Document:

Exhibit 10.3

 

Execution Version

 

CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH “*”.  AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  A TOTAL OF THREE PAGES HAVE BEEN REDACTED.

 

July 11, 2013

 

To:                                                                             Ascent Capital Group, Inc.

c/o Monitronics International, Inc.

2350 Valley View Lane, Suite 100

Dallas, Texas 75234

Attn: Michael Meyers, Senior Vice President and Chief Financial Officer

 

From:                                                               Credit Suisse Capital LLC

c/o Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

 

Re:                                                                             Base Issuer Warrant Transaction

(Transaction Reference Number: 59825896)

 

Ladies and Gentlemen:

 

The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Credit Suisse Capital LLC (“Dealer”), represented by Credit Suisse Securities (USA) LLC (“Agent”) as its agent, and Ascent Capital Group, Inc. (“Issuer”).  This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

 

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

 

This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the designation of the guarantee of Credit Suisse (USA), Inc. as a Credit Support Document, with Credit Suisse (USA), Inc. as a Credit Support Provider in relation to Dealer). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

 

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

 

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:
    	
 
    	
July 11, 2013
    

 

 

	
Effective Date:
    	
 
    	
July 17, 2013, or such other date as   agreed between the parties, subject to Section 8(o) below
    
	
 
    	
 
    	
 
    
	
Components:
    	
 
    	
The Transaction will be divided into   individual Components, each with the terms set forth in this Confirmation,   and, in particular, with the Number of Warrants and Expiration Date set forth   in this Confirmation. The payments and deliveries to be made upon settlement   of the Transaction will be determined separately for each Component as if   each Component were a separate Transaction under the Agreement.
    
	
 
    	
 
    	
 
    
	
Warrant Style:
    	
 
    	
European
    
	
 
    	
 
    	
 
    
	
Warrant Type:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Issuer
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The Series A common stock of Issuer,   par value USD 0.01 per share (Ticker Symbol: “ASCMA”).
    
	
 
    	
 
    	
 
    
	
Number of   Warrants:
    	
 
    	
For each Component, as provided in Annex   A to this Confirmation.
    
	
 
    	
 
    	
 
    
	
Warrant Entitlement:
    	
 
    	
One Share per   Warrant
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
As provided in Annex A to this   Confirmation.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
As provided in Annex A to this   Confirmation.
    
	
 
    	
 
    	
 
    
	
Premium Payment   Date:
    	
 
    	
The Effective Date
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The NASDAQ Global Select Market
    
	
 
    	
 
    	
 
    
	
Related Exchange:
    	
 
    	
All Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures for Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In   respect of any Component:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Expiration Time:
    	
 
    	
Valuation Time
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
As provided in Annex A to this   Confirmation (or, if such date is not a Scheduled Trading Day, the next   following Scheduled Trading Day that is not already an Expiration Date for   another Component); provided   that if that date is a Disrupted Day, the Expiration Date for such Component   shall be the first succeeding Scheduled Trading Day that is not a Disrupted   Day and is not or is not already deemed to be an Expiration Date in respect   of any other Component of the Transaction hereunder; and provided further that if the Expiration   Date has not occurred pursuant to the preceding proviso as of the Final   Disruption Date, Dealer may elect in its discretion that the Final Disruption   Date shall be the Expiration Date (irrespective of whether such date is an   Expiration Date in respect of any other Component for the Transaction) and,   notwithstanding anything to the contrary in this Confirmation or the   Definitions, the VWAP Price for such Expiration Date shall be the prevailing   market value per Share determined by the Calculation Agent in a commercially   reasonable manner. Notwithstanding   the foregoing and anything to the contrary in the Equity Definitions, if a   Market Disruption Event occurs on any Expiration Date, the Calculation Agent   may determine that such Expiration Date is a Disrupted Day only in part, in   which case (i)
    

 

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the Calculation   Agent shall make adjustments to the Number of Warrants for the relevant   Component for which such day shall be the Expiration Date and shall designate   the Scheduled Trading Day determined in the manner described in the   immediately preceding sentence as the Expiration Date for the remaining   Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the   Calculation Agent based on transactions in the Shares on such Disrupted Day   taking into account the nature and duration of such Market Disruption Event   on such day. Any Scheduled Trading   Day on which, as of the date hereof, the Exchange is scheduled to close prior   to its normal close of trading shall be deemed not to be a Scheduled Trading   Day; if a closure of the Exchange prior to its normal close of trading on any   Scheduled Trading Day is scheduled following the date hereof, but prior to   the opening of the regular trading session of the Exchange on such day, then   such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6   of the Equity Definitions shall not apply to any Valuation Date occurring in   respect of an Expiration Date. “Final   Disruption Date” has the meaning provided in Annex A to   this Confirmation.
    
