfort letters” to Dealer or such affiliate with respect to the financial statements and
certain financial information contained in or incorporated by reference into the offering
memorandum prepared for the resale of such Shares as are customarily requested in comfort
letters covering private placements of equity securities of companies of comparable size,
maturity and lines of business;

     (C) Issuer agrees that any Shares or Share Termination Delivery Units so delivered to
Dealer, (i) may be transferred by and among Dealer and its affiliates, and Issuer shall
effect such transfer without any further action by Dealer and (ii) after the minimum
“holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed
with respect to such Shares or any securities issued by Issuer comprising such Share
Termination Delivery Units, Issuer shall promptly remove, or cause the transfer agent for
such Shares or securities to remove,

13

 

any legends referring to any such restrictions or requirements from such Shares or
securities upon delivery by Dealer (or such affiliate of Dealer) to Issuer or such transfer
agent of seller’s and broker’s representation letters customarily delivered by Dealer in
connection with resales of restricted securities pursuant to Rule 144 under the Securities
Act (if any), without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Dealer (or such affiliate of Dealer);
and

     (D) Issuer shall not take, or cause 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 Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share
Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1)
or Section 4(3) of the Securities Act for resales of the Shares or Share Termination
Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).

     (c) Make-whole Shares. If Issuer makes the election described in clause (i)(B) of paragraph
(b) of this Section 8, then Dealer or its affiliates may sell (which sale shall be made in a
commercially reasonable manner) such Shares or Share Termination Delivery Units, as the case may
be, during a period (the “Resale Period”) commencing on the Exchange Business Day following
delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the
Exchange Business Day on which Dealer or its affiliates completes the sale of all such Shares or
Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share
Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales
exceed the Freely Tradeable Value. If any of such delivered Shares or Share Termination Delivery
Units remain after such realized net proceeds exceed the Freely Tradeable Value, Dealer shall
return such remaining Shares or Share Termination Delivery Units to Issuer. If the Freely
Tradeable Value exceeds the realized net proceeds from such resale, Issuer shall transfer to Dealer
by the open of the regular trading session on the Exchange on the Exchange Trading Day immediately
following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in
cash or in a number of additional Shares (“Make-whole Shares”) in an amount that, based on the VWAP
Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of
computing such VWAP Price), has a dollar value equal to the Additional Amount. The Resale Period
shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this
Section 8(c). This provision shall be applied successively until the Additional Amount is equal to
zero, subject to Section 8(e).

     (d) Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this
Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any
Shares if, immediately upon giving effect to such receipt of such Shares, (i) the “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated
thereunder) of Shares by Dealer, any of its affiliates subject to aggregation with Dealer for
purposes of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons
who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer
with respect to “beneficial ownership” of any Shares (collectively, “Dealer Group”) would be equal
to or greater than 8.0% or more of the outstanding Shares or (ii) Dealer, Dealer Group or any
person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer,
Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware General
Corporation Law (the “DGCL Takeover Statute”) or other federal, state or local regulations or
regulatory orders applicable to ownership of Shares (“Applicable Laws”), would own, beneficially
own, constructively own, control, hold the power to vote or otherwise meet a relevant definition of
ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to
reporting or registration obligations or other requirements (including obtaining prior approval by
a state or federal regulator) of a Dealer Person under Applicable Laws (including, without
limitation, “interested stockholder” or “acquiring person” status under the DGCL Takeover Statute)
and with respect to which such requirements have not been met or the relevant approval has not been
received minus (y) 1.0% of the number of Shares outstanding on the date of determination (either
such condition described in clause (i) or (ii), an “Excess Ownership Position”). If any delivery
owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s
obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as
promptly as practicable after, but in no event later than

14

 

one Exchange Business Day after, Dealer gives notice to Issuer that such delivery would not
result in the existence of an Excess Ownership Position.

