Document:

exv10w2

 

Exhibit 10.2

   
                                                                   October 30,
 2007

Harman International Industries, Incorporated

1101 Pennsylvania Ave., N.W., Suite 1010

Washington, D.C. 20004

     Ladies and Gentlemen:

     The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the Transaction entered into between J.P. Morgan Securities Inc., as agent for
JPMorgan Chase Bank, National Association, London Branch (the “Seller”), and Harman International
Industries, Incorporated, a Delaware corporation (the “Purchaser”), on the Trade Date specified
below (the “Transaction”). This Confirmation constitutes a “Confirmation” as referred to in the
Agreement specified below.

     This Confirmation evidences a complete and binding agreement between the Seller and the
Purchaser 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 the Seller and the Purchaser had executed an agreement in
such form (but without any Schedule except for the election of the laws of the State of New York as
the governing law) on the Trade Date. In the event of any inconsistency between provisions of the
Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction
to which this Confirmation relates. The parties hereby agree that no Transaction other than the
Transaction to which this Confirmation relates shall be governed by the Agreement.

ARTICLE 1

Definitions

     Section 1.01 . Definitions. (a) As used in this Confirmation, the following terms shall have
the following meanings:

     “10b-18 VWAP” means, (A) for any Trading Day described in clause (x) of the definition of
Trading Day hereunder, the volume-weighted average price at which the Common Stock trades as
reported in the composite transactions for the Exchange (or, if applicable, the Successor Exchange
on which the Common Stock has been listed in accordance with    Section 7.01(c)), on such Trading
Day, excluding (i) trades that do not settle regular way, (ii) opening (regular way) reported
trades in the consolidated system on such Trading Day, (iii) trades that occur in the last ten
minutes before the scheduled close of the primary trading session on the Exchange (or, as
applicable, the Successor Exchange) on such Trading Day and ten minutes before the scheduled close
of the primary trading in the market where the trade is effected, and (iv) trades on such Trading
Day that do not satisfy the requirements of Rule 10b-18(b)(3), as determined in good faith by the
Calculation Agent, or (B) for any Trading Day that is described in clause (y) of the definition of
Trading Day hereunder, an amount determined in good faith by the Calculation Agent as 10b-18 VWAP.
The Purchaser acknowledges that the Seller may refer to the Bloomberg Page “HAR.N <Equity>
AQR SEC” (or any successor thereto), in its judgment, for such Trading Day to determine the 10b-18
VWAP.

     “Additional Termination Event” has the meaning set forth in    Section 7.01.

     “Agreement” has the meaning set forth in the second paragraph of this Confirmation.

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

Registered as a branch in England & Wales branch No. BR000746.

Registered Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

     “Affected Party” has the meaning set forth in Section 14 of the Agreement.

     “Affected Transaction” has the meaning set forth in Section 14 of the Agreement.

     “Affiliated Purchaser” means any “affiliated purchaser” (as such term is defined in Rule
10b-18(a)(3)) of the Purchaser.

     “Alternative Termination Delivery Unit” means (i) in the case of a Termination Event (other
than a Potential Merger Event or Nationalization) or Event of Default (as defined in the
Agreement), one share of Common Stock and (ii) in the case of a Potential Merger Event or
Nationalization, a unit consisting of the number or amount of each type of property received by a
holder of one share of Common Stock in such Potential Merger Event or Nationalization; provided
that if such Potential Merger Event involves a choice of consideration to be received by holders of
the Common Stock, an Alternative Termination Delivery Unit shall be deemed to include the amount of
cash received by a holder who had elected to receive the maximum possible amount of cash as
consideration for his shares.

     “Bankruptcy Code” has the meaning set forth in    Section 9.07.

     “Business Day” means any day on which the Exchange is open for trading.

     “Calculation Agent” means the Seller.

     “Capped Delivery Shares” means, for any date, (i) 11,250,000 shares of Common Stock minus (ii)
the number of shares of Common Stock delivered by the Seller to the Purchaser in respect of this
Transaction on or prior to such date, subject to appropriate adjustments pursuant to    Section 8.01.

     “Cash Distribution” has the meaning set forth in    Section 6.06.

     “Cash Distribution Amount” means, for any “Reference Period” set forth in    Section 7.01(f),
the amount specified in    Section 7.01(f) for such Reference Period.

     “Common Stock” has the meaning set forth in    Section 2.01 subject to adjustment in accordance
with    Section 8.02(a).

     “Communications Procedures” has the meaning set forth in Annex B hereto.

     “Confirmation” has the meaning set forth in the first paragraph of this letter agreement.

     “Contract Period” means the period commencing on and including the Trade Date and ending on
and including the date all payments or deliveries of shares of Common Stock or Alternative
Termination Delivery Units pursuant to    Section 3.01 or    Section 7.03 have been made.

     “De-Listing” has the meaning set forth in    Section 7.01(c).

     “Determination” has the meaning set forth in    Section 8.03.

     “Distribution Termination Event” has the meaning set forth in    Section 7.01(f).

     “Early Termination Date” has the meaning set forth in Section 14 of the Agreement.

     “Event of Default” has the meaning set forth in Section 14 of the Agreement.

     “Exchange” means the New York Stock Exchange, or, if the New York Stock Exchange ceases to be
the principal market for the Common Stock (other than through circumstances resulting in
designation of a Successor Exchange), the principal market for the Common Stock, or any Successor
Exchange.

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     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Expected Trading Day” has the meaning set forth in Schedule A hereto.

     “Extraordinary Cash Dividend” means a cash dividend or distribution, or a portion thereof,
declared by the Purchaser on shares of Common Stock that is classified by the board of directors of
the Purchaser, in good faith without reference to this Transaction, as an “extraordinary” dividend,
expressed on a per share of Common Stock basis.

     “Indemnified Person” has the meaning set forth in    Section 9.02.

     “Indemnifying Party” has the meaning set forth in    Section 9.02.

     “Initial Purchase Commission” means the amount specified as such in Schedule B hereto.

     “Initial Purchase Price” has the meaning set forth in    Section 2.01.

     “Initial Settlement Date” has the meaning set forth in    Section 2.02.

     “Issuer” means the Purchaser, subject to adjustment in accordance with    Section 8.02(a).

     “Maximum Delivery Shares” means, for any date, (i) 37,500,000 shares of Common Stock, minus
(ii) the net number of shares of Common Stock delivered by the Purchaser to the Seller in respect
of this Transaction on or prior to such date, plus (iii) the net number of shares of Common Stock
delivered by the Seller to the Purchaser in respect of this Transaction on or prior to such date,
subject to appropriate adjustments pursuant to    Section 8.01.

     “Merger Event” means, in respect of any relevant Common Stock, (i) reclassification or change
of such Common Stock that results in a transfer of all of such Common Stock outstanding to another
entity or person, (ii) consolidation, amalgamation, merger or binding share exchange of the
Purchaser with or into another entity or person (other than a consolidation, amalgamation, merger
or binding share exchange in which the Purchaser is the continuing entity and which does not result
in a reclassification or change of all of such Common Stock outstanding).

     “Nationalization” has the meaning set forth in    Section 7.01(d).

     “New Shares” has the meaning set forth in    Section 8.02(a).

     “Number of Shares” has the meaning set forth in    Section 2.01.

     “Obligations” has the meaning set forth in    Section 9.02.

     “Payment Shares” has the meaning set forth in    Section 3.01(b).

     “Private Placement Agreement” has the meaning set forth in Annex A hereto.

     “Private Placement Price” has the meaning set forth in Annex A hereto.

     “Private Placement Procedures” has the meaning set forth in Annex A hereto.

     “Private Securities” has the meaning set forth in Annex A hereto.

     “Purchaser” has the meaning set forth in the first paragraph of this Confirmation.

     “Reference Period” means, for any corresponding “Cash Distribution Amount” specified in
   Section 7.01(f), the period specified as such in    Section 7.01(f) for such Cash Distribution
Amount.

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     “Regulation M” means Regulation M under the Exchange and Securities Acts.

     “Rule 10b-5” means Rule 10b-5 promulgated under the Exchange Act (or any successor rule
thereto).

     “Rule 10b5-1” means Rule 10b5-1 promulgated under the Exchange Act (or any successor rule
thereto)

     “Rule 10b-18” means Rule 10b-18 promulgated under the Exchange Act (or any successor rule
thereto).

     “Scheduled Trading Day” means each Scheduled Trading Day specified as such in Schedule A
hereto.

     “SEC” means the Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller” has the meaning set forth in the first paragraph hereto.

     “Seller Payment Share Purchase Period” has the meaning set forth in    Section 3.01(d).

     “Seller Termination Share Purchase Period” has the meaning set forth in    Section 7.03.

     “Settlement Amount” means an amount equal to (i) the Valuation Price minus (ii) the Initial
Purchase Price.

     “Settlement Commission” means the amount specified as such in Schedule B hereto.