	
 
    	
 
    	
 
    
	
Market Disruption   Event:
    	
 
    	
Section 6.3(a) of the Equity   Definitions is hereby amended (A) by deleting the words “during the one   hour period that ends at the relevant Valuation Time, Latest Exercise Time,   Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in   clause (ii) thereof and (B) by replacing the words “or   (iii) an Early Closure.” therein with “(iii) an Early Closure, or   (iv) a Regulatory Disruption.”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Section 6.3(d) of the Equity   Definitions is hereby amended by deleting the remainder of the provision   following the term “Scheduled Closing Time” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Regulatory   Disruption:
    	
 
    	
Any event that Dealer, in its discretion,   determines makes it appropriate with regard to any legal, regulatory or   self-regulatory requirements or related policies and procedures, for Dealer   to refrain from or decrease any market activity in connection with the   Transaction. Dealer shall notify Issuer as soon as reasonably practicable   that a Regulatory Disruption has occurred and the Expiration Dates affected   by it.
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
Applicable; and means that the Number of   Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration   Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration   Time on the Expiration Date that it does not wish Automatic Exercise to   occur, in which case Automatic Exercise will not apply.
    
	
 
    	
 
    	
 
    
	
Issuer’s Telephone Number and Telex and/or   Facsimile Number and Contact Details for purpose of Giving Notice:
    	
 
    	
To be provided by Issuer.
    
	
 
    	
 
    	
 
    
	
Settlement Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In   respect of any Component:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement   Currency:
    	
 
    	
USD
    

 

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Net Share   Settlement:
    	
 
    	
On each Settlement Date, Issuer shall   deliver to Dealer a number of Shares equal to the Number of Shares to be   Delivered for such Settlement Date to the account specified by Dealer and pay   to Dealer the Fractional Share Amount in cash in lieu of any fractional Share   valued at the VWAP Price on the Valuation Date corresponding to such   Settlement Date.
    
	
 
    	
 
    	
 
    
	
Number of Shares   to be Delivered:
    	
 
    	
In respect of any Exercise Date, subject to   the last sentence of Section 9.5 of the Equity Definitions, the product   of (i) the number of Warrants exercised or deemed exercised on such   Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the   excess, if any, of the VWAP Price on the Valuation Date occurring in respect   of such Exercise Date over the Strike Price divided by   (B) such VWAP Price.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Number of Shares to be Delivered shall   be delivered by Issuer to Dealer no later than noon (local time in New York   City) on the relevant Settlement Date.
    
	
 
    	
 
    	
 
    
	
VWAP Price:
    	
 
    	
For any Valuation Date, the   Rule 10b-18 dollar volume weighted average price per Share for such   Valuation Date based on transactions executed during such Valuation Date, as   reported on Bloomberg Page “ASCMA <Equity> AQR” (or any successor   thereto) or, in the event such price is not so reported on such Valuation   Date for any reason or is manifestly incorrect, as reasonably determined by   the Calculation Agent using a volume weighted method.
    
	
 
    	
 
    	
 
    
	
Other Applicable   Provisions:
    	
 
    	
The provisions of Sections 1.27, 9.1(c),   9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained   in Section 9.11 of the Equity Definitions shall be modified by excluding   any representations therein relating to restrictions, obligations,   limitations or requirements under applicable securities laws arising as a   result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of   the Equity Definitions will be applicable as if “Physical Settlement” applied   to the Transaction.
    
	
 
    	
 
    	
 
    
	
Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
In   respect of any Component:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method of   Adjustment:
    	
 
    	
Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Extraordinary   Dividend:
    	
 
    	
Any Dividend (i) that has an   ex-dividend date occurring on or after the Trade Date and on or prior to the   date on which Issuer satisfies all of its delivery obligations hereunder and   (ii) the amount or value of which differs from the Ordinary Dividend   Amount for such Dividend, as determined by the Calculation Agent.
    
	
 
    	
 
    	
 
    
	
Dividend:
    	
 
    	
Any dividend or distribution on the Shares   (other than any dividend or distribution of the type described in Sections   11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
    
	
 
    	
 
    	
 
    
	
Ordinary Dividend   Amount:
    	
 
    	
USD 0.00.
    
	
 
    	
 
    	
 
    
	
Extraordinary Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Consequences of   Merger Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)         Share-for-Share:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
(b)         Share-for-Other:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination)
    

 

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(c)               Share-for-Combined:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination)
    
	
 
    	
 
    	
 
    
	
Tender Offer:
    	
 
    	
Applicable; provided,   however, that the definitions of   “Tender Offer” and “Tender Offer Date” in Section 12.1 of the Equity   Definitions are each hereby amended by replacing the words “voting shares”   with the word “Shares”.
    
	
 
    	
 
    	
 
    
	
Consequences of   Tender Offers:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)              Share-for-Share:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
(b)              Share-for-Other:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination) on that portion of the Other Consideration that consists of   cash; Modified Calculation Agent Adjustment on the remainder of the Other   Consideration.
    
	
 
    	
 
    	
 
    
	
(c)               Share-for-Combined:
    	
 
    	
Modified Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
Modified   Calculation Agent Adjustment:
    	
 
    	
If, in respect of any Merger Event to which   Modified Calculation Agent Adjustment applies, the adjustments to be made in   accordance with Section 12.2(e)(i) of the Equity Definitions would   result in Issuer being different from the issuer of the Shares, then with   respect to such Merger Event, as a condition precedent to the adjustments   contemplated in Section 12.2(e)(i) of the Equity Definitions,   Dealer, the Issuer of the Affected Shares and the entity that will be the   Issuer of the New Shares shall, prior to the Merger Date, have entered into   such documentation containing representations, warranties and agreements   relating to securities law and other issues as requested by Dealer that   Dealer has determined, in its reasonable discretion, to be reasonably   necessary or appropriate to allow Dealer to continue as a party to the   Transaction, as adjusted under Section 12.2(e)(i) of the Equity   Definitions, and to preserve its hedging or hedge unwind activities in   connection with the Transaction in a manner compliant with applicable legal,   regulatory or self-regulatory requirements, or with related policies and   procedures applicable to Dealer, and if such conditions are not met or if the   Calculation Agent determines that no adjustment that it could make under   Section 12.2(e)(i) of the Equity Definitions will produce a   commercially reasonable result, then the consequences set forth in   Section 12.2(e)(ii) of the Equity Definitions shall apply.
    
