Document:

Exhibit 10.6

 

From:               BNP Paribas

787 7th Avenue, 8th Floor
 New York, NY 10019

 

November 12, 2018

 

To:                             KBR, Inc. 
 601 Jefferson Street, Suite 3400

Houston, Texas 77002

Attention:                                         Natasha Frausto, Vice President & Treasurer

Telephone No.:            713-753-2280

Facsimile No.:                  713-753-2517

 

Re:                             Base Warrants (Reference Code OP1220DR)

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by KBR, Inc. (“Company”) to BNP Paribas (“Dealer”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  Each party further agrees that this Confirmation together with the Agreement evidence a complete binding agreement between Company and Dealer as to the subject matter and terms of the Transaction to which this Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

 

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.

 

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

 

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

 

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

 

	
General   Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
November 12, 2018
    
	
 
    	
 
    	
 
    
	
Effective Date:
    	
 
    	
The second Exchange   Business Day immediately prior to the Premium Payment Date
    
	
 
    	
 
    	
 
    
	
Warrants:
    	
 
    	
Equity call warrants,   each giving the holder the right to purchase a number of Shares equal to the   Warrant Entitlement at a price per Share equal to the Strike Price, subject   to the terms set forth under the caption “Settlement Terms” below.  For the purposes of the Equity Definitions,   each reference to a Warrant herein shall be deemed to be a reference to a   Call Option.
    

 

 

	
Warrant Style:
    	
 
    	
European
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Company
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The common stock of Company, par value USD 0.001 per   share (Exchange symbol “KBR”)
    
	
 
    	
 
    	
 
    
	
Number of Warrants:
    	
 
    	
2,743,727. For the avoidance of doubt, the Number of   Warrants shall be reduced by any Warrants exercised or deemed exercised   hereunder. In no event will the Number of Warrants be less than zero.
    
	
 
    	
 
    	
 
    
	
Warrant Entitlement:
    	
 
    	
One Share per Warrant
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
USD 40.02
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding anything to the contrary in the   Agreement, this Confirmation or the Equity Definitions, in no event shall the   Strike Price be subject to adjustment to the extent that, after giving effect   to such adjustment, the Strike Price would be less than USD 20.01, except for   any adjustment pursuant to the terms of this Confirmation and the Equity   Definitions in connection with stock splits or similar changes to Company’s   capitalization.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD 4,501,000
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
November 15, 2018
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related Exchange(s):
    	
 
    	
All Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures   for Exercise.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Expiration Time:
    	
 
    	
The Valuation Time
    
	
 
    	
 
    	
 
    
	
Expiration Dates:
    	
 
    	
Each Scheduled Trading Day during the period from,   and including, the First Expiration Date to, but excluding, the 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 the Transaction, the Calculation
    

 

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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:
    	
 
    	
February 1, 2024 (or if such day is not a   Scheduled Trading Day, the next following Scheduled Trading Day), subject to   Market Disruption Event below.
    
	
 
    	
 
    	
 
    
	
Daily Number of   Warrants:
    	
 
    	
For any Expiration Date, the Number of Warrants that   have not expired or been exercised as of such day, divided   by the remaining number of Expiration Dates (including such day), rounded   down to the nearest whole number, subject to adjustment pursuant to the   provisos to “Expiration Dates”.
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
Applicable; and means that for each Expiration Date,   a number of Warrants equal to the Daily Number of Warrants for such   Expiration Date will be deemed to be automatically exercised at the   Expiration Time on such Expiration Date.
    
	
 
    	
 
    	
 
    
	
Market Disruption   Event:
    	
 
    	
Section 6.3(a) 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   words “Scheduled Closing Time” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Valuation   Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Valuation Time:
    	
 
    	
Scheduled Closing Time; provided that   if the principal trading session is extended, the Calculation Agent shall   determine the Valuation Time in good faith and in its reasonable discretion.
    
	
 
    	
 
    	
 
    
	
Valuation Date:
    	
 
    	
Each Exercise Date.
    
	
 
    	
 
    	
 
    
	
Settlement   Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement Method:
    	
 
    	
Net Share Settlement.
    
	
 
    	
 
    	
 
    
	
Net Share Settlement:
    	
 
    	
On the relevant Settlement Date, Company shall   deliver to Dealer a number of Shares equal to the Share Delivery Quantity for   such Settlement Date to the account specified herein free of payment through   the Clearance System, and Dealer shall be treated as the holder of record of   such Shares at the time of delivery of such Shares or, if earlier, at 5:00   p.m. (New York City time) on such Settlement Date, and Company shall pay   to Dealer cash in lieu of any
    

 

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fractional Share based on the Settlement Price on   the relevant Valuation Date.
    
	
 
    	
 
    	
 
    
	
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 for such Settlement Date.
    
	
 
    	
 
    	
 
    
	
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 the relevant Valuation Date and (iii) the   Warrant Entitlement.
    
	
 
    	
 
    	
 
    
	
Settlement Price:
    	
 
    	
For any Valuation Date, the per Share   volume-weighted average price as displayed under the heading “Bloomberg VWAP”   on Bloomberg page KBR <equity> AQR (or any successor thereto) in   respect of the period from the scheduled opening time of the Exchange to the   Scheduled Closing Time on such Valuation Date (or if such volume-weighted   average price is unavailable, the market value of one Share on such Valuation   Date, as determined by the Calculation Agent). Notwithstanding the foregoing,   if (i) any Expiration Date is a Disrupted Day and (ii) the   Calculation Agent determines that such Expiration Date shall be an Expiration   Date for fewer than the Daily Number of Warrants, as described above, then   the Settlement Price for the relevant Valuation Date shall be the   volume-weighted average price per Share on such Valuation Date on the   Exchange, as determined by the Calculation Agent based on such sources as it   deems appropriate using a volume-weighted methodology, for the portion of   such Valuation Date for which the Calculation Agent determines there is no   Market Disruption Event.
    
	
 
    	
 
    	
 
    
	
Settlement Dates:
    	
 
    	
As determined pursuant to Section 9.4 of the   Equity Definitions, subject to Section 9(i)(i) hereof.
    
	
 
    	
 
    	
 
    
	
Other Applicable   Provisions:
    	
 
    	
The provisions of Sections 9.1(c), 9.8, 9.9, 9.11   and 9.12 of the Equity Definitions will be applicable, except that all   references in such provisions to “Physically-settled” shall be read as   references to “Net Share Settled.” “Net Share Settled” in relation to any   Warrant means that Net Share Settlement is applicable to that Warrant.
    
	
 
    	
 
    	
 
    
	
Representation and   Agreement:
    	
 
    	
Notwithstanding Section 9.11 of the Equity   Definitions, the parties acknowledge that any Shares delivered to Dealer may   be, upon delivery, subject to restrictions and limitations arising from   Company’s status as issuer of the Shares under applicable securities laws.
    

 

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3.                                      Additional Terms applicable to the Transaction.

 

	
Adjustments applicable   to the Transaction:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Calculation Agent Adjustment. For the avoidance of   doubt, in making any adjustments under the Equity Definitions, the   Calculation Agent may make commercially reasonable adjustments, if any, to   any one or more of the Strike Price, the Number of Warrants, the Daily Number   of Warrants and the Warrant Entitlement. Notwithstanding the foregoing, any   cash dividends or distributions on the Shares, whether or not extraordinary,   shall be governed by Section 9(f) of this Confirmation in lieu of   Article 10 or Section 11.2(c) of the Equity Definitions.
    
	
 
    	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    
	
 
    	
 
    	
 
    
	
New Shares:
    	
 
    	
Section 12.1(i) of the Equity Definitions   is hereby amended (a) by deleting the text in clause (i) thereof in   its entirety (including the word “and” following clause (i)) and replacing it   with the phrase “publicly quoted, traded or listed (or whose related   depositary receipts are publicly quoted, traded or listed) on any of the New York   Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market   (or their respective successors)” and (b) by inserting immediately prior   to the period the phrase “and (iii) of an entity or person that is a   corporation organized under the laws of the United States, any State thereof   or the District of Columbia that also becomes Company under the Transaction   following such Merger Event or Tender Offer”.
    