     “Settlement Date” means the third Business Day following the Valuation Completion Date;
provided, however, that if the Purchaser elects pursuant to    Section 3.01(b) to deliver Payment
Shares, the Settlement Date shall be the Trading Day immediately following the day on which the
Seller informs the Purchaser, pursuant to Annex A hereto, of the number of Payment Shares required
to be delivered pursuant to    Section 3.01(b).

     “Share De-listing Event” has the meaning set forth in    Section 7.01(c).

     “Successor Exchange” has the meaning set forth in    Section 7.01(c).

     “Termination Amount” has the meaning set forth in    Section 7.02(a).

     “Termination Event” has the meaning set forth in Section 14 of the Agreement.

     “Termination Notice Day” has the meaning set forth in    Section 7.02(a).

     “Termination Price” means the value of an Alternative Termination Delivery Unit to the Seller
(determined as provided in Annex A hereto).

     “Termination Settlement Date” has the meaning set forth in    Section 7.03(a).

     “Trade Date” has the meaning set forth in    Section 2.01.

     “Trading Day” means (x) a Scheduled Trading Day during which (i) trading of any securities of
the Purchaser on any national securities exchange has not been suspended, (ii) there has not been,
in the Seller’s judgment, a material limitation in the trading of Common Stock or any options
contract or futures contract related to the Common Stock, and (iii) there has been no suspension
pursuant to    Section 4.02 of this Confirmation, or (y) a Scheduled Trading Day that,
notwithstanding the occurrence of events contemplated in clauses (i), (ii) and (iii) of this
definition, the Calculation Agent reasonably determines to be a Trading Day.

     “Transaction” has the meaning set forth in the first paragraph of this Confirmation.

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     “Valuation Completion Date” means the 30th Trading Day following the Trade Date.

     “Valuation Period” means the period comprising every Trading Day commencing on and including
the first Trading Day following the Trade Date and ending on and including the Valuation Completion
Date.

     “Valuation Price” means the product of (i) the Number of Shares and (ii) the arithmetic
average of the 10b-18 VWAP for each of the Trading Days in the Valuation Period minus the VWAP
Discount, as determined by the Calculation Agent in its sole reasonable judgment.

     “VWAP Discount” means the amount specified as such in Schedule B hereto.

ARTICLE 2

Purchase of the Stock

     Section 2.01 . Purchase of the Stock. Subject to the terms and conditions of this
Confirmation, the Purchaser agrees to purchase from the Seller, and the Seller agrees to sell to
the Purchaser, on October 30, 2007 or on such other Business Day as the Purchaser and the Seller
shall otherwise agree (the “Trade Date”), 1,790,831 shares (the “Number of Shares”) of the
Purchaser’s common stock, par value $0.01 per share (“Common Stock”), for a purchase price equal to
the product of $83.76 and the Number of Shares (the “Initial Purchase Price”); provided that if the
Seller is unable to borrow or otherwise acquire in conjunction with an economically short position
on customary terms a number of shares of Common Stock equal to the Number of Shares for delivery to
the Purchaser on the Initial Settlement Date, the Number of Shares shall be reduced to such number
of shares of Common Stock as the Seller is able to borrow on customary terms or otherwise acquire
in conjunction with an economically short position on customary terms. The Initial Purchase Price
shall be subject to adjustment and such adjusted amounts will be payable as provided in    Article 3
hereof.

     Section 2.02 . Delivery and Payments. On the first Business Day immediately following the
Trade Date (such day, the “Initial Settlement Date”), the Seller shall deliver the Number of Shares
to the Purchaser, upon payment by the Purchaser of (i) an amount equal to the Initial Purchase
Price to the Seller and (ii) the Initial Purchase Commission to the Seller, in connection with the
Purchaser’s purchase of the Number of Shares. Such delivery and payment shall be effected in
accordance with the Seller’s customary procedures.

     Section 2.03 . Conditions to Seller’s Obligations. The Seller’s obligation to deliver the
Number of Shares to the Purchaser on the Initial Settlement Date is subject to the condition that
the representations and warranties made by the Purchaser in the Agreement and herein shall be true
and correct as of the date hereof and the Initial Settlement Date.

ARTICLE 3

Adjustment of Initial Purchase Price

     Section 3.01 . Purchase Price Adjustment. (a) As an adjustment to the Initial Purchase
Price,

     (i) if the Settlement Amount is greater than zero, the Purchaser shall pay to the
Seller such Settlement Amount in the manner provided in clause (c) or (e), as the case may
be, of this    Section 3.01; or

     (ii) if the Settlement Amount is less than zero, the Seller shall pay to the Purchaser
the absolute value of such Settlement Amount in the manner provided in clause    (d) or    (e),
as the case may be, of this    Section 3.01.

     (b) Payment of the Settlement Amount shall be in cash or validly issued shares of Common Stock
(“Payment Shares”), as the Purchaser shall elect, which binding election shall be made no later
than the second Business Day following the Valuation Completion Date and communicated to the Seller
in writing; provided that if the Purchaser fails to make such an election in the manner
contemplated hereunder, the Purchaser shall be deemed to have elected settlement in cash; and
provided further that the Purchaser shall not have the right to elect delivery of

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the Settlement Amount or receipt of the absolute value of the Settlement Amount in Payment
Shares pursuant to this    Section 3.01 if:

     (i) the representations and warranties made by the Purchaser to the Seller in    Section
5.01 are not true and correct in all material respects as of the date the Purchaser makes
such election; or

     (ii) in the event the Settlement Amount shall be payable by the Purchaser to the
Seller, the Purchaser has taken any action that would make unavailable either (A) the
exemption set forth in Section 4(2) of the Securities Act for the sale of any Payment Shares
by the Purchaser to the Seller or (B) an exemption from the registration requirements of the
Securities Act reasonably acceptable to the Seller for resales of Payment Shares by the
Seller.

     For the avoidance of doubt, upon the Purchaser’s making an election to receive or to deliver
Payment Shares pursuant to this    Section 3.01(b), the Purchaser shall be deemed to make the
representations and warranties in    Section 5.01 hereof as if made on the date of the Purchaser’s
election.

     (c) Subject to    Section 3.01(b), if the Settlement Amount shall be payable by the Purchaser to
the Seller:

     (i) Notwithstanding any election by the Purchaser to make payment in Payment Shares, at
any time prior to the time the Seller (or any affiliate of the Seller) has contracted to
resell such Payment Shares, the Purchaser may deliver in lieu of such Payment Shares an
amount in cash equal to the Settlement Amount, in the manner set forth in    Section 3.01(e).

     (ii) If the Purchaser elects to pay any Settlement Amount in Payment Shares, then on
the Settlement Date, the Purchaser shall deliver to the Seller a number of Payment Shares
equal to the quotient of (A) such Settlement Amount divided by (B) the Private Placement
Price (determined in accordance with the Private Placement Procedures contained in Annex A
hereto).

     (d) Subject to    Section 3.01(b), if the absolute value of the Settlement Amount shall be
payable by the Seller to the Purchaser and the Purchaser elects to receive the absolute value of
the Settlement Amount in Payment Shares, then (i) the Seller shall, beginning on the first Trading
Day following the later of (A) the Valuation Completion Date or (B) the date that Purchaser
communicates its election to the Seller, continuing on each succeeding Trading Day and ending on
the Trading Day when the Seller shall have satisfied its obligations under this clause (d) (the
“Seller Payment Share Purchase Period”), purchase (subject to the provisions of    Section 4.01 and
   Section 4.02 hereof) shares of Common Stock with an aggregate value equal to such Settlement
Amount (which value shall, for each such share, be deemed to equal (x) 10b-18 VWAP on the Trading
Day on which such share was purchased by the Seller plus (y) the Settlement Commission and which
for the avoidance of doubt shall not be determined on the basis of the Seller’s actual purchase
price) and (ii) the Seller shall deliver such shares of Common Stock to the Purchaser on the
settlement dates relating to such purchases.

     (e) If the Purchaser elects to receive the absolute value of the Settlement Amount or to pay
the Settlement Amount in cash, then payment of such Settlement Amount shall be made by wire
transfer of immediately available U.S. dollar funds on the Settlement Date.

     Section 3.02 . Private Placement Procedures. If the Purchaser elects to deliver Payment
Shares pursuant to    Section 3.01(b) or elects to deliver Alternative Termination Delivery Units
pursuant to    Section 7.02(a), the Private Placement Procedures contained in Annex A hereto shall
apply.

     Section 3.03 . Continuing Obligation to Deliver Shares. (a) If at any time, as a result of
provisions limiting deliveries of shares of Common Stock to the number of Maximum Delivery Shares,
the Purchaser fails to deliver to the Seller any shares of Common Stock, the Purchaser shall, to
the extent that the Purchaser has at any time thereafter authorized but unissued shares of Common
Stock not reserved for other purposes, promptly notify the Seller thereof and deliver to the Seller
a number of shares of Common Stock not previously delivered as a result of such provisions.