	
 
    	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
 
    	
Modified Calculation Agent Adjustment as   set forth in Section 12.3(d) of the Equity Definitions; provided that 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”. 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 of any   Merger Event or Tender Offer or the intention to enter into a Merger Event or   Tender Offer, (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   (iii) any subsequent public announcement of a change to a
    

 

5

 

	
 
    	
 
    	
transaction or intention that is the   subject of an announcement of the type described in clause (i) or   (ii) of this sentence (in each case, whether such announcement is made   by Issuer or a third party).
    
	
 
    	
 
    	
 
    
	
Announcement   Date:
    	
 
    	
The definition of “Announcement Date” in   Section 12.1 of the Equity Definitions is hereby amended by   (i) replacing the words “a firm” with the word “any” in the second and   fourth lines thereof, (ii) replacing the word “leads to the” with the   words “, if completed, would lead to a” in the third and the fifth lines   thereof, (iii) replacing the words “voting shares” with the word   “Shares” in the fifth line thereof, and (iv) inserting the words “by any   entity” after the word “announcement” in the second and the fourth lines   thereof.
    
	
 
    	
 
    	
 
    
	
New Shares:
    	
 
    	
In the definition of New Shares in   Section 12.1(i) of the Equity Definitions, (a) the text in   clause (i) thereof shall be deleted in its entirety (including the word   “and” following such clause (i)) and replaced with “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) the phrase “and (iii) issued by a corporation organized under   the laws of the United States, any State thereof or the District of Columbia”   shall be inserted immediately prior to the period.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that   in addition to the provisions of Section 12.6(a)(iii) of the Equity   Definitions, it shall also constitute a Delisting if the Exchange is located   in the United States and the Shares are not immediately re-listed, re-traded   or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The NASDAQ Global Market (or their respective successors); if the   Shares are immediately re-listed, re-traded or re-quoted on any such exchange   or quotation system, such exchange or quotation system shall thereafter be   deemed to be the Exchange.
    
	
 
    
	
 
    	
 
    	
 
    
	
Additional   Disruption Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)         Change in Law:
    	
 
    	
Applicable; provided   that Section 12.9(a)(ii) of the Equity Definitions is hereby   amended by (x) adding the words “(including, for the avoidance of doubt   and without limitation, adoption or promulgation of new regulations   authorized or mandated by existing statute)” after the word “regulation” in   the second line thereof, (y) adding the words “or any Hedge Positions”   after the word “Shares” in the clause (X) thereof and (z) adding   the words “, or holding, acquiring or disposing of Shares or any Hedge Positions   relating to,” after the words “obligations under” in clause (Y) thereof.
    
	
 
    	
 
    	
 
    
	
(b)         Failure to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(c)          Insolvency Filing:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(d)         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
    

 

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Trade Date” and (b) inserting the   following phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“Additionally, it shall constitute a   Hedging Disruption if, as reasonably determined by the Calculation Agent, the   ADTV of the Shares (as defined in Rule 10b-18 under the Exchange Act)   decreases to or below the Liquidity Trigger provided in Annex A   to this Confirmation (as adjusted by the Calculation Agent as it determines   appropriate to account for any Potential Adjustment Event or Merger Event).   For the avoidance of doubt, the term “equity price risk” shall be deemed to   include, but shall not be limited to, stock price and volatility risk. And,   for the further avoidance of doubt, any such transactions or assets referred   to in phrases (A) or (B) above must be available on commercially   reasonable pricing terms.”; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) Section 12.9(b)(iii) of   the Equity Definitions is hereby 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”.
    
	
 
    	
 
    	
 
    
	
(e)          Increased Cost of Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(f)           Loss of Stock Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Maximum Stock   Loan Rate:
    	
 
    	
As provided in Annex A to this   Confirmation.
    
	
 
    	
 
    	
 
    
	
(g)          Increased Cost of Stock Borrow:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Initial Stock   Loan Rate:
    	
 
    	
As provided in Annex A to this   Confirmation.
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
Dealer for all applicable Potential   Adjustment Events and Extraordinary Events
    
	
 
    	
 
    	
 
    
	
Determining   Party:
    	
 
    	
Dealer for all applicable Extraordinary   Events
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements and Acknowledgments Regarding   Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional   Acknowledgments:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
3.              Calculation   Agent:
    	
 
    	
Dealer; provided that all   determinations and adjustments by the Calculation Agent hereunder shall be   made in good faith and in a commercially reasonable manner; provided further that, upon receipt of a written request   from Issuer following any determination or adjustment made by the Calculation   Agent hereunder, the Calculation Agent shall, with reasonable promptness,   provide Issuer with a written explanation describing in reasonable detail   such determination or adjustment (including any quotations, market data or   information from internal sources used in making such determination or   adjustment, but without disclosing the Calculation Agent’s proprietary models   or other information that may be proprietary or confidential).
    