	
 
    	
 
    	
 
    
	
Consequence of Merger   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger Event:
    	
 
    	
Applicable; provided that   if an event occurs that constitutes both a Merger Event under   Section 12.1(b) of the Equity Definitions and an Additional   Termination Event under Section 9(g)(ii)(B) of this Confirmation,   Dealer may elect, in its commercially reasonable judgment, whether the   provisions of Section 12.2 of the Equity Definitions or   Section 9(g)(ii)(B) 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 Dealer may   elect, in its commercially reasonable judgment, Component Adjustment   (Calculation Agent Determination) for all or any portion of the Transaction.
    
	
 
    	
 
    	
 
    
	
Consequence of Tender   Offers:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Tender Offer:
    	
 
    	
Applicable; provided that   if an event occurs that constitutes both a Tender Offer under   Section 12.1(d) of
    

 

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the Equity Definitions and Additional Termination   Event under Section 9(g)(ii)(A) of this Confirmation, Dealer may   elect, in its commercially reasonable judgment, whether the provisions of   Section 12.3 of the Equity Definitions or   Section 9(g)(ii)(A) will apply.
    
	
 
    	
 
    	
 
    
	
Share-for-Share:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Share-for-Other:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Share-for-Combined:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
 
    	
Modified Calculation Agent Adjustment as set forth   in Section 12.3(d) of the Equity Definitions; provided   that, in respect of an Announcement Event, (x) references to “Tender   Offer” shall be replaced by references to “Announcement Event” and references   to “Tender Offer Date” shall be replaced by references to “date of such   Announcement Event”, (y) the word “shall” in the second line shall be   replaced with “may” and the fifth and sixth lines shall be deleted in their   entirety and replaced with the words “effect on the Warrants of such   Announcement Event solely to account for changes in volatility, expected   dividends, stock loan rate or liquidity relevant to the Shares or the   Warrants”, and (z) for the avoidance of doubt, the Calculation Agent may   determine whether the relevant Announcement Event has had a material effect   on the Transaction (and, if so, adjust the terms of the Transaction   accordingly) on one or more occasions on or after the date of the   Announcement Event up to, and including, the Expiration Date, any Early   Termination Date and/or any other date of cancellation, it being understood   that any adjustment in respect of an Announcement Event shall take into   account any earlier adjustment relating to the same Announcement Event. An   Announcement Event shall be an “Extraordinary Event” for purposes of the   Equity Definitions, to which Article 12 of the Equity Definitions is   applicable.
    
	
 
    	
 
    	
 
    
	
Announcement Event:
    	
 
    	
(i) The public announcement by any entity of   (x) any transaction or event that, if completed, would constitute a   Merger Event or Tender Offer, (y) any potential acquisition or   disposition by Issuer and/or its subsidiaries where the aggregate   consideration exceeds 25% of the market capitalization of Issuer as of the   date of such announcement (an “Acquisition Transaction”)   or (z) the intention to enter into a Merger Event or Tender Offer or an   Acquisition Transaction, (ii) the public announcement by Issuer of an   intention to solicit or enter into, or to explore strategic alternatives or   other similar undertaking that may include, a Merger Event or Tender Offer or   an Acquisition Transaction or (iii) any subsequent public announcement   by any entity of a change to a transaction or intention that is the subject   of an announcement of the type described in clause (i) or (ii) of   this sentence (including, without limitation, a new announcement, whether or   not by the same party, relating to such a
    

 

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transaction or intention or the announcement of a   withdrawal from, or the abandonment or discontinuation of, such a transaction   or intention), as determined by the Calculation Agent. For the avoidance of   doubt, the occurrence of an Announcement Event with respect to any   transaction or intention shall not preclude the occurrence of a later   Announcement Event with respect to such transaction or intention. For   purposes of this definition of “Announcement Event,” the remainder of the   definition of “Merger Event” in Section 12.1(b) of the Equity   Definitions following the definition of “Reverse Merger” therein shall be   disregarded.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that, in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions,   it will also constitute a Delisting if the Exchange is located in the United   States and the Shares are not immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors); if the Shares are   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Change in Law:
    	
 
    	
Applicable; provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “, or public announcement of, the formal or informal   interpretation”, (ii) replacing the word “Shares” where it appears in   clause (X) thereof with the words “Hedge Position” and   (iii) replacing the parenthetical beginning after the word “regulation”   in the second line thereof the words “(including, for the avoidance of doubt   and without limitation, (x) any tax law or (y) adoption,   effectiveness or promulgation of new regulations authorized or mandated by   existing statute)”.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Not Applicable
    
	
 
    	
 
    	
 
    
	
Insolvency Filing:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Disruption:
    	
 
    	
Applicable; provided   that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)                  Section 12.9(a)(v) of   the Equity Definitions is hereby amended by (a) inserting the following   words at the end of clause (A) thereof: “in the manner contemplated by   the Hedging Party on the Trade Date” and (b) inserting the following two   phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be
    

 

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limited to, stock price   and volatility risk. And, for the further avoidance of doubt, any such   transactions or assets referred to in phrases (A) or (B) above must   be available on commercially reasonable pricing terms.”; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)               Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof, after the words “to terminate the Transaction”, the words “or a   portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
Increased Cost of   Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Loss of Stock Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Maximum Stock Loan   Rate:
    	
 
    	
100 basis points
    
	
 
    	
 
    	
 
    
	
Increased Cost of Stock   Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Initial Stock Loan   Rate:
    	
 
    	
0 basis points until November 1, 2023 and 25   basis points thereafter.
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
For all applicable Additional Disruption Events,   Dealer; provided, however, that all   calculations, adjustments, specifications, choices and determinations by   Dealer acting in its capacity as the Hedging Party shall be made in good   faith and in a commercially reasonable manner (it being understood that   Hedging Party will be subject to the requirements of the second paragraph   under “Calculation Agent” below).
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
For all applicable Extraordinary Events, Dealer; provided, however, that all calculations, adjustments,   specifications, choices and determinations by Dealer acting in its capacity   as the Determining Party shall be made in good faith and in a commercially   reasonable manner (it being understood that Determining Party will be subject   to the requirements of the second paragraph under “Calculation Agent” below).
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
4.                                      Calculation Agent.
    	
 
    	
Dealer; provided, however,   that all calculations, adjustments, specifications, choices and   determinations by the Calculation Agent shall be made in good faith and in a   commercially reasonable manner. The parties agree that they will work   reasonably to resolve any disputes as set forth in the immediately following   paragraph. In the case of any calculation, adjustment or determination by the   Hedging Party, the Determining Party or the Calculation Agent, following any   written request from Company, the Hedging Party, the Determining Party or 
    

 

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the Calculation Agent, as the case may be, shall   promptly provide to Company a written explanation describing in reasonable   detail the basis for such calculation, adjustment or determination (including   any quotation, market data or information from internal or external sources   used in making such calculation, adjustment or determination, but without   disclosing any proprietary models or other information that may be   proprietary or confidential) and shall use commercially reasonable efforts to   provide such written explanation within five (5) Exchange Business Days   from the receipt of such request. If Company promptly disputes such   calculation, adjustment or determination in writing and provides reasonable   detail as to the basis for such dispute, the Calculation Agent shall, to the   extent permitted by applicable law, discuss the dispute with Company in good   faith.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Company:

 

Bank of America, N.A.
 New York, NY

Acct No.: 4427187942
 Bank Routing: 026-009-593

 

Account for delivery of Shares from Company:

 

To be provided by Company

 

(b)                                 Account for payments to Dealer:

 

BNP Paribas, New York

ABA: 026007689

SWIFT: BNPAUS3N

Favor: BNP Paribas Paris (swift code: BNPAFRPP)

A/C: 020019409300136

 

Account for delivery of Shares to Dealer:

 

To be provided by Dealer

 

6.                                      Offices.

 

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

 

(b)                                 The Office of Dealer for the Transaction is: Paris

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Company:

 

KBR, Inc.