     (e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in the Agreement
to the contrary, in no event shall Issuer be required to deliver Shares in connection with the
Transaction in excess of the product of two, the aggregate Number of Warrants for all Components at
the time of delivery and the Warrant Entitlement at the time of delivery (such product, the “Capped
Number”); provided that, solely for purposes of determining the Capped Number, the Number of
Warrants for a Component and the Warrant Entitlement at the time of delivery shall take into
account only adjustments made in accordance with the provisions of this Confirmation as a result of
any Potential Adjustment Event or Extraordinary Event or other event, in each case, that was
initiated by, and effectuated under the control of, Issuer (it being understood, for the avoidance
of doubt, that an event initiated by Issuer shall not be deemed to be effectuated outside of the
control of Issuer merely because effectuating such event requires approvals that are outside of
Issuer’s control). Issuer represents and warrants to Dealer (which representation and warranty
shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped
Number is equal to or less than the number of authorized but unissued Shares of the Issuer that are
not reserved for future issuance in connection with transactions in the Shares (other than the
Transaction) on the date of the determination of the Capped Number (such Shares, the “Available
Shares”). In the event Issuer shall not have delivered the full number of Shares otherwise
deliverable as a result of this Section 8(e) (the resulting deficit, the “Deficit Shares”), Issuer
shall be continually obligated to use commercially reasonable efforts to deliver Shares, from time
to time until the full number of Deficit Shares have been delivered pursuant to this paragraph,
when, and to the extent, that (A) Shares are repurchased, acquired or otherwise received by Issuer
or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or
any other consideration), (B) authorized and unissued Shares reserved for issuance in respect of
other transactions prior to such date which prior to the relevant date become no longer so reserved
and (C) Issuer additionally authorizes any unissued Shares that are not reserved for other
transactions (such events as set forth in clauses (A), (B) and (C) above, collectively, the “Share
Issuance Events”). Issuer shall promptly notify Dealer of the occurrence of any of the Share
Issuance Events (including the number of Shares subject to clause (A), (B) or (C) and the
corresponding number of Shares to be delivered) and, as promptly as reasonably practicable, deliver
such Shares thereafter. Issuer shall not, until Issuer’s obligations under the Transaction have
been satisfied in full, use any Shares that become available for potential delivery to Dealer as a
result of any Share Issuance Event for the settlement or satisfaction of any transaction or
obligation other than the Transaction or reserve any such Shares for future issuance for any
purpose other than to satisfy Issuer’s obligations to Dealer under the Transaction.

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

15

 

collateral that would otherwise secure the obligations of Issuer herein under or pursuant to
any other agreement.

     (g) Amendments to Equity Definitions. The following amendments shall be made to the Equity
Definitions:

     (i) For the purposes of any adjustment under Section 11.2(c) of the Equity
Definitions, the first sentence of Section 11.2(c) of the Equity Definitions, prior to
clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent
Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share
Option Transaction, then following the announcement or occurrence of any Potential
Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment
Event has a material effect on the theoretical value of the relevant Shares or options on
the Shares and, if so, will (i) make appropriate commercially reasonable adjustment(s), if
any, to any one or more of:’ and, the portion of such sentence immediately preceding clause
(ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the
words “(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 such latter phrase with the words “(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)”;

     (ii) Sections 11.2(a) and 11.2(e)(vii) of the Equity Definitions are hereby amended by
inserting at the end of each Section the phrase “or a material effect on the theoretical
value of the Warrants;”

     (iii) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) 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); (B) replacing “will lend” with “lends” in
subsection (B); and (C) 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; and

     (iv) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the
word “or” immediately before subsection “(B)” and deleting the comma at the end of
subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word
“or” immediately preceding subsection (C), (3) replacing in the penultimate sentence the
words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final
sentence.

     (h) Transfer and Assignment. Dealer may transfer or assign its rights and obligations
hereunder and under the Agreement, in whole or in part, at any time without the consent of Issuer.
Dealer shall as soon as reasonably practicable notify Issuer of such transfer or assignment.

     (i) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Issuer 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 Issuer relating to such tax treatment and tax structure.

     (j) Additional Termination Events. The occurrence of any of the following shall constitute an
Additional Termination Event with respect to which the Transaction shall be the sole Affected
Transaction and Issuer shall be the sole Affected Party and Dealer shall be the party entitled to
designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the
amount payable pursuant to Section 6(e) of the Agreement; provided that with respect to any
Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole
Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with
terms identical to those set forth herein except with a Number of Warrants equal to the unaffected
number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full
force and effect:

     (i) Dealer reasonably determines that it is advisable to terminate a portion of the
Transaction so that Dealer’s related hedging activities will comply with applicable
securities laws, rules or regulations or related policies and procedures of Dealer (whether
or not such

16

 

requirements, policies or procedures are imposed by law or have been voluntarily
adopted by Dealer), or Dealer, 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

     (ii) at any time at which any Excess Ownership Position (as defined above) occurs,
Dealer, in its discretion, is unable to effect a transfer or assignment to a third party of
the Transaction or any other transaction between the parties after using its commercially
reasonable efforts on pricing terms and within a time period reasonably acceptable to
Dealer such that an Excess Ownership Position no longer exists; provided that Dealer shall
treat only that portion of the Transaction as the Affected Transaction as necessary so that
such Excess Ownership Position no longer exists; or