	
 
    	
 
    	
 
    
	
4.              Account   Details:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dealer Payment   Instructions:
    	
 
    	
Credit Suisse Capital LLC
    
	
 
    	
 
    	
Citibank, N.A. New York
    
	
 
    	
 
    	
ABA: 
    
	
 
    	
 
    	
SWIFT: 
    

 

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A/C: 
    
	
 
    	
 
    	
A/C: 
    
	
 
    	
 
    	
 
    
	
Issuer Payment   Instructions:
    	
 
    	
To be provided by Issuer.
    
	
 
    	
 
    	
 
    
	
5.              Offices:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
The Office of Dealer   for the Transaction is: New York  
    
	
 
    	
 
    	
 
    
	
The Office of Issuer for the Transaction is: Not applicable
    

 

	
6.
    	
Notices: For   purposes of this Confirmation:
    
	
 
    	
 
    
	
(a)
    	
Address for notices or communications to   Issuer:
    
	
 
    	
 
    	
 
    
	
 
    	
To:
    	
Ascent Capital Group, Inc.
    
	
 
    	
 
    	
c/o Monitronics International, Inc.
    
	
 
    	
 
    	
2350 Valley View Lane, Suite 100
    
	
 
    	
 
    	
Dallas, Texas 75234
    
	
 
    	
Attn:
    	
Michael Meyers, Senior Vice President and   Chief Financial Officer
    
	
 
    	
Facsimile:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
With a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Ascent Capital Group, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
5251 DTC Parkway, Suite 1000
    	
 
    	
 
    
	
 
    	
 
    	
Greenwood Village, CO 80111
    	
 
    	
 
    
	
 
    	
Attn:
    	
William E. Niles, Executive Vice President,   General Counsel and Secretary
    
	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
Address for notices or communications to   Dealer:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
To:
    	
Credit Suisse Capital LLC
    	
 
    	
 
    
	
 
    	
 
    	
c/o Credit Suisse Securities (USA) LLC
    	
 
    	
 
    
	
 
    	
 
    	
Eleven Madison Avenue
    	
 
    	
 
    
	
 
    	
 
    	
New York, NY 10010
    	
 
    	
 
    
	
 
    	
Attn:
    	
Senior Legal Officer
    	
 
    	
 
    
	
 
    	
Telephone:
    	
 
    	
 
    	
 
    
	
 
    	
Facsimile:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
With a copy to:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Credit Suisse Securities (USA) LLC
    	
 
    	
 
    
	
 
    	
 
    	
One Madison Avenue, 8th Floor
    	
 
    	
 
    
	
 
    	
 
    	
New York, New York 10010
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
For payments and deliveries:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Attn:
    	
Mike Sergio
    	
 
    	
 
    
	
 
    	
Telephone:
    	
 
    	
 
    	
 
    
	
 
    	
Facsimile:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
For all other communications:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Attn:
    	
Peter Finnegan
    	
 
    	
 
    
	
 
    	
Telephone:
    	
 
    	
 
    	
 
    
	
 
    	
Facsimile:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Designated responsible employee for the purposes of   Section 12(a)(iii) of the Agreement: Senior Legal Officer
    

 

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7.     Representations, Warranties and Agreements:

 

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

 

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

 

(ii)           Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

 

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

 

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

 

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

 

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

 

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

 

(viii)        The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of the Trade Date July 11, 2013 between Issuer and Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the Underwriters party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

 

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

 

(x)           During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act.

 

(xi)          On each day during the Settlement Period, neither Issuer nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited

 

9

 

partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

 

(xii)         On the Trade Date and at all times until termination or earlier expiration of the Transaction, (A) a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer, (B) the Shares issuable upon exercise of the Warrants (the “Warrant Shares”) have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable and (C) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and shall upon issuance be accepted for listing or quotation on the Exchange.

 

(xiii)        No state or local (including non-U.S. jurisdictions) or non-U.S. federal 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; provided that Issuer makes no representation or warranty regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer or its affiliates solely as a result of their being a financial institution or a broker-dealer.

 

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

 

(c)           Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof.  Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

 

(d)           Issuer agrees and acknowledges that Dealer is a “financial institution,”  “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”).  The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, (B) the Agreement is a “master netting agreement” and each of the parties thereto is a “master netting agreement participant”, each as defined in the Bankruptcy Code, (C) a party’s right to liquidate a 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...to cause the liquidation, termination or acceleration” of the Transaction as described in the Bankruptcy Code and (D) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 363(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)           Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(xii) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may reasonably request.

 

8.  Other Provisions:

 

(a)           Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.  If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or

 

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pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“Notice of Share Termination”); provided that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and provided further that Issuer shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event of (i) an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party, which Event of Default or Termination Event resulted from an event or events within Issuer’s control.  Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:

 

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

A number of Share Termination Delivery   Units, as calculated by the Calculation Agent, equal to the Payment   Obligation divided by the Share Termination Unit Price. The Calculation Agent   shall adjust the Share Termination Delivery Property by replacing any   fractional portion of the aggregate amount of a security therein with an   amount of cash equal to the value of such fractional security based on the   values used to calculate the Share Termination Unit Price.
    