601 Jefferson Street, Suite 3400

Houston, Texas 77002

Attention:                                         Natasha Frausto, Vice President & Treasurer

 

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Telephone No.:             713-753-2280

Facsimile No.:                   713-753-2517

 

With a copy to:

 

Mayer Brown LLP
 700 Louisiana, Suite 3400

Houston, Texas 77002

Attention:                                         Jeff M. Dobbs

Telephone No.:            713-238-2697

Facsimile No.:                  713-238-4697

Email:                                                            jdobbs@mayerbrown.com

 

(b)                                 Address for notices or communications to Dealer:

 

BNP Paribas

787 7th Avenue
 New York, NY 10019

Attn: Damir Tanovic

Telephone:  212-841-2504

Email:  NYK_STE@americas.bnpparibas.com

 

With a copy to:

 

BNP Paribas

787 7th Avenue, 8th Floor
 New York, NY 10019

Attn: Nicholas Gao

Telephone:  212-841-2504

Email:  nick.gao@us.bnpparibas.com

 

8.                                      Representations and Warranties of Company.

 

Each of the representations and warranties of Company set forth in Section 1 of the Purchase Agreement (the “Purchase Agreement”), dated as of November 12, 2018, between Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein except to the extent that such representation and warranties if not true or correct, would not have a material adverse effect on the power or ability of Company to execute and deliver this Confirmation or to perform their obligations hereunder.  Company hereby further represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(d), at all times until termination of the Transaction, that:

 

(a)                                 This Confirmation has been duly authorized, executed and delivered by Company and is enforceable against Company in accordance with its terms, except, in each case, as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(b)                                 The execution, delivery and performance of this Confirmation and the consummation of the Transaction contemplated hereby have been duly authorized by all necessary corporate action by Company and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined in the Purchase Agreement) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of Company or any subsidiary thereof pursuant to the

 

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Agreements and Instruments (as defined in the Purchase Agreement), except for such conflicts, breaches, defaults or Repayment Events (as defined in the Purchase Agreement) or liens, charges or encumbrances that would not, singly or in the aggregate, result in a Material Adverse Effect (as defined in the Purchase Agreement), nor will such action result in any violation of (a) the provisions of the charter, by-laws or similar organizational document of Company or any of its subsidiaries or (b) any law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity (as defined in the Purchase Agreement),  except, in the case of  clause (b) above, for such violations that would not, singly or in the aggregate, result in a Material Adverse Effect (as defined in the Purchase Agreement).

 

(c)                                  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity (as defined in the Purchase Agreement) is necessary or required for the performance by Company of its obligations hereunder or the consummation of the Transaction contemplated by this Confirmation or for the due execution, delivery and performance of this Confirmation, except such as have been already obtained and excluding any filing, authorization, approval, consent, license, order, registration, qualification or decree the failure of which to obtain or make would not have a Material Adverse Effect (as defined in the Purchase Agreement).

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights.

 

(e)                                  Company is not and, after consummation of 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.

 

(f)                                   Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).

 

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

 

(h)                                 No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

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

 

(j)                                    The assets of Company do not constitute “plan assets” under the Employee Retirement Income Security Act of 1974, as amended, the Department of Labor Regulations promulgated thereunder or similar law.

 

(k)                                 Company has received and read 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”.

 

11

 

9.                                      Other Provisions.

 

(a)                                 Opinions.  Company shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (d) of this Confirmation, which shall be deemed delivered to Dealer hereunder if delivered to Dealer under the Purchase Agreement.  Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(b)                                 Repurchase Notices.  Company shall, on any day on which Company effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares on such day, subject to any adjustments provided herein, is (i) less than 129.3 million (in the case of the first such notice) or (ii) thereafter more than 9.8 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually may become subject to, as a result of Company’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person, such Indemnified Person shall promptly notify Company in writing, and Company, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Company may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is 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 the Transaction.

 

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

 

(d)                                 No Manipulation.  Company is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to

 

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raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)                                  Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party; provided, (A) Company 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 Company would have been required to pay to Dealer in the absence of such transfer and assignment, (B) Dealer shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Company to permit Company to determine that results described in clause (A) will not occur upon or after such transfer and assignment, (C) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment and (D) Dealer shall provide written notice to Company following any such Transfer.  If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(i) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Company that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or

 

13

 

receive any payment in cash, to or from Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Company to the extent of any such performance.

 

(f)                                   Dividends.  If at any time during the period from and including the Effective Date, to and including the last Expiration Date, (i) an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that dividend differs from the Regular Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a cash dividend occurs with respect to the Shares in any quarterly dividend period of Company, then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend or lack thereof.  “Regular Dividend” shall mean for any calendar quarter, USD 0.08 for the first regular cash dividend or distribution on the Shares for which the Ex-Dividend Date falls within such calendar quarter, and zero for any other dividend or distribution on the Shares for which the Ex-Dividend Date falls within the same calendar quarter.

 

(g)                                  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 (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof 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 “a material”; and adding the phrase “or Warrants” at the end of the sentence.

 

(D)                               Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) inserting “(1)” immediately following the word “means” in the first line thereof and (2) inserting immediately prior to the semi-colon at the end of subsection (B) thereof the following words: “or (2) 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)                                 replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.

 

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(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), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence.

 

(G)                               Section 12.9(b)(vi) 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 final sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.”

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its reasonable discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:

 

(A)                               A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its wholly owned subsidiaries and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Shares representing more than 50% of the voting power of the Shares.

 

(B)                               Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets, (II) any share exchange, consolidation or merger of Company pursuant to which the Shares will be converted into cash, securities or other property or assets or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s wholly owned subsidiaries.  Notwithstanding the foregoing, any transaction or transactions set forth in clause (A) above or this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of The New York Stock Exchange, The

 

15

 

NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares.

 

(C)                               The stockholders of Company approve any plan or proposal for the liquidation or dissolution of Company.

 

(D)                               The Shares cease to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

 

(E)                                Default by Company or any of its “significant subsidiaries” (as such term is defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $100 million (or its foreign currency equivalent) in the aggregate of Company and/or any such significant subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity or (ii) constituting a failure to pay the principal or interest of any such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise.

 

(F)                                 A final judgment or judgments for the payment of $100 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against Company or any of its “significant subsidiaries” (as such term is defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act), which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished.

 

(G)                               Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(h)                                 No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral.  Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise.  For the avoidance of doubt and notwithstanding anything to the contrary provided in this Section 9(h), in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(i)                                     Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

(i)                                     If (a) 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 (b) the

 

16

 

Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to all holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Company’s control, or (iii) an Event of Default in which Company is the Defaulting Party or a Termination Event in which Company is the Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Company’s control), and if Company would owe any amount to Dealer pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Company remakes the representation set forth in Section 8(g) as of the date of such election and (c) Dealer agrees, in its commercially reasonable discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

	
Share Termination   Alternative:
    	
 
    	
If applicable, Company shall deliver to Dealer the   Share Termination Delivery Property on the date (the “Share   Termination Payment Date”) on which the Payment Obligation would   otherwise be due pursuant to Section 12.7 or Section 12.9 of the   Equity Definitions or Section 6(d)(ii) of the Agreement, as   applicable, subject to Section 9(j)(i) below, in satisfaction,   subject to Section 9(j)(ii) below, of the relevant Payment   Obligation, in the manner reasonably requested by Dealer free of payment.
    
	
 
    	
 
    	
 
    
	
Share Termination   Delivery Property:
    	
 
    	
A number of Share Termination Delivery Units, as   calculated by the Calculation Agent, equal to the relevant 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 (without   giving effect to any discount pursuant to Section 9(j)(i)).
    