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     (b) The Purchaser agrees to use its best efforts to cause the number of authorized but
unissued shares of Common Stock to be increased, if necessary, to an amount sufficient to permit
the Purchaser to fulfill its obligations under this    Section 3.03.

ARTICLE 4

Market Transactions

     Section 4.01 . Transactions by the Seller. (a) The parties agree and acknowledge that:

     (i) During the Valuation Period, any Seller Payment Share Purchase Period and any
Seller Termination Share Purchase Period, the Seller (or its agent or affiliate) may effect
transactions in shares of Common Stock in connection with this Confirmation. The timing of
such transactions by the Seller, the price paid or received per share of Common Stock
pursuant to such transactions and the manner in which such transactions are made, including,
without limitation, whether such transactions are made on any securities exchange, through
any interdealer quotation system or alternative trading system or privately, shall be within
the sole judgment of the Seller; provided that the Seller shall use good faith efforts to
make all purchases of Common Stock in a manner that would comply with the limitations set
forth in clauses (b)(2), (b)(3), (b)(4) and (c) of Rule 10b-18 as if such rule were
applicable to such purchases.

     (ii) The Purchaser shall, at least one day prior to the first day of the Valuation
Period, notify the Seller of the total number of shares of Common Stock purchased in Rule
10b-18 purchases of blocks pursuant to the once-a-week block exception set forth in Rule
10b-18(b)(4) by or for the Purchaser or any of its Affiliated Purchasers during each of the
four calendar weeks preceding such day and during the calendar week in which such day occurs
(“Rule 10b-18 purchase” and “blocks” each being used as defined in Rule 10b-18), which
notice shall be substantially in the form set forth as Exhibit A hereto.

     (b) The Purchaser acknowledges and agrees that (i) all transactions effected pursuant to
   Section 4.01 hereunder shall be made in the Seller’s sole judgment and for the Seller’s own
account and (ii) the Purchaser does not have, and shall not attempt to exercise, any influence over
how, when or whether to effect such transactions, including, without limitation, the price paid or
received per share of Common Stock pursuant to such transactions or whether such transactions are
made on any securities exchange, through any interdealer quotation system or alternative trading
system or privately. It is the intent of the Seller and the Purchaser that this Transaction comply
with the requirements of Rule 10b5-1(c) and that this Confirmation shall be interpreted to comply
with the requirements of Rule 10b5-1(c)(1)(i) and the Seller shall take no action that results in
the Transaction not so complying with such requirements.

     (c) Notwithstanding anything to the contrary in this Confirmation, the Purchaser acknowledges
and agrees that, on any day, the Seller shall not be obligated to deliver or receive any shares of
Common Stock to or from the Purchaser and the Purchaser shall not be entitled to receive any shares
of Common Stock from the Seller on such day, to the extent (but only to the extent) that either
immediately before or after such transactions the Seller’s ultimate parent entity would directly or
indirectly beneficially own (as such term is defined for purposes of Section 13(d) of the Exchange
Act) at any time on such day in excess of 4.0% of the outstanding shares of Common Stock. Any
purported receipt of shares of Common Stock shall be void and have no effect to the extent (but
only to the extent) that after any receipt of such shares of Common Stock the Seller’s ultimate
parent entity would directly or indirectly so beneficially own in excess of 4.0% of the outstanding
shares of Common Stock. If, on any day, any delivery or receipt of shares of Common Stock by the
Seller is not effected, in whole or in part, as a result of this provision, the Seller’s and
Purchaser’s respective obligations to make or accept such receipt or delivery shall not be
extinguished and such receipt or delivery shall be effected over time as promptly as the Seller
determines, in the reasonable determination of the Seller, that after such receipt or immediately
prior to such delivery its ultimate parent entity would not directly or indirectly beneficially own
in excess of 4.0% of the outstanding shares of Common Stock.

     Section 4.02 . Adjustment of Transaction for Securities Laws. (a) If, based on the advice of
counsel, Seller reasonably determines that, on any Trading Day, Seller’s trading activity in order
to manage its economic hedge in respect of the Transaction would not be advisable in respect of
applicable securities laws, then Seller may extend the

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Valuation Completion Date, modify the Valuation Period (subject to the penultimate sentence of
   Section 8.01), or otherwise adjust the terms of the Transaction in its good faith reasonable
discretion to ensure Seller’s compliance with such laws and to preserve the fair value of the
Transaction to the Seller. For the purposes of this    section, the fair value of the Transaction to
the Seller shall be determined solely in accordance with    Section 8.03    of this Confirmation. The
Seller shall notify the Purchaser of the exercise of the Seller’s rights pursuant to this    Section
4.02(a) upon such exercise.

     (b) The Purchaser agrees that, during the Contract Period, neither the Purchaser nor any of
its affiliates or agents shall make any distribution (as defined in Regulation M) of Common Stock,
or any security for which the Common Stock is a reference security (as defined in Regulation M) or
take any other action that would, in the view of the Seller, preclude purchases by the Seller of
the Common Stock or cause the Seller to violate any law, rule or regulation with respect to such
purchases.

     Section 4.03 . Purchases of Common Stock by the Purchaser. During the Contract Period,
without the prior written consent of the Seller, the Purchaser shall not, and shall cause its
affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or
indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or commence any tender
offer relating to, any shares of Common Stock (or equivalent interest, including a unit of
beneficial interest in a trust or limited partnership or a depository share) or any security
convertible into or exchangeable for shares of Common Stock except for the other accelerated share
repurchase transaction entered into by the Purchaser on the date hereof; provided, however, that
without the prior written consent of the Seller, (x) non-10b-18 purchases which comply with the
provisions of Rule 10b-18(a)(13)(ii) may be effected for an issuer plan by an agent independent of
the Purchaser; (y) the Purchaser’s affiliates who are not “affiliated purchasers” under Rule 10b-18
may make purchases pursuant to the exercise of stock options under the Purchaser’s 1992 Incentive
Plan and 2002 Stock Option and Incentive Plan; and (z) the Purchaser may continue to purchase
shares of Common Stock pursuant to its previously announced stock buyback program, so long as (i)
on any Scheduled Trading Day such purchases are conducted solely through the same broker or dealer
used by the Seller in effecting purchases of Common Stock in connection with this Confirmation;
(ii) on any Trading Day during the Valuation Period, such purchases do not exceed 5% of the ADTV
(as defined in Rule 10b-18(a)(1)) on such Trading Day, and (iii) such purchases otherwise comply
with other provisions of Rule 10b-18 and other applicable laws, rules and regulations.

ARTICLE 5

Representations, Warranties and Agreements

     Section 5.01 . Repeated Representations, Warranties and Agreements of the Purchaser. The
Purchaser represents and warrants to, and agrees with, the Seller, on the date hereof and on any
date pursuant to which the Purchaser makes an election to receive or deliver Payment Shares
pursuant to    Section 3.01 or Alternative Termination Delivery Units pursuant to    Section 7.03,
that:

     (a) Disclosure; Compliance with Laws. The reports and other documents filed by the Issuer
with the SEC pursuant to the Exchange Act when considered as a whole (with the more recent such
reports and documents deemed to amend inconsistent statements contained in any earlier such reports
and documents), do not contain any untrue statement of a material fact or any omission of a
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading. The Purchaser is not in
possession of any material nonpublic information regarding the Issuer or the Common Stock.

     (b) Rule 10b5-1. The Purchaser acknowledges that (i) the Purchaser does not have, and shall
not attempt to exercise, any influence over how, when or whether to effect purchases of Common
Stock by the Seller (or its agent or affiliate) in connection with this Confirmation and (ii) the
Purchaser is entering into the Agreement and this Confirmation in good faith and not as part of a
plan or scheme to evade compliance with federal securities laws including, without limitation, Rule
10b-5. The Purchaser also acknowledges and agrees that any amendment, modification, waiver or
termination of this Confirmation must be effected in accordance with the requirements for the
amendment or termination of a “plan” as defined in Rule 10b5-1(c). Without limiting the generality
of the foregoing, any such amendment, modification, waiver or termination shall be made in good
faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and no
amendment, modification or waiver shall be made at

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any time at which the Purchaser or any officer or director of the Purchaser is aware of any
material nonpublic information regarding the Issuer or the Common Stock.

     (c) Nature of Shares Delivered. Any shares of Common Stock or Alternative Termination
Delivery Units delivered to the Seller pursuant to this Confirmation, when delivered, shall have
been duly authorized and shall be duly and validly issued, fully paid and nonassessable and free of
preemptive or similar rights, and such delivery shall pass title thereto free and clear of any
liens or encumbrances.

     (d) No Manipulation. The Purchaser is not entering into this Confirmation to create actual or
apparent trading activity in the Common Stock (or any security convertible into or exchangeable for
Common Stock) or to manipulate the price of the Common Stock (or any security convertible into or
exchangeable for Common Stock).