     (iii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act
other than Issuer or its subsidiaries files a Schedule TO or any schedule, form or report
under the Exchange Act disclosing that such person or group has become the direct or
indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of
Issuer’s common equity representing more than 50% of the voting power of Issuer’s common
equity; or

     (iv) consummation of any binding share exchange, exchange offer, tender offer,
consolidation or merger of Issuer pursuant to which the Shares will be converted into cash,
securities or other property or any sale, lease or other transfer in one transaction or a
series of transactions of all or substantially all of the consolidated assets of Issuer and
its subsidiaries, taken as a whole, to any person other than one or more of Issuer’s
subsidiaries (any such exchange, offer, consolidation, merger, transaction or series of
transactions being referred to herein as an “event”); provided, however, that any such
event where the holders of more than 50% of the Shares immediately prior to such event own,
directly or indirectly, more than 50% of all classes of common equity of the continuing or
surviving person or transferee or the parent thereof immediately after such event shall not
be an Additional Termination Event; or

     (v) the first day on which Continuing Directors cease to constitute at least a
majority of Issuer’s board of directors; or

     (vi) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or
dissolution; or

     (vii) the Shares cease to be listed on at least one U.S. national securities exchange.

Notwithstanding the foregoing, an event set forth in clause (iv) above will not constitute an
Additional Termination Event if at least 90% of the consideration, excluding cash payments for
fractional shares, in the transaction or event that would otherwise have constituted an Additional
Termination Event consists of shares of common stock that are traded on at least one U.S. national
securities exchange or that will be so traded when issued or exchanged in connection with the
relevant transaction or event (these securities being referred to as “publicly traded securities”).

In addition, a filing that would otherwise constitute an Additional Termination Event under clause
(iii) above will not constitute an Additional Termination Event if (A) the filing occurs in
connection with a transaction in which the Shares are replaced by the securities of another entity
and (B) no such filing is made or is in effect with respect to common equity representing more than
50% of the voting power of such other entity.

“Continuing Director” means a director who either was a member of Issuer’s board of directors on
the Effective Date or who becomes a member of Issuer’s board of directors subsequent to that date
and whose election, appointment or nomination for election by Issuer’s stockholders, is duly
approved by a majority of the continuing directors on Issuer’s board of directors at the time of
such approval, either by a specific vote or by approval of the proxy statement issued by Issuer on
behalf of its entire board of directors in which such individual is named as nominee for director.

17

 

     (k) Effectiveness. If, on or prior to the Effective Date, Dealer reasonably determines that
it is advisable to cancel the Transaction because of concerns that Dealer’s related hedging
activities could be viewed as not complying with applicable securities laws, rules or regulations,
the Transaction shall be cancelled and shall not become effective, and neither party shall have any
obligation to the other party in respect of the Transaction.

     (l) Extension of Settlement. Dealer may divide any Component into additional Components and
designate the Expiration Date and the Number of Warrants for each such Component if Dealer
determines, in a commercially reasonable manner, that such further division is necessary or
advisable to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing
liquidity conditions in the cash market or stock loan market or to enable Dealer to effect
purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder
in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be compliance
with applicable legal, regulatory and self-regulatory requirements, or with related policies and
procedures applicable to Dealer.

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

     (n) Delivery of Cash. For the avoidance of doubt, nothing in this Confirmation shall be
interpreted as requiring the Issuer to deliver cash in respect of the settlement of the
Transaction, except in circumstances where the required cash settlement thereof is permitted for
classification of the contract as equity by EITF 00-19 as in effect on the relevant Trade Date
(including, without limitation, where the Issuer so elects to deliver cash or fails timely to elect
to deliver Shares or Share Termination Delivery Property in respect of such settlement).

     (o) Payments by Dealer upon Early Termination. The parties hereby agree that, notwithstanding
anything to the contrary herein, in the Definitions or in the Agreement, following the payment of
the Premium, in the event that an Early Termination Date (whether as a result of an Event of
Default or a Termination Event) occurs or is designated with respect to the Transaction or the
Transaction is terminated or cancelled pursuant to Article 12 of the Equity Definitions and, as a
result, Dealer would owe to Issuer an amount calculated under Section 6(e) of the Agreement or
Article 12 of the Equity Definitions, such amount shall be deemed to be zero.