	
 
    	
 
    	
 
    
	
Share Termination Unit   Price:
    	
 
    	
The value to Dealer of property contained in one   Share Termination Delivery Unit on the date such Share Termination Delivery   Units are to be delivered as Share Termination Delivery Property, as   determined by the Calculation Agent in its discretion by commercially   reasonable means. In the case of a Private Placement of Share Termination   Delivery Units that are Restricted Shares (as defined below), as set forth in   Section 9(j)(i) below, the Share Termination Unit Price shall be   determined by the discounted price applicable to such Share
    

 

17

 

	
 
    	
 
    	
Termination Delivery Units. In the case of a   Registration Settlement of Share Termination Delivery Units that are   Restricted Shares (as defined below) as set forth in   Section 9(j)(ii) below, notwithstanding the foregoing, the Share   Termination Unit Price shall be the Settlement Price on the Merger Date,   Tender Offer Date, Announcement Date (in the case of a   Nationalization, Insolvency or Delisting), Early Termination Date or   date of cancellation, as applicable. The Calculation Agent shall notify   Company of the Share Termination Unit Price at the time of notification of   such Payment Obligation to Company or, if applicable, at the time the   discounted price applicable to the relevant Share Termination Units is   determined pursuant to Section 9(j)(i).
    
	
 
    	
 
    	
 
    
	
Share Termination   Delivery Unit:
    	
 
    	
One Share or, if the Shares have changed into cash   or any other property or the right to receive cash or any other property as   the result of a Nationalization, Insolvency or Merger Event (any such cash or   other property, the “Exchange Property”),   a unit consisting of the type and amount of Exchange 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 or Merger Event. If such   Nationalization, Insolvency or Merger Event involves a choice of   Exchange Property 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 and 9.12 (as modified above) of the   Equity Definitions will be applicable, except that all references in such   provisions to “Physically-settled” shall be read as references to “Share   Termination Settled” and all references to “Shares” shall be read as   references to “Share Termination Delivery Units”. “Share Termination Settled”   in relation to the Transaction means that the Share Termination Alternative   is applicable to the Transaction.
    

 

(j)                                    Registration/Private Placement Procedures.  If, in the reasonable opinion of Dealer, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery

 

18

 

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

 

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

 

(ii)                                  If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of

 

19

 

such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(i) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above).  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following such resale 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 such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares.  If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)                               Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) 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) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or use its best efforts to cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). 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.

 

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

 

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

 

20

 

Percentage would not exceed 7.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.

 

(l)                                     Share Deliveries. 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.

 

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

 

(n)                                 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.

 

(o)                                 Maximum Share Delivery.

 

(i)                                     Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than 5,487,454 (the “Maximum Number of Shares”) to Dealer in connection with the Transaction.

 

(ii)                                  In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because (x) the number of Shares or Restricted Shares to be delivered would require the approval of Company’s shareholders (as required by Rule 312.03 of the New York Stock Exchange Rules (“Rule 312.03”) or (y) Company has insufficient authorized but unissued Shares that are not reserved for other transactions (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(o)(ii), when, and to the extent that, (1) in the case of (x), Company shall have obtained either such required shareholder approval under Rule 312.03 or a waiver from the New York Stock Exchange, waiving the application of Rule 312.03 to Company’s issuance of Shares or Restricted Shares, and (2) in the case of (y), (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(o)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  To the extent Company’s issuance of Shares or Restricted Shares requires the approval of Company’s shareholders as required by Rule 312.03, Company shall use its reasonable best efforts to obtain either such required shareholder approval or a waiver from the New York Stock Exchange, waiving the application of Rule 312.03 to Company’s issuance of Shares or Restricted Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the

 

21

 

corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

(p)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in good faith and in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer; provided that no such Expiration Date or other date of valuation, payment or delivery may be postponed or added more than 80 Exchange Business Days after the original Exercise Date or date of valuation, payment or delivery, as the case may be.

 

(q)                                 Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Company of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

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

 

(s)                                   Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(t)                                    Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction;  (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Prices; and (D) any market activities of Dealer

 

22

 

and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Prices, each in a manner that may be adverse to Company.

 

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

 

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

 

(w)                               Listing of Warrant Shares.  Company shall have submitted an application for the listing of the Warrant Shares on the Exchange, and such application and listing shall have been approved by the Exchange, subject only to official notice of issuance, in each case, on or prior to the Premium Payment Date.  Company agrees and acknowledges that such submission and approval shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

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

 

(y)                                 Role of Agent.  Company agrees and acknowledges that (i) BNP Paribas Securities Corp. (“BNPPSC”), an affiliate of Dealer, has acted solely as agent and not as principal with respect to the Transaction and (ii) BNPPSC has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the 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 the Transaction.  For the avoidance of doubt, any performance by Dealer of its obligations to Company hereunder solely to BNPPSC shall not relieve Dealer of such obligations. Any performance by Company of its obligations (including notice obligations) through or by means of BNPPSC’s agency for Dealer shall constitute good performance of Company’s obligations hereunder to Dealer.

 

(z)                                  ISDA 2016 Bail-in Article 55 BRRD Protocol.  The parties agree that the terms of the Attachment to the ISDA 2016 Bail-in Article 55 BRRD Protocol published by the International Swaps and Derivatives Association, Inc. (“BRRD Protocol”) apply to the Agreement (which shall, for these purposes, be deemed to be a “Protocol Covered Agreement”) as if the parties had each adhered to the BRRD Protocol without amendment, with an Implementation Date of 1st January, 2016.

 

(aa)                          2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol.  The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc. (“Protocol”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. For these purposes:

 

23

 

(i)                                    Dealer is a Portfolio Data Sending Entity and Company is a Portfolio Data Receiving Entity;

 

(ii)                                 Dealer and Company may use a Third Party Service Provider, and the other party (in each case) consents to such use including the communication of the relevant data in relation to that other party to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity;

 

(iii)                              The Local Business Days for such purposes in relation to Dealer are London and Brussels, and in relation to Company is New York.

 

(iv)                             The following are the applicable email addresses:

 

	
Portfolio Data:
    	
Dealer:   portfoliorec.eu@uk.bnpparibas.com
    
	
 
    	
 
    
	
 
    	
Company:   adam.kramer@kbr.com
    
	
 
    	
 
    
	
Notice   of discrepancy:
    	
Dealer:   portfoliorec.eu@uk.bnpparibas.com
    
	
 
    	
 
    
	
 
    	
Company:   adam.kramer@kbr.com
    
	
 
    	
 
    
	
Dispute   Notice:
    	
Dealer:   portfoliorec.eu@uk.bnpparibas.com
    
	
 
    	
 
    
	
 
    	
Company:   adam.kramer@kbr.com
    

 

(bb)                          Certain Tax Considerations.

 

(i)                                     Dealer makes the following representations to Company: it is a “foreign person” (as that term is used in section 1.6041-4(a)(4) of the United States Treasury Regulations) for United States federal income tax purposes and each payment received or to be received by it in connection with this Confirmation is effectively connected with its conduct of a trade or business in the United States.

 

(ii)                                  Dealer agrees to deliver to Company a valid, accurate and complete U.S. Internal Revenue Service Form W-8ECI (or any successor form) and any required attachments thereto (A) upon execution of this Confirmation, (B) promptly upon reasonable demand by Company and (C) promptly upon learning that any Form W-8ECI (or any successor thereto) previously provided by Dealer has become obsolete, invalid or incorrect.

 

(iii)                               Company makes the following representation to Dealer: it is a corporation established under the laws of the State of Delaware and is a “United States person” (as that term is defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended). Company agrees to deliver to Dealer a valid, accurate and complete U.S. Internal Revenue Service Form W-9 (or any successor form) and any required attachments thereto (A) upon execution of this Confirmation, (B) promptly upon reasonable demand by Dealer and (C) promptly upon learning that any Form W-9 (or any successor thereto) previously provided by Company has become obsolete, invalid or incorrect.

 

(cc)                            Withholding Tax imposed on payments to non-U.S. counterparties under the United States Foreign Account Tax Compliance Act.  “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a

 

24

 

“FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

(dd)                          871(m).  The parties agree that the definitions and provisions contained in the 2015 Section 871(m) Protocol, as published by ISDA, are incorporated into and apply to the Agreement solely for purposes of this Confirmation as if set forth in full herein.