     (e) Regulation M. The Issuer is not engaged in a distribution, as such term is used in
Regulation M, that would preclude purchases by the Purchaser or the Seller of the Common Stock or
cause the Seller to violate any law, rule or regulation with respect to such purchases.

     (f) Board Authorization. The Purchaser is entering into this Transaction in connection with
its share repurchase program, which was approved by its board of directors and publicly disclosed,
solely for the purposes stated in such board resolution and public disclosure. There is no
internal policy of the Purchaser, whether written or oral, that would prohibit the Purchaser from
entering into any aspect of this Transaction, including, but not limited to, the purchases of
shares of Common Stock to be made pursuant hereto.

     (g) Due Authorization and Good Standing. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. This Confirmation
has been duly authorized, executed and delivered by the Purchaser and (assuming due authorization,
execution and delivery thereof by the Seller) constitutes a valid and legally binding obligation of
the Purchaser. The Purchaser has all corporate power to enter into this Confirmation and to
consummate the transactions contemplated hereby and to purchase the Common Stock and deliver any
Payment Shares in accordance with the terms hereof.

     (h) Certain Transactions. There has not been any public announcement (as defined in Rule
165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a
recapitalization relating to the Issuer that would fall within the scope of Rule 10b-18(a)(13)(iv).

     Section 5.02 . Initial Representations, Warranties and Agreements of the Purchaser. The
Purchaser represents and warrants to, and agrees with the Seller, as of the date hereof, that:

     (a) Solvency. The assets of the Purchaser at their fair valuation exceed the liabilities of
the Purchaser, including contingent liabilities; the capital of the Purchaser is adequate to
conduct the business of the Purchaser and the Purchaser has the ability to pay its debts and
obligations as such debts mature and does not intend to, or does not believe that it will, incur
debts beyond its ability to pay as such debts mature.

     (b) Required Filings. The Purchaser has made, and will use its reasonable best efforts to
make, all filings required to be made by it with the SEC, any securities exchange or any other
regulatory body with respect to the Transaction contemplated hereby.

     (c) No Conflict. The execution and delivery by the Purchaser of, and the performance by the
Purchaser of its obligations under, this Confirmation and the consummation of the transactions
herein contemplated do not conflict with or violate (i) any provision of the certificate of
incorporation, by-laws or other constitutive documents of the Purchaser, (ii) any statute or order,
rule, regulation or judgment of any court or governmental agency or body having jurisdiction over
the Purchaser or any of its subsidiaries or any of their respective assets or (iii) any contractual
restriction binding on or affecting the Purchaser or any of its subsidiaries or any of its assets.

     (d) Consents. All governmental and other consents that are required to have been obtained by
the Purchaser with respect to performance, execution and delivery of this Confirmation have been
obtained and are in full force and effect and all conditions of any such consents have been
complied with.

9

 

     (e) Investment Company Act. The Purchaser is not and, after giving effect to the transactions
contemplated in this Confirmation, 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) Commodity Exchange Act. The Purchaser is an “eligible contract participant”, as such term
is defined in Section 1a(12) of the Commodity Exchange Act, as amended.

     Section 5.03 . Additional Representations, Warranties and Agreements. The Purchaser and the
Seller represent and warrant to, and agree with, each other that:

     (a) Non-Reliance. Each party has entered into this Transaction solely in reliance on its own
judgment. Neither party has any fiduciary obligation to the other party relating to this
Transaction. In addition, neither party has held itself out as advising, or has held out any of
its employees or agents as having the authority to advise, the other party as to whether or not the
other party should enter into this Transaction, any subsequent actions relating to this Transaction
or any other matters relating to this Transaction. Neither party shall have any responsibility or
liability whatsoever in respect of any advice of this nature given, or views expressed, by it or
any such persons to the other party relating to this Transaction, whether or not such advice is
given or such views are expressed at the request of the other party. The Purchaser has conducted
its own analysis of the legal, accounting, tax and other implications of this Transaction and
consulted such advisors, accountants and counsel as it has deemed necessary.

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

     Section 5.04 . Representations and Warranties of the Seller. The Seller represents and
warrants to the Purchaser that:

     (a) Due Authorization. This Confirmation has been duly authorized, executed and delivered by
the Seller and (assuming due authorization, execution and delivery thereof by the Purchaser)
constitutes a valid and legally binding obligation of the Seller. The Seller has all corporate
power to enter into this Confirmation and to consummate the transactions contemplated hereby and to
deliver the Common Stock in accordance with the terms hereof.

     (b) Right to Transfer. The Seller will, at the Initial Settlement Date, have the free and
unqualified right to transfer the Number of Shares of Common Stock to be sold by the Seller
pursuant to    Section 2.01 hereof, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind.

     (c) No Termination Event. No Termination Event with respect to Seller has occurred and is
continuing and no such event or circumstance would occur as a result of its entering into or
performing its obligations under this Confirmation.

     (d) Investment Company Act. Seller is not, and after giving effect to the Transaction
contemplated in this Confirmation, will not be required to register as an “investment company” as
such term is defined in the Investment Company Act of 1940, as amended.

     (e) Tax Matters. The Seller represents and warrants to Purchaser that, for U.S. federal
income tax purposes: (i) it is a beneficial owner of each payment received or to be received under
this Confirmation; and (ii) it is a “United States person” as defined in Section 7701(a)(30) of the
Internal Revenue Code. Any successor entity to Seller shall make such representations and provide
such documents as are necessary to ensure that any payments made pursuant to this transaction are
free of U.S. withholding tax, but only to the extent that it is reasonably feasible, legally and
commercially, to do so.

10

 

ARTICLE 6

Additional Covenants

     Section 6.01 . Purchaser’s Further Assurances. The Purchaser hereby agrees with the Seller
that the Purchaser shall cooperate with the Seller, and execute and deliver, or use its reasonable
best efforts to cause to be executed and delivered, all such other instruments, and to obtain all
consents, approvals or authorizations of any person, and take all such other actions as the Seller
may reasonably request from time to time, consistent with the terms of this Confirmation, in order
to effectuate the purposes of this Confirmation and the Transaction contemplated hereby.

     Section 6.02 . Purchaser’s Hedging Transactions. The Purchaser hereby agrees with the Seller
that the Purchaser shall not, during the Contract Period, enter into or alter any corresponding or
hedging transaction or position with respect to the Common Stock (including, without limitation,
with respect to any securities convertible or exchangeable into the Common Stock) and agrees not to
alter or deviate from the terms of this Confirmation. For the avoidance of doubt the parties hereto
acknowledge that the entry into the other accelerated share repurchase transaction entered into by
the Purchaser on the date hereof does not fall within the ambit of the preceding sentence.

     Section 6.03 . No Communications. The Purchaser hereby agrees with the Seller that the
Purchaser shall not, directly or indirectly, communicate any information relating to the Common
Stock or this Transaction (including any notices required by    Section 6.04) to any employee of the
Seller or JPMSI other than as set forth in the Communications Procedures attached as Annex B
hereto.

     Section 6.04 . Maximum Deliverable Number of Shares of Common Stock. Notwithstanding any
other provision of this Confirmation, the Purchaser shall not be required to deliver Payment
Shares, or shares of Common Stock or other securities comprising the aggregate Alternative
Termination Delivery Units, in excess of the number of Maximum Delivery Shares, in each case except
to the extent that the Purchaser has available at such time authorized but unissued shares of such
Common Stock or other securities not expressly reserved for any other uses (including, without
limitation, shares of Common Stock reserved for issuance upon the exercise of options or
convertible debt). The Purchaser shall not permit the sum of (i) the number of Maximum Delivery
Shares plus (ii) the aggregate number of shares expressly reserved for any such other uses, in each
case whether expressed as caps or as numbers of shares reserved or otherwise, to exceed at any time
the number of authorized but unissued shares of Common Stock. Notwithstanding any other provision
of this Confirmation, the Seller shall not be required to deliver Payment Shares, or shares of
Common Stock or other securities comprising the aggregate Alternative Termination Delivery Units in
excess of the number of Capped Delivery Shares.