     (p) Amendment. This Confirmation and the Agreement may not be modified, amended or
supplemented, except in a written instrument signed by Issuer and Dealer. If Morgan Stanley & Co.
Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated exercises the underwriters’ (as
defined in the Underwriting Agreement) right under the Underwriting Agreement dated as of April 6,
2009, between Issuer and Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. as managers for the
underwriters party thereto, to purchase additional convertible notes as set forth therein, then
Dealer and Issuer will either enter into a new confirmation evidencing a corresponding number of
additional warrants to be issued by Issuer to Dealer or amend this Confirmation (in each case on
pricing terms acceptable Dealer and Issuer) (such additional confirmation or amendment to this
Confirmation to provide for the payment by Dealer to Issuer of the additional premium related
thereto in an amount to be agreed between the parties).

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

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

18

 

     (s) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN
BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES
IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

     (t) Governing Law; Jurisdiction. THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN
CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF
LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT
FORUM WITH RESPECT TO, THESE COURTS.

     (u) Agent of Dealer. Morgan Stanley & Co. Incorporated (“MS&CO”) is acting as agent for both
parties but does not guarantee the performance of either party. Neither Dealer nor Issuer shall
contact the other with respect to any matter relating to the Transaction without the direct
involvement of MS&CO; (ii) MS&CO, Dealer and Issuer each hereby acknowledges that any transactions
by Dealer or MS&CO with respect to Shares will be undertaken by Dealer as principal for its own
account; (iii) all of the actions to be taken by Dealer and MS&CO in connection with the
Transaction shall be taken by Dealer or MS&CO independently and without any advance or subsequent
consultation with Issuer; and (iv) MS&CO is hereby authorized to act as agent for Issuer only to
the extent required to satisfy the requirements of Rule 15a-6 under the Exchange Act in respect of
the Transaction.

19

 

     Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so
that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the
foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement
between Dealer and Issuer 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 us.

	 	 	 	 	 
	 	Yours faithfully,

MORGAN STANLEY & CO. INCORPORATED, 

as agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	MORGAN STANLEY & CO. INTERNATIONAL PLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Agreed and Accepted By:

BORGWARNER INC.

			
	By:	 	                                                            

Name:

Title:

Signature Page to Warrant
Confirmation

 

 

Annex A

For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth
below.

[Insert Table Here]exv10w1

EXHIBIT 10.1

LINDSAY CORPORATION

MANAGEMENT INCENTIVE UMBRELLA PLAN

1. PURPOSE. The purpose of the Lindsay Corporation Management Incentive Umbrella Plan (the “Plan”)
is to provide annual or other cash awards based on financial performance criteria to executive
officers that recognize and reward the achievement of corporate financial performance goals. The
executive officers who participate in this Plan may also receive annual or other cash awards that
are not paid under this Plan which are based on attaining individual performance objectives that
are not measured based on the financial performance criteria described in this Plan or are in the
nature of discretionary awards. This Plan will only apply to the portions of annual or other cash
awards for executive officers that are based on financial performance criteria.

2. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of January 26, 2009, upon approval of
the Plan by the stockholders of Lindsay Corporation (the “Corporation”).

3. PLAN ADMINISTRATION. The Plan shall be administered by the Compensation Committee (“Committee”)
of the Board of Directors, which shall consist of two or more members appointed from time to time
by the Board of Directors. Each member of the Committee shall be an “outside director” within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The
Committee shall have full power and authority, subject to the provisions of the Plan and applicable
law, to: (a) establish, amend, suspend or waive such rules and regulations and appoint such agents
as it deems necessary or advisable for the proper administration of the Plan, (b) construe,
interpret and administer the Plan and any instrument or agreement relating to the Plan, and (c)
make all other determinations and take all other actions necessary or advisable for the
administration of the Plan, provided that the Committee shall have no authority to take any action
that would cause any award to any Participant under this Plan to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code except as permitted pursuant to
Section 9 hereof. Unless otherwise expressly provided in the Plan, each determination made and
each action taken by the Committee pursuant to the Plan or any instrument or agreement relating to
the Plan (a) shall be within the sole discretion of the Committee, (b) may be made at any time, and
(c) shall be final, binding and conclusive for all purposes on all persons, including, but not
limited to, Participants in the Plan, their legal representatives and beneficiaries and employees
of the Corporation and its subsidiaries.

4. ELIGIBILITY. The Chief Executive Officer and all other executive officers of the Corporation
and its subsidiaries are eligible to participate in the Plan, if designated by the Committee.