 

(ee)                            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 cash settle the Transaction, except in circumstances where cash settlement is within Company’s control (including, without limitation, where Company elects to deliver or receive cash, or where Company has made Private Placement Settlement unavailable due to the occurrence of events within its control) or in those circumstances in which holders of Shares would also receive cash.

 

25

 

Please confirm that the foregoing correctly sets forth the terms of the agreement between Dealer and Company with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and returning an executed copy to Dealer.

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
BNP PARIBAS
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Frederick J. Fiddle
    
	
 
    	
 
    	
Name:   Frederick J. Fiddle
    
	
 
    	
 
    	
Title:   Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephan B. Nawrocki
    
	
 
    	
 
    	
Name:   Stephen B. Nawrocki
    
	
 
    	
 
    	
Title:   Managing Director
    
	
Agreed   and Accepted By:
    	
 
    
	
 
    	
 
    
	
KBR, INC.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Stuart J. B. Bradie
    	
 
    	
 
    
	
 
    	
Name:
    	
Stuart   J. B. Bradie
    	
 
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    	
 
    
						

 

[Signature Page to Base Warrant Confirmation — BNP Paribas]Exhibit 10.7

 

 

From:               Citibank, N.A.

Corporate Equity Derivatives

390 Greenwich Street, 1st Floor
 New York, NY 10013

 

November 12, 2018

 

To:                             KBR, Inc. 
 601 Jefferson Street, Suite 3400

Houston, Texas 77002

Attention:                                         Natasha Frausto, Vice President & Treasurer

Telephone No.:             713-753-2280

Facsimile No.:                   713-753-2517

 

Re:                             Base Warrants

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by KBR, Inc. (“Company”) to Citibank, N.A. (“Dealer”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  Each party further agrees that this Confirmation together with the Agreement evidence a complete binding agreement between Company and Dealer as to the subject matter and terms of the Transaction to which this Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

 

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.

 

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

 

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

 

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

 

	
General   Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
November 12, 2018
    
	
 
    	
 
    	
 
    
	
Effective Date:
    	
 
    	
The second Exchange Business Day immediately prior   to the Premium Payment Date
    
	
 
    	
 
    	
 
    
	
Warrants:
    	
 
    	
Equity call warrants, each giving the holder the   right to purchase a number of Shares equal to the Warrant Entitlement at a   price per Share equal to the Strike Price, subject to the terms set forth   under the caption
    

 

 

	
 
    	
 
    	
“Settlement Terms” below. For the purposes of the   Equity Definitions, each reference to a Warrant herein shall be deemed to be   a reference to a Call Option.
    
	
 
    	
 
    	
 
    
	
Warrant Style:
    	
 
    	
European
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Company
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The common stock of Company, par value USD 0.001 per   share (Exchange symbol “KBR”)
    
	
 
    	
 
    	
 
    
	
Number of Warrants:
    	
 
    	
4,115,590. For the avoidance of doubt, the Number of   Warrants shall be reduced by any Warrants exercised or deemed exercised   hereunder. In no event will the Number of Warrants be less than zero.
    
	
 
    	
 
    	
 
    
	
Warrant Entitlement:
    	
 
    	
One Share per Warrant
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
USD 40.02
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding anything to the contrary in the   Agreement, this Confirmation or the Equity Definitions, in no event shall the   Strike Price be subject to adjustment to the extent that, after giving effect   to such adjustment, the Strike Price would be less than USD 20.01, except for   any adjustment pursuant to the terms of this Confirmation and the Equity   Definitions in connection with stock splits or similar changes to Company’s   capitalization.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD 6,751,500
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
November 15, 2018
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related Exchange(s):
    	
 
    	
All Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures for Exercise.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Expiration Time:
    	
 
    	
The Valuation Time
    
	
 
    	
 
    	
 
    
	
Expiration Dates:
    	
 
    	
Each Scheduled Trading Day during the period from,   and including, the First Expiration Date to, but excluding, the 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
    

 

2

 

	
 
    	
 
    	
provided further that if such   Expiration Date has not occurred pursuant to this clause as of the eighth   Scheduled Trading Day following the last scheduled Expiration Date under the   Transaction, the Calculation Agent shall have the right to declare such   Scheduled Trading Day to be the final Expiration Date and the Calculation   Agent shall determine its good faith estimate of the fair market value for   the Shares as of the Valuation Time on that eighth Scheduled Trading Day or   on any subsequent Scheduled Trading Day, as the Calculation Agent shall   determine using commercially reasonable means.
    
	
 
    	
 
    	
 
    
	
First Expiration Date:
    	
 
    	
February 1, 2024 (or if such day is not a   Scheduled Trading Day, the next following Scheduled Trading Day), subject to Market   Disruption Event below.
    
	
 
    	
 
    	
 
    
	
Daily Number of   Warrants:
    	
 
    	
For any Expiration Date, the Number of Warrants that   have not expired or been exercised as of such day, divided   by the remaining number of Expiration Dates (including such day), rounded   down to the nearest whole number, subject to adjustment pursuant to the   provisos to “Expiration Dates”.
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
Applicable; and means that for each Expiration Date,   a number of Warrants equal to the Daily Number of Warrants for such   Expiration Date will be deemed to be automatically exercised at the   Expiration Time on such Expiration Date.
    
	
 
    	
 
    	
 
    
	
Market Disruption   Event:
    	
 
    	
Section 6.3(a) 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   words “Scheduled Closing Time” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Valuation Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Valuation Time:
    	
 
    	
Scheduled Closing Time; provided that   if the principal trading session is extended, the Calculation Agent shall   determine the Valuation Time in good faith and in its reasonable discretion.
    
	
 
    	
 
    	
 
    
	
Valuation Date:
    	
 
    	
Each Exercise Date.
    
	
 
    	
 
    	
 
    
	
Settlement Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement Method:
    	
 
    	
Net Share Settlement.
    
	
 
    	
 
    	
 
    
	
Net Share Settlement:
    	
 
    	
On the relevant Settlement Date, Company shall   deliver to Dealer a number of Shares equal to the Share Delivery Quantity for   such Settlement Date to the account specified herein free of payment through   the Clearance System, and
    

 

3

 

	
 
    	
 
    	
Dealer shall be treated as the holder of record of   such Shares at the time of delivery of such Shares or, if earlier, at 5:00   p.m. (New York City time) on such Settlement Date, and Company shall pay   to Dealer cash in lieu of any fractional Share based on the Settlement Price   on the relevant Valuation Date.
    
	
 
    	
 
    	
 
    
	
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 for such Settlement Date.
    
	
 
    	
 
    	
 
    
	
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 the relevant Valuation Date and (iii) the   Warrant Entitlement.
    
	
 
    	
 
    	
 
    
	
Settlement Price:
    	
 
    	
For any Valuation Date, the per Share   volume-weighted average price as displayed under the heading “Bloomberg VWAP”   on Bloomberg page KBR <equity> AQR (or any successor thereto) in   respect of the period from the scheduled opening time of the Exchange to the   Scheduled Closing Time on such Valuation Date (or if such volume-weighted   average price is unavailable, the market value of one Share on such Valuation   Date, as determined by the Calculation Agent). Notwithstanding the foregoing,   if (i) any Expiration Date is a Disrupted Day and (ii) the   Calculation Agent determines that such Expiration Date shall be an Expiration   Date for fewer than the Daily Number of Warrants, as described above, then   the Settlement Price for the relevant Valuation Date shall be the   volume-weighted average price per Share on such Valuation Date on the   Exchange, as determined by the Calculation Agent based on such sources as it   deems appropriate using a volume-weighted methodology, for the portion of   such Valuation Date for which the Calculation Agent determines there is no   Market Disruption Event.
    
	
 
    	
 
    	
 
    
	
Settlement Dates:
    	
 
    	
As determined pursuant to Section 9.4 of the   Equity Definitions, subject to Section 9(i)(i) hereof.
    
	
 
    	
 
    	
 
    
	
Other Applicable   Provisions:
    	
 
    	
The provisions of Sections 9.1(c), 9.8, 9.9, 9.11   and 9.12 of the Equity Definitions will be applicable, except that all   references in such provisions to “Physically-settled” shall be read as   references to “Net Share Settled.” “Net Share Settled” in relation to any   Warrant means that Net Share Settlement is applicable to that Warrant.
    