	
 
    	
 
    	
 
    
	
Share Termination Unit Price:
    	
 
    	
The value of property contained in one   Share Termination Delivery Unit 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 and notified by the Calculation Agent to Issuer at the time   of notification of the Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share Termination Delivery Unit:
    	
 
    	
In the case of a Termination Event, Event   of Default, Delisting, Additional Disruption Event or Announcement Event, one   Share or, in the case of an Insolvency, Nationalization, Merger Event or   Tender Offer, one Share or a unit consisting of the number or amount of each   type of property received by a holder of one Share (without consideration of   any requirement to pay cash or other consideration in lieu of fractional   amounts of any securities) in such Insolvency, Nationalization, Merger Event   or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger   Event or Tender Offer involves a choice of consideration to be received by   holders, such holder shall be deemed to have elected to receive the maximum   possible amount of cash.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Other applicable provisions:
    	
 
    	
If Share Termination Alternative is   applicable, the provisions of Sections 1.27, 9.8, 9.9, 9.10, 9.11 (except   that the Representation and Agreement contained in Section 9.11 of the   Equity Definitions shall be modified by excluding any representations therein   relating to restrictions, obligations, limitations or requirements under   applicable securities laws arising as a result of the fact that Seller is the   issuer of the Shares or any portion of the Share Termination Delivery Units),   9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical   Settlement” applied to the Transaction, except that all references to   “Shares” shall be read as references to “Share Termination Delivery Units”.
    

 

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(b)           Private Placement Procedures.  (i)  If, in the reasonable judgment of Dealer, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “Delivered Securities”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply.  In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect an appropriate liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “Freely Tradeable Value”).  (For the avoidance of doubt, as used in this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant securities, as the context shall require.)

 

(ii) (A)     Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them and subject to reasonable confidentiality restrictions);

 

(B)          Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “Private Placement Agreement”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all out-of-pocket expenses in connection with such resale, including all reasonable fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and

 

(C)          Issuer agrees that any Delivered Securities so delivered to Dealer, (i) may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from such Delivered Securities upon delivery by Dealer (or such Affiliate of Dealer) to Issuer or such transfer agent of any seller’s and broker’s representation letters customarily delivered by Dealer in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).

 

(D)          Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).

 

(c)           Make-whole. Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “Resale Period”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “Required Proceeds”).  If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination

 

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Delivery Units to Issuer.  If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“Make-whole Shares”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(c).  This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(e).

 

(d)           Beneficial Ownership. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 7.5% of the outstanding Shares, (ii) Dealer, or any “affiliate” or “associate” of Dealer, would be an “interested stockholder” of Issuer, as all such terms are defined in Section 203 of the Delaware General Corporation Law or (iii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or constitutive documents or contracts or agreements of Issuer that are, in each case, applicable to ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, that could reasonably be expected to result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party, in each case minus (y) 1% of the number of Shares outstanding on the date of determination (each of clause (i), (ii) and (iii) above, an “Ownership Limitation”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached.  “Dealer’s Beneficial Ownership” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “Section 13”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “Dealer Group”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number).  Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(l) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(d), until such time as such Shares are delivered pursuant to this Section 8(d).

 

(e)           Limitations on Settlement by Issuer.  (i) Notwithstanding anything herein or in the Agreement to the contrary, in no event shall Issuer be required to deliver Shares in connection with the Transaction in excess of the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions resulting from actions of Issuer or events within Issuer’s control (the “Capped Number”).  Issuer represents and warrants to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of authorized but unissued Shares of the Issuer that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) on the date of the determination of the Capped Number (such Shares, the “Available Shares”).  In the event Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(e) (the resulting deficit, the “Deficit Shares”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (A) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares reserved for issuance in respect of other transactions prior to such date which prior to the relevant date become no longer so reserved or (C) Issuer additionally authorizes any unissued Shares that are not

 

13

 

reserved for other transactions.  Issuer 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 to be delivered) and promptly deliver such Shares thereafter.

 

(ii) Issuer shall not enter into any transaction, or take any other action, that would result in an adjustment to the maximum number of Shares deliverable under clause (i) of this subsection that would result in the issuance of a number of Shares that would require stockholder approval under the continued listing standards of The NASDAQ Global Select Market without having obtained prior stockholder approval.

 

(f)            Right to Extend.  Dealer may postpone any Exercise Date or Settlement 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 Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, that such extension is reasonably necessary or appropriate to (i) preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) 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.

 

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

 

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

 

(i)            Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.

 

(ii)           The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;

 

(iii)          Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with the word “material” and adding the phrase “or Warrants” at the end of the sentence;

 

(iv)          Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of  the ISDA 2002 Master Agreement with respect to that Issuer.”;

 

(v)           Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither

 

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the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and

 

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

 

(i)            Transfer and Assignment.  Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, at any time to any person or entity whatsoever without the consent of Issuer; provided that Issuer will not be obligated to pay to such transferee or assignee an amount in respect of Indemnifiable Taxes greater than the amount in respect of Indemnifiable Taxes which Issuer would have been required to pay to Dealer in the absence of such transfer or assignment.  At any time at which any Ownership Limitation or a Hedging Disruption exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Ownership Limitation or Hedging Disruption, as the case may be, no longer exists.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.