5. AWARDS. Prior to or within 90 days after the commencement of each fiscal year (the “Plan
Year”), the Committee shall designate the following for annual cash awards under this Plan:

5.1 The executive officers who will participate (the “Participants”) in the Plan for the Plan Year.

5.2 The Financial Performance Criteria, as defined herein, which will apply to awards for the Plan
Year.

5.3 The Performance Goals, as defined herein, to be met for Participants to earn awards for the
Plan Year and a payout matrix or formula for the Financial Performance Criteria and Performance
Goals.

5.4 The award will be a bonus payment in an amount calculated based on the following amounts: (1)
a Participant’s annualized base salary, as determined by the Committee, as of the first, last or
other specified day or pro-rated for the Plan Year, (2) a specified target award percentage
(expressed as a percentage or fixed by a formula which will determine such percentage) determined
by the Committee to apply to the Participant for the Plan Year, and (3) the payout matrix or
formula for the Financial Performance Criteria and Performance Goals established by the Committee
for the Plan Year.

5.5 The Committee may, after the 90th day of the Plan Year, designate additional executive officers
to participate in the Plan for the Plan Year (also “Participants” for purposes hereof); provided,
however, that: (i) any award earned by any such Participant for participation for such partial Plan
Year will be pro-rated based on the number of days during the Plan

-1-

 

Year in which the Participant participated in the Plan, and (ii) the Performance Goals for such
additional Participants will be established prior to or before the expiration of 25% of the days
remaining in such partial Plan Year.

5.6 In addition to annual cash awards, the Committee may also provide other cash awards under this
Plan with performance periods which are longer or shorter than one Plan Year. The Performance
Goals for such other cash awards shall be established prior to or before the earlier of (i) the
90th day of the performance period or (ii) the expiration of 25% of the days in the performance
period. Any other cash awards under the Plan shall satisfy all of the other requirements to
qualify as “performance-based compensation” under Section 162(m) of the Code.

5.7 Awards under the Plan shall be paid to the Participants in cash. A Participant (other than one
who is party to an employment agreement with the Corporation or a subsidiary providing for a
partial year bonus) who terminates employment, either voluntarily or involuntarily, before the
payment date for awards is ineligible for an award under the Plan, unless otherwise determined by
the Committee in its complete and sole discretion.

6. FINANCIAL PERFORMANCE CRITERIA. For each Plan Year (or other performance period), the Committee
shall designate one or more of the financial performance criteria (the “Financial Performance
Criteria”) set forth in this Section 6 for use in determining an award for a Participant for such
Plan Year (or other performance period). Financial Performance Criteria shall consist of one or
more, or a combination of, the following financial measures, which may be described in terms of
corporate-wide objectives or objectives that are related to the performance of the individual
Participant or the subsidiary, division, department or function within the Corporation or
subsidiary in which the Participant is employed. Financial Performance Criteria may be measured on
an absolute or relative basis. Relative performance may be measured by a group of peer companies
or by a financial market index. Financial Performance Criteria under this Plan shall be limited to
specified levels of or increases or decreases in return on equity, earnings per share, total
earnings, earnings growth, return on capital, return on assets, earnings before interest, taxes,
depreciation and/or amortization, revenues or sales, revenues or sales growth, gross margin or
operating margin, return on investment, increase in the fair market value of the Corporation’s
shares, share price (including but not limited to, growth measures and total stockholder return),
gross or net income or profit, operating income or profit, net earnings, cash flow (including, but
not limited to, operating cash flow and free cash flow), cash flow return on investment (which
equals net cash flow divided by total capital), inventory turns, financial return ratios, total
return to shareholders, market share, earnings measures/ratios, economic value added (EVA), balance
sheet measurements such as receivable turnover, internal rate of return, increase in net present
value or expense targets, working capital measurements (such as average working capital divided by
sales), customer or dealer satisfaction surveys and productivity. Any Financial Performance
Criteria and Performance Goals may provide for adjustments to exclude the impact of any
acquisitions or dispositions of businesses by the Corporation, one-time non-operating charges,
extraordinary or nonrecurring items, accounting changes (including the early adoption of any
accounting change mandated by any governing body, organization or authority), changes in tax laws,
impacts of discontinued operations, restatements of prior period financial results, and any other
events or transactions that may result in distortion of the Financial Performance Criteria or
Performance Goals.