     Section 6.05 . Notice of Certain Transactions. If at any time during the Contract Period,
the Purchaser makes, or expects to be made, or has made, any public announcement (as defined in
Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving
a recapitalization relating to the Purchaser (other than any such transaction in which the
consideration consists solely of cash and there is no valuation period, or as to which the
completion of such transaction or the completion of the vote by target shareholders has occurred),
then the Purchaser shall (i) notify the Seller prior to the opening of trading in the Common Stock
on any day on which the Purchaser makes, or expects to be made, or has made any such public
announcement, (ii) notify the Seller promptly following any such announcement (or, if later, prior
to the opening of trading in the Common Stock on the first day of any Seller Payment Share Purchase
Period or any Seller Termination Share Payment Period) that such announcement has been made and
(iii) promptly deliver to the Seller following the making of any such announcement (or, if later,
prior to the opening of trading in the Common Stock on the first day of any Seller Payment Share
Purchase Period or any Seller Termination Share Payment Period) a certificate indicating (A) the
Purchaser’s average daily Rule 10b-18 purchases (as defined in Rule 10b-18) during the three full
calendar months preceding the date of such announcement and (B) the Purchaser’s block purchases (as
defined in Rule 10b-18) effected pursuant to paragraph (b)(4) of Rule 10b-18 during the three full
calendar months preceding the date of such announcement. In addition, the Purchaser shall promptly
notify the Seller of the earlier to occur of the completion of such transaction and the completion
of the vote by target shareholders. Accordingly, the Purchaser acknowledges that its actions in
relation to any such announcement or transaction must comply with the standards set forth in
   Section 6.03.

11

 

     Section 6.06 . No Excess Dividends. Purchaser shall not declare any cash dividend or
distribution on shares of Common Stock, including an Extraordinary Cash Dividend (a “Cash
Distribution”), that has an ex-dividend date during the Contract Period, the amount of which,
together with all prior declared Cash Distributions that have an ex-dividend date during the same
Reference Period of the Purchaser, exceeds the Cash Distribution Amount specified in    Section
7.01(f) for such Reference Period. The “ex dividend” date will be determined based on the
regular-way settlement procedures of the Exchange with respect to such dividend.

     Section 6.07 . Right to Deliver Shares. For the avoidance of doubt, in the event that the
Purchaser would otherwise be obligated to pay the Seller any amount in cash in respect of this
Transaction as a result of an event arising outside the Purchaser’s control, the Purchaser shall
have the right to elect to deliver shares of Common Stock without the benefit of a resale
registration statement in lieu of that cash payment; provided that any such election shall be
subject to the provisions of       Section 3.01(b), (c) and (e) as if the cash amount payable were the
Settlement Amount and with the election to be made no later than the second Business Day after the
determination of the cash amount that would otherwise be due.

ARTICLE 7

Termination

     Section 7.01 . Additional Termination Events. (a) An Additional Termination Event shall
occur in respect of which the Purchaser is the sole Affected Party and this Transaction is the sole
Affected Transaction if, on any day, the Seller determines, in its sole reasonable judgment, that
it is unable to establish, re-establish or maintain any hedging transactions reasonably necessary
in the normal course of such party’s business of hedging the price and market risk of entering into
and performing under this Transaction, due to market illiquidity, illegality, or lack of
availability of hedging transaction market participants on customary terms.

     (b) An Additional Termination Event shall occur in respect of which the Purchaser is the sole
Affected Party and this Transaction is the sole Affected Transaction if (i) a Share De-listing
Event occurs; (ii) a Potential Merger Event occurs; (iii) a Nationalization occurs, (iv) a
Distribution Termination Event occurs or (v) an event described in paragraph III of Annex B occurs.

     (c) A “Share De-listing Event” means that at any time during the Contract Period, the Common
Stock ceases to be listed, traded or publicly quoted on the Exchange for any reason (other than a
Merger Event, a “De-Listing”) and is not immediately re-listed, traded or quoted as of the date of
such de-listing, on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their respective successors) (such exchange or
quotation system or, if more than one, that which is the principal market for the Common Stock, the
“Successor Exchange”); provided that it shall not constitute an Additional Termination Event if the
Common Stock is immediately re-listed on a Successor Exchange upon its De-Listing from the
Exchange, and the Successor Exchange shall be deemed to be the Exchange for all purposes. In
addition, in such event, the Seller shall make any commercially reasonable adjustments it deems
necessary to the terms of the Transaction.

     (d) A “Potential Merger Event” means the public announcement, including any public
announcement as defined in Rule 165(f) of the Securities Act (by the Purchaser or otherwise) at any
time during the Contract Period of any (i) planned recapitalization, reclassification or change of
the Common Stock that will, if consummated, result in a transfer of more than 20% of the
outstanding shares of Common Stock, (ii) planned consolidation, amalgamation, merger or similar
transaction of the Purchaser with or into another entity (other than a consolidation, amalgamation
or merger in which the Purchaser will be the continuing entity and which does not result in any
such recapitalization, reclassification or change of more than 20% of such shares outstanding),
(iii) other takeover offer for the shares of Common Stock that is aimed at resulting in a transfer
of more than 20% of such shares of Common Stock (other than such shares owned or controlled by the
offeror) or (iv) irrevocable commitment to any of the foregoing.

12

 

     (e) A “Nationalization” means that all or substantially all of the outstanding shares of
Common Stock or assets of the Purchaser are nationalized, expropriated or are otherwise required to
be transferred to any governmental agency, authority or entity.

     (f) A “Distribution Termination Event” means a declaration by the Purchaser of any Cash
Distribution, that has an ex-dividend date during the Contract Period, the amount of which,
together with all prior Cash Distributions that have an ex-dividend date during the same regular
Reference Period of the Purchaser, exceeds the amount set forth in this    Section 7.01(f) for such
regular Reference Period.

	 	 	 
	Cash Distribution Amount	 	Reference Period
	$0.00 per share of Common Stock

	 	Trade Date – October 31, 2007
	$0.0125 per share of Common Stock

	 	November 1, 2007 – January 31, 2008
	$0.0125 per share of Common Stock

	 	February 1, 2008 – April 30, 2008
	$0.0125 per share of Common Stock

	 	May 1, 2008 – July 31, 2008
	$0.00 per share of Common Stock

	 	Any period after August 1, 2008

The “ex dividend” date will be determined based on the regular-way settlement procedures of the
Exchange with respect to such dividend.

     Section 7.02 . Consequences of Additional Termination Events. (a) In the event of the
occurrence or effective designation of an Early Termination Date under the Agreement, cash
settlement, as set forth in    Section 7.02(b), shall apply unless the Purchaser (i) elects (which
election shall be binding), in lieu of payment of the amount payable in respect of this Transaction
pursuant to    Section 7.02(b) below (the “Termination Amount”), to deliver or to receive Alternative
Termination Delivery Units pursuant to    Section 7.03, and (ii) notifies the Seller of such election
by delivery of written notice to the Seller on the Business Day immediately following the
Purchaser’s receipt of a notice (as required by    Section 7.02(b) below) setting forth the amounts
payable by the Purchaser or by the Seller with respect to such Early Termination Date (the date of
such delivery, the “Termination Notice Day”); provided that the Purchaser shall not have the right
to elect the delivery or receipt of the Alternative Termination Delivery Units pursuant to    Section
7.03 if:

     (i) the representations and warranties made by the Purchaser to the Seller in    Section
5.01 are not true and correct as of the date the Seller makes such election, as if made on
such date, or

     (ii) in the event that the Termination Amount is payable by the Purchaser to the
Seller, (A) the Purchaser has taken any action that would make unavailable (x) the exemption
set forth in Section 4(2) of the Securities Act, for the sale of any Alternative Termination
Delivery Units by the Purchaser to the Seller or (y) an exemption from the registration
requirements of the Securities Act reasonably acceptable to the Seller for resales of
Alternative Termination Delivery Units by the Seller, and (B) such Early Termination Date is
in respect of an Event of Default which is within Purchaser’s control (including, without
limitation, failure to execute a Private Placement Agreement or otherwise comply with the
requirements applicable to Purchaser set forth in Annex A hereto).

     For the avoidance of doubt, upon the Purchaser’s making an election to deliver Alternative
Termination Delivery Units pursuant to this    Section 7.02(a), the Purchaser shall be deemed to make
the representations and warranties in    Section 5.01 hereof as if made on the date of the
Purchaser’s election. Notwithstanding the foregoing, at any time prior to the time the Seller (or
any affiliate of the Seller) has contracted to resell the property to be delivered upon alternative
termination settlement, the Purchaser may deliver in lieu of such property an amount in cash equal
to the Termination Amount in the manner set forth in    Section 7.02(b) below.

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     (b) If cash settlement applies in respect of an Early Termination Date, Section 6 of the
Agreement shall not apply. The Seller shall instead determine the fair value of the Transaction in
a good faith and commercially reasonable manner following the occurrence of an Early Termination
Date, taking into account the factors set forth in    Section 8.03, and shall provide notice to the
Purchaser of any cash amount payable by the Purchaser or by the Seller based on the Seller’s good
faith determination of the fair value of the Transaction. Such cash amount will be payable by the
Purchaser or by the Seller, as applicable, on the day which is two Business Days after the day on
which the Seller’s notice of such cash amount payable is effective. For the avoidance of doubt, the
fair value of the Transaction shall be determined solely in accordance with       Section 8.03 of this
Confirmation.