	
 
    	
 
    	
 
    
	
Representation and   Agreement:
    	
 
    	
Notwithstanding Section 9.11 of the Equity   Definitions, the parties acknowledge that any Shares delivered to Dealer may   be, upon delivery, subject to restrictions and limitations arising from   Company’s status as issuer of the Shares under applicable securities laws.
    

 

4

 

	
3.                                      Additional Terms applicable to the Transaction.
    
	
 
    	
 
    	
 
    
	
Adjustments applicable   to the Transaction:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Calculation Agent Adjustment. For the avoidance of   doubt, in making any adjustments under the Equity
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Definitions, the Calculation Agent may make   commercially reasonable adjustments, if any, to any one or more of the Strike   Price, the Number of Warrants, the Daily Number of Warrants and the Warrant   Entitlement. Notwithstanding the foregoing, any cash dividends or   distributions on the Shares, whether or not extraordinary, shall be governed   by Section 9(f) of this Confirmation in lieu of Article 10 or   Section 11.2(c) of the Equity Definitions.
    
	
 
    	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    
	
 
    	
 
    	
 
    
	
New Shares:
    	
 
    	
Section 12.1(i) of the Equity Definitions   is hereby amended (a) by deleting the text in clause (i) thereof in   its entirety (including the word “and” following clause (i)) and replacing it   with the phrase “publicly quoted, traded or listed (or whose related   depositary receipts are publicly quoted, traded or listed) on any of the New   York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global   Market (or their respective successors)” and (b) by inserting   immediately prior to the period the phrase “and (iii) of an entity or   person that is a corporation organized under the laws of the United States,   any State thereof or the District of Columbia that also becomes Company under   the Transaction following such Merger Event or Tender Offer”.
    
	
 
    	
 
    	
 
    
	
Consequence of Merger   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger Event:
    	
 
    	
Applicable; provided that   if an event occurs that constitutes both a Merger Event under   Section 12.1(b) of the Equity Definitions and an Additional   Termination Event under Section 9(g)(ii)(B) of this Confirmation,   Dealer may elect, in its commercially reasonable judgment, whether the   provisions of Section 12.2 of the Equity Definitions or   Section 9(g)(ii)(B) 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 Dealer may   elect, in its commercially reasonable judgment, Component Adjustment   (Calculation Agent Determination) for all or any portion of the Transaction.
    
	
 
    	
 
    	
 
    
	
Consequence of Tender   Offers:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Tender Offer:
    	
 
    	
Applicable; provided that   if an event occurs that constitutes both a Tender Offer under   Section 12.1(d) of
    

 

5

 

	
 
    	
 
    	
the Equity Definitions and Additional Termination   Event under Section 9(g)(ii)(A) of this Confirmation, Dealer may   elect, in its commercially reasonable judgment, whether the provisions of   Section 12.3 of the Equity Definitions or   Section 9(g)(ii)(A) will apply.
    
	
 
    	
 
    	
 
    
	
Share-for-Share:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Share-for-Other:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Share-for-Combined:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
 
    	
Modified Calculation Agent Adjustment as set forth   in Section 12.3(d) of the Equity Definitions; provided   that, in respect of an Announcement Event, (x) references to “Tender   Offer” shall be replaced by references to “Announcement Event” and references   to “Tender Offer Date” shall be replaced by references to “date of such   Announcement Event”, (y) the word “shall” in the second line shall be   replaced with “may” and the fifth and sixth lines shall be deleted in their   entirety and replaced with the words “effect on the Warrants of such   Announcement Event solely to account for changes in volatility, expected   dividends, stock loan rate or liquidity relevant to the Shares or the   Warrants”, and (z) for the avoidance of doubt, the Calculation Agent may   determine whether the relevant Announcement Event has had a material effect   on the Transaction (and, if so, adjust the terms of the Transaction   accordingly) on one or more occasions on or after the date of the   Announcement Event up to, and including, the Expiration Date, any Early   Termination Date and/or any other date of cancellation, it being understood   that any adjustment in respect of an Announcement Event shall take into   account any earlier adjustment relating to the same Announcement Event. An   Announcement Event shall be an “Extraordinary Event” for purposes of the   Equity Definitions, to which Article 12 of the Equity Definitions is   applicable.
    
	
 
    	
 
    	
 
    
	
Announcement Event:
    	
 
    	
(i) The public announcement by any entity of   (x) any transaction or event that, if completed, would constitute a   Merger Event or Tender Offer, (y) any potential acquisition or   disposition by Issuer and/or its subsidiaries where the aggregate   consideration exceeds 25% of the market capitalization of Issuer as of the   date of such announcement (an “Acquisition Transaction”)   or (z) the intention to enter into a Merger Event or Tender Offer or an   Acquisition Transaction, (ii) the public announcement by Issuer of an   intention to solicit or enter into, or to explore strategic alternatives or   other similar undertaking that may include, a Merger Event or Tender Offer or   an Acquisition Transaction or (iii) any subsequent public announcement   by any entity of a change to a transaction or intention that is the subject   of an announcement of the type described in clause (i) or (ii) of   this sentence (including, without limitation, a new announcement, whether or   not by the same party, relating to such a
    

 

6

 

	
 
    	
 
    	
transaction or intention or the announcement of a   withdrawal from, or the abandonment or discontinuation of, such a transaction   or intention), as determined by the Calculation Agent. For the avoidance of   doubt, the occurrence of an Announcement Event with respect to any   transaction or intention shall not preclude the occurrence of a later   Announcement Event with respect to such transaction or intention. For   purposes of this definition of “Announcement Event,” the remainder of the   definition of “Merger Event” in Section 12.1(b) of the Equity   Definitions following the definition of “Reverse Merger” therein shall be   disregarded.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that, in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions,   it will also constitute a Delisting if the Exchange is located in the United   States and the Shares are not immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors); if the Shares are   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Change in Law:
    	
 
    	
Applicable; provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “, or public announcement of, the formal or informal   interpretation”, (ii) replacing the word “Shares” where it appears in   clause (X) thereof with the words “Hedge Position” and   (iii) replacing the parenthetical beginning after the word “regulation”   in the second line thereof the words “(including, for the avoidance of doubt   and without limitation, (x) any tax law or (y) adoption,   effectiveness or promulgation of new regulations authorized or mandated by   existing statute)”.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Not Applicable
    
	
 
    	
 
    	
 
    
	
Insolvency Filing:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Disruption:
    	
 
    	
Applicable; provided   that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)                  Section 12.9(a)(v) of   the Equity Definitions is hereby amended by (a) inserting the following   words at the end of clause (A) thereof: “in the manner contemplated by   the Hedging Party on the Trade Date” and (b) inserting the following two   phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be
    

 

7

 

	
 
    	
 
    	
limited to, stock price   and volatility risk. And, for the further avoidance of doubt, any such   transactions or assets referred to in phrases (A) or (B) above must   be available on commercially reasonable pricing terms.”; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)               Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof, after the words “to terminate the Transaction”, the words “or a   portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
Increased Cost of   Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Loss of Stock Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Maximum Stock Loan   Rate:
    	
 
    	
100 basis points
    
	
 
    	
 
    	
 
    
	
Increased Cost of Stock   Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Initial Stock Loan   Rate:
    	
 
    	
0 basis points until November 1, 2023 and 25   basis points thereafter.
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
For all applicable Additional Disruption Events,   Dealer; provided, however, that all   calculations, adjustments, specifications, choices and determinations by   Dealer acting in its capacity as the Hedging Party shall be made in good   faith and in a commercially reasonable manner (it being understood that   Hedging Party will be subject to the requirements of the second paragraph   under “Calculation Agent” below).
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
For all applicable Extraordinary Events, Dealer; provided, however, that all calculations, adjustments,   specifications, choices and determinations by Dealer acting in its capacity   as the Determining Party shall be made in good faith and in a commercially   reasonable manner (it being understood that Determining Party will be subject   to the requirements of the second paragraph under “Calculation Agent” below).
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
4.                                      Calculation Agent.
    	