7. PERFORMANCE GOALS. For each Plan Year (or other performance period), the Committee shall
establish one or more specific, objective performance goals (the “Performance Goals”), the outcome
of which are substantially uncertain at the time so established, for each of the Financial
Performance Criteria designated by the Committee for the Plan Year (or other performance period),
against which actual performance is to be measured to determine the amount of awards. Performance
Goals established by the Committee may be described by means of a matrix or formula providing for
goals resulting in the payment of awards under the Plan.

8. DETERMINATION & PAYMENT OF AWARDS

8.1 As soon as practicable after the end of the Plan Year (or other performance period), the
Committee will determine the amount of the award earned by each Participant, based on application
of the Financial Performance Criteria and Performance Goals established for the Plan Year (or other
performance period); provided however that, except for Participants who have entered into an
employment agreement with the Corporation or a subsidiary, the Committee may, in its sole
discretion, reduce the amount which would otherwise be payable under the Plan. As to those
Participants who have entered into employment agreements with the Corporation or a subsidiary, the
Committee will not have the discretion to reduce any bonus below any minimum amount provided in
such employment agreement, if any. Payments will be made

-2-

 

promptly after determination of the awards by the Committee, unless payment of an award has been
deferred pursuant to Section 10.6 hereof. Such Committee determination must include a
certification in writing that the Performance Goals and any other materials terms of the award were
in fact satisfied; provided that minutes of the Committee meeting (or any action by written
consent) approving the awards shall satisfy the written certification requirement.

8.2 Notwithstanding anything herein to the contrary, the maximum dollar amount that may be paid
under this Plan in any Plan Year to any Participant may not exceed $2 million.

8.3 Payment of the award as determined pursuant to Section 8.1 shall be made as soon as practicable
following such determination, but in no event later than the 15th day of the third month of the
calendar year following the Plan Year (or other performance period) for which the award is paid.

9. TERMINATION, SUSPENSION OR MODIFICATION OF THE PLAN. The Board of Directors or Committee may at
any time, with or without notice, terminate, suspend, or modify the Plan in whole or in part,
except that the Board of Directors or Committee shall not amend the Plan in violation of the law or
in contravention of Treasury Regulation Section 1.162-27, promulgated under the Code, unless the
Board of Directors or Committee finds that such amendment is in the best interest of the
Corporation. The Committee is expressly permitted to make any amendments to the Plan, which are
not in violation of the law, that are required to conform the Plan to the requirements of Section
162(m). The Committee may also correct any defect, supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it shall deem desirable to carry the Plan
into effect.

10. MISCELLANEOUS.

10.1 No Assignments. No award under this Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary, including any such liability which is for
alimony or other payments for the support of a spouse or former spouse, or for any other relative
of a Participant prior to actually being received by the Participant or his/her designated
beneficiary in the event of the Participant’s death, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge, or otherwise dispose of any right to such award shall
be void.

10.2 No Right of Employment. Neither the adoption of the Plan, the determination of eligibility to
participate in the Plan, nor the granting of an award under the Plan shall confer upon any
Participant any right to continue in the employ of the Corporation or any of its subsidiaries or to
interfere in any way with the right of the Corporation or the subsidiary to terminate such
employment at any time.

10.3 Tax Withholding. The Corporation shall have the right to withhold the amount of any tax
attributable to amounts payable under the Plan.

10.4 Governing Law. The Plan and all determinations under the Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.

10.5 Other Plans. Nothing in this Plan shall be construed as limiting the authority of the
Committee, Board of Directors, the Corporation or any subsidiary of the Corporation to establish
any other compensation plan, or as in any way limiting its or their authority to pay bonuses or
supplemental compensation to any persons employed by the Corporation or a subsidiary of the
Corporation, whether or not such person is a Participant in this Plan and regardless of how the
amount of such compensation or bonuses is determined.

10.6 Deferrals of Awards. A Participant may only elect to defer payment of his/her cash award
under the Plan if deferral of an award under the Plan is permitted pursuant to the terms of a
deferred compensation program of the Corporation existing at the time the election to defer is
permitted to be made, and the Participant complies with the terms of such program.

-3-

 

10.7 Section 162(m). It is the intention of the Corporation that all payments made under this Plan
shall fall within the “performance-based compensation” exception contained in Section 162(m) of the
Code. Thus, unless the Board of Directors or Committee expressly determines otherwise, if any Plan
provision is found not to be in compliance with such exception, that provision shall be deemed to
be amended so that the provision does comply to the extent permitted by law, and in every event the
Plan shall be construed in favor of its meeting the “performance-based compensation” exception
contained in Section 162(m) of the Code.

Approved by Stockholders of the Company on January 26, 2009

-4-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]