     Section 7.03 . Alternative Termination Settlement. (a) Subject to    Section 7.02(a), if the
Termination Amount shall be payable by the Purchaser to the Seller and the Purchaser elects to
deliver the Alternative Termination Delivery Units to the Seller, the Purchaser shall, as soon as
directed by the Seller after the Termination Notice Day (such date, the “Termination Settlement
Date”), deliver to the Seller a number of Alternative Termination Delivery Units equal to the
quotient of (A) the Termination Amount divided by (B) the Termination Price.

     (b) Subject to    Section 7.02(a), if the Termination Amount shall be payable by the Seller to
the Purchaser and the Purchaser elects to receive the Alternative Termination Delivery Units from
the Seller, (i) the Seller shall, beginning on the first Trading Day following the Termination
Notice Day, continuing on each Trading Day thereafter and ending on the Trading Day when the Seller
shall have satisfied its obligations under this clause (the “Seller Termination Share Purchase
Period”), purchase (subject to the provisions of    Section 4.01 and    Section 4.02 hereof) a number
of Alternative Termination Delivery Units equal to the quotient of (A) the Termination Amount
divided by (B) the Termination Price; and (ii) the Seller shall deliver such Alternative
Termination Delivery Units to the Purchaser on the settlement dates relating to such purchases.

     Section 7.04 . Notice of Default. If an Event of Default occurs in respect of the Purchaser,
the Purchaser will, promptly upon becoming aware of it, notify the Seller specifying the nature of
such Event of Default.

ARTICLE 8

Adjustments

     Section 8.01 . Other Dilution Adjustments. If (x) any corporate event occurs involving the
Purchaser or the Common Stock (other than a Merger Event or cash dividend but including, without
limitation, a spin-off, a stock split, stock or other dividend or distribution, reorganization,
rights offering or recapitalization or any other event having a dilutive or concentrative effect on
the Common Stock), or (y) as a result of the definition of Trading Day (whether because of a
suspension of transactions pursuant to    Section 4.02 or otherwise), any day that would otherwise be
a Trading Day during the Contract Period is not a Trading Day or on such Trading Day, pursuant to
   Section 4.02, the Seller effects transactions with respect to shares of Common Stock at a volume
lower than originally anticipated with respect to this Transaction, then in any such case, the
Calculation Agent shall make corresponding adjustments with respect to any variable relevant to the
terms of the Transaction, as the Calculation Agent determines appropriate to preserve the fair
value of the Transaction to the Seller, and shall determine the effective date of such adjustment.
Notwithstanding anything to the contrary in this Confirmation, the Calculation Agent shall not
adjust the date of any Scheduled Trading Day, as specified in Schedule A hereto. For the purposes
of this       Section 8.01, any and all adjustments made to preserve the fair value of the Transaction
to the Seller shall be determined solely in accordance with       Section 8.03 of this Confirmation.

     Section 8.02 . Merger Events. If an Early Termination Date has not been designated in respect
of the Transaction, then upon the occurrence of a Merger Event, the Calculation Agent shall make
the following adjustments to the terms hereof based on the relative proportions of the types of
consideration for the Common Stock in respect of the Merger Event:

     (a) to the extent the consideration for the Common Stock consists of ordinary or common shares
that are, or that as of the Merger Date are promptly scheduled to be, (i) publicly quoted, traded
or listed on any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their respective successors) and (ii) not subject to
any currency exchange controls, trading

14

 

restrictions or other trading limitations (the “New Shares”), on or after the closing date of
the Merger Event (or where a closing date cannot be determined, such other date as determined by
the Calculation Agent), the New Shares and their issuer shall be deemed the “Common Stock” and the
“Issuer,” respectively, and the Calculation Agent will adjust any relevant terms; provided,
however, that no adjustment shall be made to the date of any Scheduled Trading Day specified in
Schedule A hereto. For the avoidance of doubt for the purposes of this       Section 8.02, any and all
adjustments made hereto shall be determined solely in accordance with    Section 8.03 of this
Confirmation;

     (b) to the extent the consideration for the Common Stock consists of cash, the Initial
Purchase Price shall be adjusted and the Transaction settled in accordance with Article 3 hereof,
except that, in determining the Valuation Price, the 10b-18 VWAP for any Trading Days in the
Valuation Period that have not yet occurred shall be deemed to be equal to the amount of cash
consideration per share of Common Stock;

     (c) to the extent the consideration for the Common Stock consists of any property other than
New Shares or cash, the Calculation Agent shall determine the fair value of such other
consideration, and the Initial Purchase Price shall be adjusted and the Transaction settled as set
forth in    Section 8.02(b) as though such consideration were cash.

     For the avoidance of doubt, if such Merger Event involves a choice of consideration to be
received by holders of the Common Stock, the consideration for the Common Stock shall be deemed to
include the amount of cash received by a holder who had elected to receive the maximum possible
amount of cash as consideration for his shares.

     Section 8.03 . Agreement in Respect of Adjustments and Termination Amounts. In calculating
any adjustment in respect of the Transaction to which this Confirmation relates pursuant to Article
11 or Article 12 of the Equity Definitions; or in determining any amounts payable in respect of the
termination or cancellation of the Transaction to which this Confirmation relates pursuant to
Section 6 of the Agreement or Article 12 of the Equity Definitions; or with respect to any
calculation or determination of the fair value of this Transaction, the Calculation Agent shall
make any such calculation or determination (in either case, a “Determination”) only with regard to
changes in (i) volatility or volatilities (which, for the avoidance of doubt, shall include the
entire volatility surface) at the time of such Determination, (ii) changes to all outstanding
shares of Common Stock, such as in the case of stock splits, stock dividends and mergers, (iii)
stock price experience prior to, and at the time of, such Determination (including experience as to
liquidity of the Common Stock, and whether based on available market price information, or
estimates of trading prices for blocks of shares equal in size to the Number of Shares, or other
relevant information as to prevailing market prices) and (iv) any and all variables related to
time. For the avoidance of doubt, the Calculation Agent shall make any Determination without
regard to (i) changes to costs of funding, stock loan rates, or actual or expected dividends since
the Trade Date (but, in making any such Determination, the Seller may take into account the same
assumptions used by the Seller for such costs, rates or dividends as had been used by the Seller
on the Trade Date in its internal pricing calculations), (ii) the stock prices at which the
Seller’s open or terminated hedging transactions are effected or (iii) actual or expected losses or
costs incurred in connection with termination, liquidating or re-establishing any hedge related to
the Transaction (or any gain resulting from any of them).

     Section 8.04 . Agreement in Respect of Dividends. For the avoidance of doubt, if an Early
Termination Date occurs in respect of the Transaction as a result of an Additional Termination
Event of the type described in Article 7, the Termination Amount shall be determined without regard
to the difference between the Extraordinary Cash Dividend or any dividend, including the excess
amount as described in    Section 7.01(f), giving rise to such Additional Termination Event and the
expected dividend as of the Trade Date. Notwithstanding the foregoing, this    Section 8.04 shall
not be construed as limiting any damages or other remedy at law or in equity that may be payable or
receivable as a result of a breach of this Confirmation, including, without limitation,    Section
6.06 hereof.

15

 

ARTICLE 9

Miscellaneous

     Section 9.01 . Successors and Assigns. All covenants and agreements in this Confirmation
made by or on behalf of either of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or not.

     Section 9.02 . Purchaser Indemnification. The Purchaser (the “Indemnifying Party”) agrees to
indemnify and hold harmless the Seller and its officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and
all losses, claims, damages and liabilities, joint or several (collectively, “Obligations”), to
which an Indemnified Person may become subject arising out of or in connection with this
Confirmation or any claim, litigation, investigation or proceeding relating thereto, regardless of
whether any of such Indemnified Person is a party thereto, and to reimburse, within 30 days, upon
written request, each such Indemnified Person for any reasonable legal or other expenses incurred
in connection with investigating, preparation for, providing evidence for or defending any of the
foregoing, provided, however, that the Indemnifying Party shall not have any liability to any
Indemnified Person to the extent that such Obligations (i) are finally determined by a court of
competent jurisdiction, from which determination no appeal can be or is taken, to have resulted
from the gross negligence or willful misconduct of such Indemnified Person (and in such case, such
Indemnified Person shall promptly return to the Indemnifying Party any amounts previously expended
by the Indemnifying Party hereunder) or (ii) are trading losses incurred by the Seller as part of
its purchases or sales of shares of Common Stock pursuant to this Confirmation (unless the
Purchaser has breached any agreement, term or covenant herein).

     Section 9.03 . Assignment and Transfer. Notwithstanding the Agreement, the Seller may assign
any of its rights or duties hereunder to any one or more of its affiliates without the prior
written consent of the Purchaser. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Seller to purchase, sell, receive or deliver any shares of Common
Stock or other securities to or from the Purchaser, Seller may designate any of its affiliates to
purchase, sell, receive or deliver such shares of Common Stock or other securities and otherwise to
perform the Seller’s obligations in respect of this Transaction and any such designee may assume
such obligations. The Seller may assign the right to receive Payment Shares to any third party who
may legally receive Payment Shares. The Seller shall be discharged of its obligations to the
Purchaser only to the extent of any such performance. For the avoidance of doubt, Seller hereby
acknowledges that notwithstanding any such designation hereunder, to the extent any of Seller’s
obligations in respect of this Transaction are not completed by its designee, Seller shall be
obligated to continue to perform or to cause any other of its designees to perform in respect of
such obligations.