 

(j)            Adjustments.  For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

 

(k)           Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.

 

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

 

(m)          Additional Termination Events.  The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party; provided that with respect to any Additional Termination Event, Dealer may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:

 

(i)             Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer);

 

(ii)            any Person (as defined below), other than Issuer or its subsidiaries, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such Person has become the direct or indirect ultimate “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), of (a) more than 50% (or, in the case of a Permitted Holder, 60%) of the outstanding Shares or (b) Issuer’s common equity representing more than 50% (or, in the case of a Permitted Holder, 60%) of the voting power of Issuer’s common equity;  provided

 

15

 

that a filing that would otherwise result in an Additional Termination Event pursuant to this clause (ii) will not constitute an Additional Termination Event if (x) the filing occurs in connection with a transaction in which the Shares are replaced by the securities of another corporation, partnership, limited liability company or similar entity and (y) no filing of Schedule TO (or any such schedule, form or report) is made or is in effect with respect to common equity representing more than 50% of the voting power of such other entity;

 

(iii)           consummation of any binding share exchange, exchange offer, tender offer, consolidation or merger of Issuer pursuant to which Shares will be converted into cash, securities or other property or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Issuer and Issuer’s subsidiaries, taken as a whole, to any person other than one or more of Issuer’s subsidiaries (any such exchange, offer, consolidation, merger, transaction or series of transactions referred to for the purpose of this section as an “Event”) other than any Event where the holders of Issuer’s common equity immediately prior to such Event own, directly or indirectly, more than 50% of the voting power of all classes of common equity of the continuing or surviving person or transferee or the parent thereof immediately after such Event, with such holders’ proportional voting power immediately after such Event being in substantially the same proportions as their respective voting power before such Event;

 

(iv)          the Continuing Directors (as defined below) cease to constitute at least a majority of Issuer’s board of directors;

 

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

 

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

 

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

 

“Person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d) of the Exchange Act.

 

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

 

“Permitted Holder” means (1) John C. Malone and/or William Fitzgerald (Issuer’s current Chairman of the Board and Chief Executive Officer) (acting individually or in concert); (2) the spouses, siblings or lineal descendants (including adoptees) of the persons described in clause (1); (3) any trusts or private foundations created for the benefit of, or controlled by, any of the persons described in clauses (1) and (2) or any trusts or private foundations created for the benefit of any such trust or private foundation; (4) in the event of the incompetence or death of any of the persons described in clauses (1) and (2), such person’s estate, executor, administrator, committee or other personal representative or similar fiduciary or beneficiaries, heirs, devisees or distributes, in each case, who at any particular date shall beneficially own capital interests of the Issuer; or (5) any group consisting solely of persons described in clauses (1)-(4).

 

(n)           No Netting and Set-off.  Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

 

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

 

(p)           Wall Street Transparency and Accountability Act of 2010.  The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), (w) any similar legal 

 

16

 

certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s 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, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).

 

(q)           Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act. “Tax” and “Indemnifiable Tax” each 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 U.S. Internal Revenue Code of 1986, as amended (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 the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

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

 

(s)            Governing Law; Jurisdiction.  THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

 

(t)            Tax Representation.  For the purposes of Section 3(e) and 3(f) of the Agreement, Dealer and Issuer each represent either (i) that they are “United States persons” within the meaning of Section 7701(a)(30) of the Code or (ii) that payments received or deemed received pursuant to this Confirmation will be treated as income effectively connected with the conduct of a trade or business within the United States.

 

(u)           Matters Relating to Dealer and Agent.  Agent shall act as “agent” for Dealer and Issuer in connection with the Transaction.  Agent will furnish to Issuer upon written request a statement as to the source and amount of any remuneration received or to be received by Agent in connection herewith.  Agent has no obligation hereunder, by guaranty, endorsement or otherwise, with respect to performance of Dealer’s obligations hereunder or under the Agreement.  Dealer is an “OTC derivatives dealer” as such term is defined in the Exchange Act and is an affiliate of Agent.  Dealer is not a member of the Securities Investor Protection Corporation.

 

17

 

Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.

 

	
 
    	
Yours faithfully,
    
	
 
    	
 
    
	
 
    	
CREDIT SUISSE   CAPITAL LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bik Kwan Chung
    
	
 
    	
 
    	
Name: 
    	
Bik Kwan Chung
    
	
 
    	
 
    	
Title: 
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CREDIT SUISSE SECURITIES (USA) LLC,
    
	
 
    	
as Agent
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emilie Blay
    
	
 
    	
 
    	
Name: 
    	
Emilie Blay
    
	
 
    	
 
    	
Title: 
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Agreed and Accepted By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
ASCENT CAPITAL GROUP, INC.
    	