 
    	
Dealer; provided, however,   that all calculations, adjustments, specifications, choices and   determinations by the Calculation Agent shall be made in good faith and in a   commercially reasonable manner. The parties agree that they will work   reasonably to resolve any disputes as set forth in the immediately following   paragraph. In the case of any calculation, adjustment or determination by the   Hedging Party, the Determining Party or the Calculation Agent, following any   written request from Company, the Hedging Party, the Determining Party or 
    
	
 
    	
 
    	
 
    

 

8

 

	
 
    	
 
    	
the Calculation Agent, as the case may be, shall   promptly provide to Company a written explanation describing in reasonable   detail the basis for such calculation, adjustment or determination (including   any quotation, market data or information from internal or external sources   used in making such calculation, adjustment or determination, but without   disclosing any proprietary models or other information that may be   proprietary or confidential) and shall use commercially reasonable efforts to   provide such written explanation within five (5) Exchange Business Days   from the receipt of such request. If Company promptly disputes such   calculation, adjustment or determination in writing and provides reasonable   detail as to the basis for such dispute, the Calculation Agent shall, to the   extent permitted by applicable law, discuss the dispute with Company in good   faith.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Company:

 

Bank of America, N.A.
 New York, NY

Acct No.: 4427187942
 Bank Routing: 026-009-593

 

Account for delivery of Shares from Company:

 

To be provided by Company

 

(b)                                 Account for payments to Dealer:

 

Citibank NA New York

ABA: CITIUS33 (or ABA: 021000089)

F/O: Citibank New York

A/C: 00167679

Ref: NY Swap Operations

 

Account for delivery of Shares to Dealer:

 

To be provided by Dealer

 

6.                                      Offices.

 

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

 

(b)                                 The Office of Dealer for the Transaction is: New York

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Company:

 

KBR, Inc.

601 Jefferson Street, Suite 3400

Houston, Texas 77002

Attention:                                         Natasha Frausto, Vice President & Treasurer

 

9

 

Telephone No.:             713-753-2280

Facsimile No.:                  713-753-2517

 

With a copy to:

 

Mayer Brown LLP
 700 Louisiana, Suite 3400
 Houston, Texas 77002
 Attention:                                         Jeff M. Dobbs

Telephone No.:            713-238-2697

Facsimile No.:                  713-238-4697
 Email:                                                            jdobbs@mayerbrown.com

 

(b)                                 Address for notices or communications to Dealer:

 

Citibank, N.A.

Corporate Equity Derivatives

390 Greenwich Street, 1st Floor
 New York, NY 10013

Attn: Equity Derivatives

Telephone:  212-723-5770

Email:  eq.us.corporates.middle.office@citi.com

 

8.                                      Representations and Warranties of Company.

 

Each of the representations and warranties of Company set forth in Section 1 of the Purchase Agreement (the “Purchase Agreement”), dated as of November 12, 2018, between Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein except to the extent that such representation and warranties if not true or correct, would not have a material adverse effect on the power or ability of Company to execute and deliver this Confirmation or to perform their obligations hereunder.  Company hereby further represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(d), at all times until termination of the Transaction, that:

 

(a)                                 This Confirmation has been duly authorized, executed and delivered by Company and is enforceable against Company in accordance with its terms, except, in each case, as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

(b)                                 The execution, delivery and performance of this Confirmation and the consummation of the Transaction contemplated hereby have been duly authorized by all necessary corporate action by Company and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined in the Purchase Agreement) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of Company or any subsidiary thereof pursuant to the Agreements and Instruments (as defined in the Purchase Agreement), except for such conflicts, breaches, defaults or Repayment Events (as defined in the Purchase Agreement) or liens, charges or encumbrances that would not, singly or in the aggregate, result in a Material Adverse Effect (as defined in the Purchase Agreement), nor will such action result in any violation of (a) the provisions of the charter, by-laws or similar organizational document of Company or any of its subsidiaries or (b) any law, statute, rule, regulation, judgment, order, writ or decree of any Governmental Entity (as defined in the Purchase Agreement),  except, in the case of  clause (b)

 

10

 

above, for such violations that would not, singly or in the aggregate, result in a Material Adverse Effect (as defined in the Purchase Agreement).

 

(c)                                  No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity (as defined in the Purchase Agreement) is necessary or required for the performance by Company of its obligations hereunder or the consummation of the Transaction contemplated by this Confirmation or for the due execution, delivery and performance of this Confirmation, except such as have been already obtained and excluding any filing, authorization, approval, consent, license, order, registration, qualification or decree the failure of which to obtain or make would not have a Material Adverse Effect (as defined in the Purchase Agreement).

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights.

 

(e)                                  Company is not and, after consummation of 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.

 

(f)                                   Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).

 

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

 

(h)                                 No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

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

 

(j)                                    The assets of Company do not constitute “plan assets” under the Employee Retirement Income Security Act of 1974, as amended, the Department of Labor Regulations promulgated thereunder or similar law.

 

9.                                      Other Provisions.

 

(a)                                 Opinions.  Company shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (d) of this Confirmation, which shall be deemed delivered to Dealer hereunder if delivered to Dealer under the Purchase Agreement.  Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(b)                                 Repurchase Notices.  Company shall, on any day on which Company effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares on such day, subject to

 

11

 

any adjustments provided herein, is (i) less than 129.3 million (in the case of the first such notice) or (ii) thereafter more than 9.8 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually may become subject to, as a result of Company’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person, such Indemnified Person shall promptly notify Company in writing, and Company, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Company may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is 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 the Transaction.

 

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

 

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

 

(e)                                  Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party; provided, (A) Company 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 Company would have been required to pay to Dealer in the absence of such transfer and assignment, (B) Dealer shall cause the transferee to make such Payee Tax

 

12

 

Representations and to provide such tax documentation as may be reasonably requested by Company to permit Company to determine that results described in clause (A) will not occur upon or after such transfer and assignment, (C) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment and (D) Dealer shall provide written notice to Company following any such Transfer.  If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(i) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Company that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Company to the extent of any such performance.

 

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

 

13

 

in any quarterly dividend period of Company, then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend or lack thereof.  “Regular Dividend” shall mean for any calendar quarter, USD 0.08 for the first regular cash dividend or distribution on the Shares for which the Ex-Dividend Date falls within such calendar quarter, and zero for any other dividend or distribution on the Shares for which the Ex-Dividend Date falls within the same calendar quarter.

 

(g)                                  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 (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof 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 “a material”; and adding the phrase “or Warrants” at the end of the sentence.

 

(D)                               Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) inserting “(1)” immediately following the word “means” in the first line thereof and (2) inserting immediately prior to the semi-colon at the end of subsection (B) thereof the following words: “or (2) 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)                                 replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” 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), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging

 

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Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence.

 

(G)                               Section 12.9(b)(vi) 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 final sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.”

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its reasonable discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:

 

(A)                               A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its wholly owned subsidiaries and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Shares representing more than 50% of the voting power of the Shares.

 

(B)                               Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets, (II) any share exchange, consolidation or merger of Company pursuant to which the Shares will be converted into cash, securities or other property or assets or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s wholly owned subsidiaries.  Notwithstanding the foregoing, any transaction or transactions set forth in clause (A) above or this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares.

 

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(C)                               The stockholders of Company approve any plan or proposal for the liquidation or dissolution of Company.

 

(D)                               The Shares cease to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

 

(E)                                Default by Company or any of its “significant subsidiaries” (as such term is defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $100 million (or its foreign currency equivalent) in the aggregate of Company and/or any such significant subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity or (ii) constituting a failure to pay the principal or interest of any such indebtedness when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise.

 

(F)                                 A final judgment or judgments for the payment of $100 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against Company or any of its “significant subsidiaries” (as such term is defined in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act), which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished.