     Section 9.04 . Calculation Agent. Whenever the Seller or Calculation Agent is required to
act or to exercise judgment in a any way with respect to this Transaction, it will do so in good
faith and in a commercially reasonable manner.

     Section 9.05 . Non-confidentiality. The Seller and the Purchaser hereby acknowledge and
agree that subject to    Section 6.03 each is authorized to disclose every aspect of this
Confirmation and the transactions contemplated hereby to any and all persons, without limitation of
any kind, and there are no express or implied agreements, arrangements or understandings to the
contrary.

     Section 9.06 . Unenforceability and Invalidity. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Confirmation shall not render
any other provision or provisions herein contained unenforceable or invalid.

     Section 9.07 . Securities Contract. The parties hereto agree and acknowledge as of the date
hereof that (i) the Seller is a “financial institution” within the meaning of Section 101(22) of
Title 11 of the United States Code (the “Bankruptcy Code”) and (ii) this Confirmation is a
“securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, entitled
to the protection of Sections 362(b)(6) and 555 of the Bankruptcy Code.

     Section 9.08 . No Collateral, Netting or Setoff. Notwithstanding any provision of the
Agreement, or any other agreement between the parties, to the contrary, the obligations of the
Purchaser hereunder are not secured by

16

 

any collateral. Obligations under this Transaction shall not be netted, recouped or set off
(including pursuant to Section 6 of the Agreement) 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, and no other obligations of the parties shall be
netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations
under this Transaction, whether arising under the Agreement, this Confirmation, under any other
agreement between the parties hereto, by operation of law or otherwise, and each party hereby
waives any such right of setoff, netting or recoupment.

     Section 9.09 . Equity Rights. The Seller acknowledges and agrees that this Confirmation is
not intended to convey to it rights with respect to the Transaction that are senior to the claims
of holders of Common Stock in the event of the Purchaser’s bankruptcy.

     Section 9.10 . Notices. Unless otherwise specified herein, any notice, the delivery of which
is expressly provided for in this Confirmation, may be made by telephone, to be confirmed in
writing to the address below. Changes to the information below must be made in writing.

     (a)  If to the Purchaser:

Harman International Industries, Incorporated

1101 Pennsylvania Ave., N.W., Suite 1010

Washington, D.C. 20004

Attention:  Robert Ryan

Title:  Vice President, Treasurer

Telephone No:  (202) 662-2215

Facsimile No:   (202) 393-3064

E-mail: rryan@harman.com

     (b)  If to the Seller:

JPMorgan Chase Bank, National Association

c/o J.P. Morgan Securities Inc.

277 Park Avenue

New York, NY 10172

Attention: Eric Stefanik

Title: Operations Analyst

EDG Corporate Marketing

Telephone No: (212) 622-5814

Facsimile No: (212) 622-8534

17

 

     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
the copy of this Confirmation enclosed for that purpose and returning it to us.

	 	 	 	 	 
	 	Yours sincerely,

J.P. MORGAN SECURITIES INC., as agent for JPMorgan Chase Bank, National
Association, London Branch

 	 
	 	By:  	  /s/ James F. Smith
 	 
	 	 	Name:  	James F. Smith 	 
	 	 	Title:  	Executive Director 	 
	 

	 	 	 	 	 
	Confirmed as of the date first
above written:

HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
 	 	 
	 
	By:  	  /s/ Robert Ryan
 	 	 
	 	Name:  	Robert Ryan 	 	 
	 	Title:  	Vice President, TreasurerCONFORMED COPY

amendment agreement 

Dated 17 September 2007

for

INTERNATIONAL FLAVORS & FRAGRANCES INC.

as the Parent

AND OTHERS

as the Subsidiaries

 with 

CITIBANK INTERNATIONAL PLC

acting as Agent

	
				
	

relating to a MULTICURRENCY REVOLVING

facility agreement

 dated 23 NOVEMBER 2005 

	
				
	

CONTENTS

							
	Clause			Page
	1.    Definitions And Interpretation					2	
	2.    Amendment					3	
	3.    Confirmation					3	
	4.    Representations					3	
	5.    Continuity And Further Assurance					3	
	6.    Fees, Costs And Expenses					3	
	7.    Miscellaneous					4	
	8.    Governing Law					4	
	Schedule 1         Conditions Precedent					5	
	Schedule 2         Amendment Letter					6	

1

THIS AGREEMENT is dated 17 September 2007 and made between:

		
	(1) 	INTERNATIONAL FLAVORS & FRAGRANCES INC. (the ‘‘Parent’’);

		
	(2) 	THE SUBSIDIARIES of the Parent listed as Original Borrowers on the signature pages (the ‘‘Subsidiaries’’);

		
	(3) 	CITIBANK INTERNATIONAL PLC as agent on behalf of itself and the other Finance Parties (the ‘‘Agent’’).

RECITALS

		
	(A) 	The Lenders made a facility available to the Parent and certain of its Subsidiaries pursuant to the Original Facility Agreement (as defined below).

		
	(B) 	The Parent has requested that the Finance Parties amend the Original Facility Agreement so that it may become a Tranche B Borrower for the purposes of the Original Facility Agreement.

		
	(C) 	The Finance Parties, with the Agent effecting such amendments on their behalf pursuant to Clause 37.1(b) (Required consents) of the Original Facility Agreement, the Parent and its Subsidiaries have agreed to amend the Original Facility Agreement as set out below.

IT IS AGREED as follows:

		
	1. 	DEFINITIONS AND INTERPRETATION

		
	1.1 	Definitions

In this Agreement:

‘‘Amended Agreement’’ means the Original Facility Agreement, as amended by this Agreement.

‘‘Effective Date’’ means the date on which the Agent confirms to the Lenders and the Parent that it has received each of the documents listed in Schedule 1 (Conditions Precedent) in a form and substance satisfactory to the Agent.

‘‘Original Facility Agreement’’ means the multicurrency revolving facility agreement dated 23 November 2005 between the Parent, the Subsidiaries, the Agent, the Arrangers and others (each as defined therein).

		
	1.2 	Incorporation of defined terms

			
		(a) 	Unless a contrary indication appears, a term defined in Original Facility Agreement has the same meaning in this Agreement.

			
		(b) 	The principles of construction set out in the Original Facility Agreement shall have effect as if set out in this Agreement.

		
	1.3 	Clauses

In this Agreement any reference to a ‘‘Clause’’ or a ‘‘Schedule’’ is, unless the context otherwise requires, a reference to a Clause or a Schedule to this Agreement.

		
	1.4 	Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

		
	1.5 	Designation

In accordance with the Original Facility Agreement, each of the Parent and the Agent designates this Agreement as a Finance Document.

2

		
	2. 	AMENDMENT

Each of the parties to this Agreement hereby agrees that as of the Effective Date the definition of ‘‘Tranche B Borrower’’ shall be read and construed so as to include the Parent and each reference to ‘‘Tranche B Borrower’’ shall be deemed to include the Parent.

		
	3. 	CONFIRMATION

Each of the parties to this Agreement hereby confirms the amendments to the Original Facility Agreement made by the amendment letter dated 3 August 2006 between the Agent, the Parent and each of the Subsidiaries a copy of which is attached as Schedule 2 to this Agreement.

		
	4. 	REPRESENTATIONS

The Repeating Representations are deemed to be made by each Subsidiary and the Parent (by reference to the facts and circumstances then existing) on:

			
		(a) 	the date of this Agreement; and

			
		(b) 	the Effective Date.

		
	5. 	CONTINUITY AND FURTHER ASSURANCE

		
	5.1 	Continuing obligations

The provisions of the Original Facility Agreement and the other Finance Documents shall, save as amended by this Agreement, continue in full force and effect.

		
	5.2 	Further assurance

Each Subsidiary and the Parent shall, at the request of the Agent and at its own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement.

		
	6. 	FEES, COSTS AND EXPENSES

		
	6.1 	Transaction expenses

The Parent shall promptly on demand pay the Agent the amount of all costs and expenses (including legal fees subject to any limit as may be separately agreed between the Parent and the Agent) reasonably incurred by it in connection with the negotiation, preparation, printing and execution of this Agreement and any other documents referred to in this Agreement.

		
	6.2 	Enforcement costs

The Parent shall, within three Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, this Agreement.

		
	6.3 	Stamp taxes

The Parent shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of this Agreement.