 
    	
 
    	
 
    
	
 
    
	
 
    
	
By:
    	
/s/ William E. Niles
    	
 
    	
 
    
	
 
    	
Name: 
    	
William E. Niles
    	
 
    
	
 
    	
Title: 
    	
Executive Vice President
    	
 
    
								

 

[Signature page to Base Warrant Transaction]

 

 

Annex A

 

	
Strike Price:
    	
 
    	
USD118.62
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD6,178,500
    
	
 
    	
 
    	
 
    
	
Final Disruption Date:
    	
 
    	
*
    
	
 
    	
 
    	
 
    
	
Maximum Stock Loan Rate:
    	
 
    	
200 basis points per annum
    
	
 
    	
 
    	
 
    
	
Initial Stock Loan Rate:
    	
 
    	
50 basis points per annum
    
	
 
    	
 
    	
 
    
	
Capped Number of Shares:
    	
 
    	
875,448 Shares
    
	
 
    	
 
    	
 
    
	
Liquidity Trigger:
    	
 
    	
* Shares
    

 

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

 

	
Component Number
    	
 
    	
Number of Warrants
    	
 
    	
Expiration Date
    
	
*
    	
 
    	
*
    	
 
    	
*
    

 

A-1

 

	
Component Number
    	
 
    	
Number of Warrants
    	
 
    	
Expiration Date
    
	
*
    	
 
    	
*
    	
 
    	
*
    

 

A-2

 

	
Component Number
    	
 
    	
Number of Warrants
    	
 
    	
Expiration Date
    
	
*
    	
 
    	
*
    	
 
    	
*
    

 

A-3Exhibit 10.4

 

Execution Version

 

CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH “*”.  AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
 
    	
 
    	
July 11,   2013
    
	
 
    	
 
    	
 
    
	
To:
    	
 
    	
Ascent Capital   Group, Inc.
    
	
 
    	
 
    	
c/o Monitronics   International, Inc.
    
	
 
    	
 
    	
2350 Valley View   Lane, Suite 100
    
	
 
    	
 
    	
Dallas, Texas   75234
    
	
 
    	
 
    	
Attn: Michael   Meyers, Senior Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
From:
    	
 
    	
Credit Suisse Capital LLC
    
	
 
    	
 
    	
c/o Credit Suisse Securities (USA) LLC
    
	
 
    	
 
    	
Eleven Madison Avenue
    
	
 
    	
 
    	
New York, NY 10010
    
	
 
    	
 
    	
 
    
	
Re:
    	
 
    	
Base Convertible Bond   Hedge Transaction
    
	
 
    	
 
    	
(Transaction Reference Number: 59825887)
    

 

Ladies and Gentlemen:

 

The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between Credit Suisse Capital LLC (“Dealer”), represented by Credit Suisse Securities (USA) LLC (“Agent”) as its agent, and Ascent Capital Group, Inc. (“Counterparty”).  This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.

 

1.     This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”).  In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern.  Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and U.S. Bank National Association as trustee (the “Indenture”) relating to the USD90,000,000 principal amount of 4.00% convertible senior notes due 2020 and any additional principal amount of 4.00% convertible senior notes due 2020 issued pursuant to an exercise of the over-allotment option (the “Convertible Securities”).  In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern.  For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution and if the Indenture is amended following its execution, any such amendment will be disregarded for purposes of this Confirmation (other than as provided in Section 8(a) below) unless the parties agree otherwise in writing.

 

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement (the “ISDA Form”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the designation of the guarantee of Credit Suisse (USA), Inc. as a Credit Support Document, with Credit Suisse (USA), Inc.

 

 

as a Credit Support Provider in relation to Dealer).  For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.

 

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

 

2.     The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions.  The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms:

 

	
Trade Date:
    	
 
    	
July 11, 2013
    
	
 
    	
 
    	
 
    
	
Effective Date:
    	
 
    	
The closing date of the initial issuance of   the Convertible Securities.
    
	
 
    	
 
    	
 
    
	
Option Type:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The Series A common stock of   Counterparty, par value USD0.01 per share (Ticker Symbol: “ASCMA”).
    
	
 
    	
 
    	
 
    
	
Number of Options:
    	
 
    	
The number of Convertible Securities (other   than any “Option Securities” (as defined in the Underwriting Agreement, as   defined below)) in denominations of USD1,000 principal amount issued by   Counterparty on the closing date for the initial issuance of the Convertible   Securities.
    
	
 
    	
 
    	
 
    
	
Number of Shares:
    	
 
    	
As of any date, the product of the Number   of Options and the Conversion Rate.
    
	
 
    	
 
    	
 
    
	
Applicable Percentage:
    	
 
    	
50%
    
	
 
    	
 
    	
 
    
	
Conversion Rate:
    	
 
    	
As of any date, the “Conversion Rate” (as   defined in the Indenture) as of such date, but without regard to any   adjustments to the “Conversion Rate” pursuant to Section 12.03 of the   Indenture (a “Fundamental Change Adjustment”)   or Section 12.04(h) of the Indenture (a “Discretionary   Adjustment”).
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
As provided in Annex A to this   Confirmation
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
The Effective Date
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The NASDAQ Global Select Market
    
	
 
    	
 
    	
 
    
	
Related Exchange:
    	
 
    	
All Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures for   Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise Dates:
    	
 
    	
Each Conversion Date.
    
	
 
    	
 
    	
 
    
	
Conversion Date:
    	
 
    	
Each “Conversion Date” (as defined in the   Indenture), occurring during the period from and excluding the Trade Date to   and including the Expiration Date, for Convertible Securities, each in   denominations of USD1,000 principal amount, that are submitted for conversion   on such Conversion Date in accordance with the terms of the Indenture (such   Convertible Securities the “Relevant   Convertible Securities” for such Conversion Date).
    