 

(G)                               Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(h)                                 No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral.  Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise.  For the avoidance of doubt and notwithstanding anything to the contrary provided in this Section 9(h), in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(i)                                     Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

(i)                                     If (a) 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 (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to all holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Company’s control, or (iii) an Event of Default in which Company is the Defaulting Party or a Termination Event in which Company is the

 

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Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Company’s control), and if Company would owe any amount to Dealer pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Company remakes the representation set forth in Section 8(g) as of the date of such election and (c) Dealer agrees, in its commercially reasonable discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

	
Share Termination   Alternative:
    	
 
    	
If applicable, Company shall deliver to Dealer the   Share Termination Delivery Property on the date (the “Share   Termination Payment Date”) on which the Payment Obligation would   otherwise be due pursuant to Section 12.7 or Section 12.9 of the   Equity Definitions or Section 6(d)(ii) of the Agreement, as   applicable, subject to Section 9(j)(i) below, in satisfaction,   subject to Section 9(j)(ii) below, of the relevant Payment   Obligation, in the manner reasonably requested by Dealer free of payment.
    
	
 
    	
 
    	
 
    
	
Share Termination   Delivery Property:
    	
 
    	
A number of Share Termination Delivery Units, as   calculated by the Calculation Agent, equal to the relevant 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 (without   giving effect to any discount pursuant to Section 9(j)(i)).
    
	
 
    	
 
    	
 
    
	
Share Termination Unit   Price:
    	
 
    	
The value to Dealer of property contained in one   Share Termination Delivery Unit on the date such Share Termination Delivery   Units are to be delivered as Share Termination Delivery Property, as   determined by the Calculation Agent in its discretion by commercially   reasonable means. In the case of a Private Placement of Share Termination   Delivery Units that are Restricted Shares (as defined below), as set forth in   Section 9(j)(i) below, the Share Termination Unit Price shall be   determined by the discounted price applicable to such Share Termination   Delivery Units. In the case of a Registration Settlement of Share Termination   Delivery Units that are Restricted Shares (as defined below) as set forth in   Section 9(j)(ii) below, notwithstanding the foregoing, the Share   Termination
    

 

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Unit Price shall be the Settlement Price on the   Merger Date, Tender Offer Date, Announcement Date (in the case of a   Nationalization, Insolvency or Delisting), Early Termination Date or date of   cancellation, as applicable. The Calculation Agent shall notify Company of   the Share Termination Unit Price at the time of notification of such Payment   Obligation to Company or, if applicable, at the time the discounted price   applicable to the relevant Share Termination Units is determined pursuant to   Section 9(j)(i).
    
	
 
    	
 
    	
 
    
	
Share Termination   Delivery Unit:
    	
 
    	
One Share or, if the Shares have changed into cash   or any other property or the right to receive cash or any other property as   the result of a Nationalization, Insolvency or Merger Event (any such   cash or other property, the “Exchange Property”),   a unit consisting of the type and amount of Exchange 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 or Merger Event. If such   Nationalization, Insolvency or Merger Event involves a choice of   Exchange Property 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 and 9.12 (as modified above) of the   Equity Definitions will be applicable, except that all references in such   provisions to “Physically-settled” shall be read as references to “Share   Termination Settled” and all references to “Shares” shall be read as   references to “Share Termination Delivery Units”. “Share Termination Settled”   in relation to the Transaction means that the Share Termination Alternative   is applicable to the Transaction.
    

 

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

 

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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 remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants.  The Calculation Agent shall make reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.

 

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

 

(ii)                                  If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(i) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of

 

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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).  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following such resale 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 such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares.  If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)                               Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) 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) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or use its best efforts to cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). 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.

 

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

 

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

 

(l)                                     Share Deliveries. 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

 

20

 

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.

 

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

 

(n)                                 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.

 

(o)                                 Maximum Share Delivery.

 

(i)                                     Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than 8,231,180 (the “Maximum Number of Shares”) to Dealer in connection with the Transaction.

 

(ii)                                  In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because (x) the number of Shares or Restricted Shares to be delivered would require the approval of Company’s shareholders (as required by Rule 312.03 of the New York Stock Exchange Rules (“Rule 312.03”) or (y) Company has insufficient authorized but unissued Shares that are not reserved for other transactions (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(o)(ii), when, and to the extent that, (1) in the case of (x), Company shall have obtained either such required shareholder approval under Rule 312.03 or a waiver from the New York Stock Exchange, waiving the application of Rule 312.03 to Company’s issuance of Shares or Restricted Shares, and (2) in the case of (y), (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(o)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  To the extent Company’s issuance of Shares or Restricted Shares requires the approval of Company’s shareholders as required by Rule 312.03, Company shall use its reasonable best efforts to obtain either such required shareholder approval or a waiver from the New York Stock Exchange, waiving the application of Rule 312.03 to Company’s issuance of Shares or Restricted Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

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(p)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in good faith and in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer; provided that no such Expiration Date or other date of valuation, payment or delivery may be postponed or added more than 80 Exchange Business Days after the original Exercise Date or date of valuation, payment or delivery, as the case may be.

 

(q)                                 Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Company of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

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

 

(s)                                   Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(t)                                    Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction;  (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Prices, each in a manner that may be adverse to Company.

 

(u)                                 Early Unwind. In the event the sale of the “Initial Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers for any reason, or Company fails to

 

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deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date.  Each of Dealer and Company represents and acknowledges to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

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

 

(w)                               Listing of Warrant Shares.  Company shall have submitted an application for the listing of the Warrant Shares on the Exchange, and such application and listing shall have been approved by the Exchange, subject only to official notice of issuance, in each case, on or prior to the Premium Payment Date.  Company agrees and acknowledges that such submission and approval shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(x)                                 Certain Tax Considerations.

 

(i)                                     Dealer makes the following representations to Company: it is a national banking association organized under the laws of the United States and its U.S. taxpayer identification number is 13-5266470. It is “exempt” within the meaning of U.S. Treasury Regulations Sections 1.6041-3(p) and 1.6049-4(c) from information reporting on Form 1099 and backup withholding.

 

(ii)                                  Dealer agrees to deliver to Company a valid, accurate and complete U.S. Internal Revenue Service Form W-9 (or any successor form) and any required attachments thereto (A) upon execution of this Confirmation, (B) promptly upon reasonable demand by Company and (C) promptly upon learning that any Form W-9 (or any successor thereto) previously provided by Dealer has become obsolete, invalid or incorrect.

 

(iii)                               Company makes the following representation to Dealer: it is a corporation established under the laws of the State of Delaware and is a “United States person” (as that term is defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended). Company agrees to deliver to Dealer a valid, accurate and complete U.S. Internal Revenue Service Form W-9 (or any successor form) and any required attachments thereto (A) upon execution of this Confirmation, (B) promptly upon reasonable demand by Dealer and (C) promptly upon learning that any Form W-9 (or any successor thereto) previously provided by Company has become obsolete, invalid or incorrect.

 

(y)                                 Withholding Tax imposed on payments to non-U.S. counterparties under the United States Foreign Account Tax Compliance Act.  “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax

 

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the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

(z)                                  871(m).  The parties agree that the definitions and provisions contained in the 2015 Section 871(m) Protocol, as published by ISDA, are incorporated into and apply to the Agreement solely for purposes of this Confirmation as if set forth in full herein.

 

(aa)                          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 cash settle the Transaction, except in circumstances where cash settlement is within Company’s control (including, without limitation, where Company elects to deliver or receive cash, or where Company has made Private Placement Settlement unavailable due to the occurrence of events within its control) or in those circumstances in which holders of Shares would also receive cash.

 

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Company hereby agrees to check this Confirmation and to confirm that the foregoing correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Dealer the fully executed Confirmation via facsimile or e-mail.

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
CITIBANK, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James Heathcote
    
	
 
    	
 
    	
Name:   James Heathcote
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
Agreed   and Accepted By:
    	
 
    
	
 
    	
 
    
	
KBR, INC.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Stuart J. B. Bradie
    	
 
    	
 
    
	
 
    	
Name:
    	
Stuart   J. B. Bradie
    	
 
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    	
 
    
						

 

[Signature Page to Base Warrant Confirmation — Citibank, N.A.]

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