3

		
	7. 	MISCELLANEOUS

		
	7.1 	Incorporation of terms

The provisions of Clause 33 (Notices), Clause 35 (Partial Invalidity), Clause 36 (Remedies and waivers) and Clause 40 (Enforcement) of the Original Facility Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to ‘‘this Agreement’’ or ‘‘the Finance Documents’’ are references to this Agreement.

		
	7.2 	Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

		
	8. 	Governing Law

This Agreement is governed by English law.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

4

SCHEDULE 1

Conditions Precedent

		
	1. 	Corporate documents

			
		(a) 	A copy of the constitutional documents of each Subsidiary and the Parent or a certificate of an authorised signatory of each relevant Subsidiary and the Parent certifying that the constitutional documents previously delivered to the Agent for the purposes of the Original Facility Agreement have not been amended and remain in full force and effect.

			
		(b) 	A copy of a resolution of the board of directors of each Subsidiary and the Parent:

			
		(i) 	approving the terms of, and the transactions contemplated by, this Agreement and resolving that it execute this Agreement; and

			
		(ii) 	authorising a specified person or persons to execute this Agreement on its behalf.

			
		(c) 	A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

			
		(d) 	A certificate of an authorised signatory of the relevant Subsidiary and the Parent certifying that each copy document relating to it specified in this Schedule 1 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

		
	2. 	Legal Opinions

			
		(a) 	A legal opinion of Clifford Chance LLP, Amsterdam, legal advisers to the Arranger and the Agent as to English law, substantially in the form distributed to the Lenders prior to signing this Agreement.

			
		(b) 	If a Subsidiary or the Parent is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Arranger and the Agent in the relevant jurisdiction, substantially in the form distributed to the Lenders prior to signing this Agreement.

		
	3. 	Other documents and evidence

A copy of any other Authorisation or other document, opinion or assurance which the Agent considers to be necessary or desirable (if it has notified the Parent accordingly) in connection with the entry into and performance of the transaction contemplated by this Agreement or for the validity and enforceability of this Agreement.

5

SCHEDULE 2

Amendment Letter

		
	To: 	International Flavors & Fragrances (Luxembourg) S.à.r.l

6 rue de Mamer

L-8081 Bertrange

Luxembourg

		
	Attn: 	Iain Campbell

		
	Date: 	3 August 2006

Dear Sirs,

Multicurrency Revolving Facility Agreement dated 23 November 2005 between International Flavors & Fragrances (Luxembourg) S.à.r.l and the Original Borrowers as Borrowers, International Flavors & Fragrances Inc. as Guarantor and Parent, Citigroup Global Markets Limited, Fortis Bank S.A./N.V., Bank of America, N.A., Bank of Tokyo-Mitsubishi, BNP Paribas, ING Bank N.V., J.P. Morgan Securities Inc. and Wachovia Bank, National Association as Mandated Lead Arrangers, Citibank International PLC as Agent and Euro Swingline Agent, Citibank N.A. as US Swingline Agent and the financial institutions named therein as Lenders (the ‘‘Facility Agreement’’)

		
	1. 	DEFINITIONS

We refer to the Facility Agreement. All terms herein, unless otherwise defined, shall have the same meaning as in the Facility Agreement. The Majority Lenders, pursuant to Clause 37 (Amendments and Waivers) of the Facility Agreement, have authorised the Agent to sign this letter on behalf of the Lenders.

		
	2. 	FACILITY AGREEMENT AMENDMENTS

Subject to Clause 3 below, we confirm that the Majority Lenders consent to the following amendments to the Facility Agreement (with such amendments to take effect on the date on which the last person to countersign a copy of this letter countersigns a copy of this letter):

		
	2.1 	Clause 25.12 (Material adverse change) shall be deleted in its entirety;

		
	2.2 	Clause 25.13 (Acceleration) shall be renumbered as Clause 25.12 (Acceleration); and

		
	2.3 	A new sub-clause 37.1(c) shall be inserted as follows:

			
		‘‘(c) 	Each Obligor agrees to any such amendment or waiver permitted by this Clause 37 which is agreed to by the Parent. This includes any amendment or waiver which would, but for this paragraph (c), require the consent of the Guarantor.’’

		
	3. 	GENERAL CONDITIONS

		
	3.1 	Nothing in this letter shall be deemed to be an amendment, waiver or consent of the Agent or the Lenders of any provision of the Facility Agreement or any other Finance Document or any default (howsoever described), save to the extent expressly referred to in this letter.

		
	3.2 	This letter is a Finance Document and is governed by English Law.

		
	3.3 	This letter may be executed in any number of counterparts, all of which when taken together will constitute one and the same instrument.

Yours faithfully,

Citibank International PLC

as Agent

SIGNATURES NOT REPRODUCED

6

SIGNATURES

The Parent

INTERNATIONAL FLAVORS & FRAGRANCES INC.

		
	By: 	Douglas J. Wetmore

		
	Title: 	Senior Vice President and Chief Financial Officer

		
	Address: 	521 West 57th St., New York NY 10019

		
	Fax: 	+ 1 212 708 7191

		
	Tel: 	+ 1 212 765 5500

		
	Attention: 	Dennis Meany

The Original Borrowers

INTERNATIONAL FLAVORS & FRAGRANCES INC.

		
	By: 	Douglas J. Wetmore

		
	Title: 	Senior Vice President and Chief Financial Officer

		
	Address: 	521 West 57th St., New York, NY 10019

		
	Fax: 	+ 1 212 708 7191

		
	Tel: 	+ 1 212 765 5500

		
	Attention: 	Dennis Meany

INTERNATIONAL FLAVORS & FRAGRANCES (LUXEMBOURG) S.À.R.L

		
	By: 	J.H.M. van Noorden

		
	Title: 	VP Legal Affairs EAME

		
	Address: 	6 Rue de Mamer

L-8081 Bertrange, Luxembourg

		
	Fax: 	+ 35 2 26 11 41 41

		
	Tel: 	+ 35 2 26 11 41 1

		
	Attention: 	I. Campbell

INTERNATIONAL FLAVORS & FRAGRANCES I.F.F. (NEDERLAND) B.V.

		
	By: 	J.H.M. van Noorden

		
	Title: 	Managing Director

		
	Address: 	P.O. Box 309

1200 AH Hilversum

The Netherlands

		
	Fax: 	+ 31 (0)35 6883 202

		
	Tel: 	+ 31 (0)35 6883 911

		
	Attention: 	J.H.M. van Noorden

7

INTERNATIONAL FLAVORS & FRAGRANCES (NEDERLAND) HOLDING B.V.

		
	By: 	J.H.M. van Noorden

		
	Title: 	Managing Director

		
	Address: 	P.O. Box 309

1200 AH Hilversum

The Netherlands

		
	Fax: 	+ 31 (0)35 6883 202

		
	Tel: 	+ 31 (0)35 6883 911

		
	Attention: 	J.H.M. van Noorden

IRISH FLAVOURS AND FRAGRANCES LTD

		
	By: 	J.H.M. van Noorden

		
	Title: 	VP Legal Affairs EAME

		
	Address: 	Industrial Estate, Drogheda, Co. Louth

		
	Fax: 	+ 353 (0)41 983 5119

		
	Tel: 	+ 353 (0)41 983 1031

		
	Attention: 	M. Tolan

IFF BENICARLO SA

		
	By: 	J.H.M. van Noorden

		
	Title: 	VP Legal Affairs EAME

		
	Address: 	Avenida Felipe Klein, 2

Benicarlo – 12580 – Castellón

		
	Fax: 	+34 (0)964 473 411

		
	Tel: 	+34 (0)964 470 200

Attention:    A. Dantart

INTERNATIONAL FLAVOURS & FRAGRANCES I.F.F. (GREAT BRITAIN) LTD

		
	By: 	J.H.M. van Noorden

		
	Title: 	VP Legal Affairs EAME

		
	Address: 	Duddery Hill, Haverhill, Suffolk, CB9 8LG

United Kingdom

		
	Fax: 	+ 44 (0)1440 76 1599

		
	Tel: 	+ 44 (0)1440 71 5000

		
	Attention: 	P.J. Gardner

8

BUSH BOAKE ALLEN HOLDINGS (UK) LTD

		
	By: 	J.H.M. van Noorden

		
	Title: 	VP Legal Affairs EAME

		
	Address: 	Duddery Hill, Haverhill, Suffolk, CB9 8LG

United Kingdom

		
	Fax: 	+ 44 (0)1440 76 1599

		
	Tel: 	+ 44 (0)1440 71 5000

		
	Attention: 	P.J. Gardner

THE AGENT

CITIBANK INTERNATIONAL PLC

		
	By: 	John Nelson

		
	Title: 	Specialist

		
	Address: 	Canada Square

Canary Wharf

London

E14 5L

		
	Fax: 	+44 208 663 3824

		
	Tel: 	+44 207 500 4246

		
	Attention: 	John Nelson

john1.nelson@citi.com

9

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