 

2

 

	
Required Exercise on
    	
 
    	
 
    
	
Conversion Dates:
    	
 
    	
On each Conversion Date, a number of   Options equal to the number of Relevant Convertible Securities for such   Conversion Date in denominations of USD1,000 principal amount shall be   automatically exercised.
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
The second “Scheduled Trading Day”   immediately preceding the “Maturity Date” (each as defined in the Indenture).
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
As provided above under “Required Exercise   on Conversion Dates”.
    
	
 
    	
 
    	
 
    
	
Exercise Notice Deadline:
    	
 
    	
In respect of any exercise of Options   hereunder on any Conversion Date, the Scheduled Trading Day prior to the   scheduled first “Trading Day” (as defined in the Indenture) of the relevant   “Cash Settlement Averaging Period” relating to the Convertible Securities   converted on the Conversion Date occurring on the relevant Exercise Date; provided that in the case of any exercise of Options   hereunder in connection with the conversion of any Relevant Convertible   Securities on any Conversion Date occurring during the period starting on and   including January 15, 2020 and ending on and including the second   “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as   defined in the Indenture) (the “Final Conversion Period”),   the Exercise Notice Deadline shall be the Scheduled Trading Day immediately   following such Conversion Date.
    
	
 
    	
 
    	
 
    
	
Notice of Exercise:
    	
 
    	
Notwithstanding anything to the contrary in   the Equity Definitions, Dealer shall have no obligation to make any payment   or delivery in respect of any exercise of Options hereunder unless   Counterparty notifies Dealer in writing prior to 4:00 PM, New York City time,   on the Exercise Notice Deadline in respect of such exercise of (i) the   number of Options being exercised on the relevant Exercise Date,   (ii) the scheduled settlement date under the Indenture for the Relevant   Convertible Securities converted on the Conversion Date corresponding to such   Exercise Date, (iii) whether such Relevant Convertible Securities will   be settled by Counterparty by delivery of cash, Shares or a combination of   cash and Shares and, if such a combination, the applicable “Specified Dollar   Amount” (as defined in the Indenture) and (iv) the scheduled first   “Trading Day” (as defined in the Indenture) of the relevant “Cash Settlement   Averaging Period”; provided that   in the case of any exercise of Options hereunder in connection with the   conversion of any Relevant Convertible Securities on any Conversion Date   occurring during the Final Conversion Period, the contents of such notice   shall be as set forth in clause (i) above. Counterparty acknowledges its   responsibilities under applicable securities laws, and in particular   Section 9 and Section 10(b) of the Exchange Act (as defined   below) and the rules and regulations thereunder, in respect of any election   of a settlement method with respect to the Convertible Securities and such   election’s effect on the Transaction contemplated by this Confirmation. For   the avoidance of doubt, if Counterparty fails to give such notice when due in   respect of any exercise of Options hereunder, Dealer’s obligation to make any   payment or delivery in respect of such exercise shall be permanently   extinguished, and late notice shall not cure such failure; provided that notwithstanding the foregoing, such notice   (and the related exercise of Options) shall be effective if given
    

 

3

 

	
 
    	
 
    	
after the Exercise Notice Deadline, but   prior to 4:00 PM New York City time, on the fifth Exchange Business Day   following the Exercise Notice Deadline, in which event the Calculation Agent   shall have the right to adjust the Delivery Obligation in a commercially   reasonable manner as appropriate to reflect the additional costs (including,   but not limited to, hedging mismatches and market losses) and expenses   incurred by Dealer in connection with its hedging activities (including the   unwinding of any hedge position) as a result of Dealer not having received   such notice on or prior to the Exercise Notice Deadline.
    
	
 
    	
 
    	
 
    
	
Notice of Convertible Security
    	
 
    	
 
    
	
Settlement Method:
    	
 
    	
Counterparty shall notify Dealer in writing   before 4:00 P.M., New York City time, on the first day of the Final   Conversion Period of the irrevocable election by Counterparty, in accordance   with Section 12.02(a)(iii) of the Indenture, of the settlement   method and, if applicable, the “Specified Dollar Amount” (as defined in the   Indenture) applicable to Relevant Convertible Securities with a Conversion   Date falling in the Final Conversion Period. If Counterparty fails timely to   provide such notice, Counterparty shall be deemed to have notified Dealer of   combination settlement with a “Specified Dollar Amount” (as defined in the   Indenture) of USD1,000 for all conversions occurring during the Final   Conversion Period. Counterparty agrees that it shall settle any Relevant   Convertible Securities with a Conversion Date falling in the Final Conversion   Period in the same manner as provided in the Notice of Convertible Security   Settlement Method it provides or is deemed to have provided hereunder.
    
	
 
    	
 
    	
 
    
	
Dealer’s Telephone Number and Telex and/or   Facsimile Number and Contact Details for purpose of Giving Notice:
    	
 
    	
To be provided by Dealer.
    
	
 
    	
 
    	
 
    
	
Settlement Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
In respect of an Exercise Date occurring on   a Conversion Date, the settlement date for the cash and Shares (if any) to be   delivered in respect of the Relevant Convertible Securities converted on such   Conversion Date pursuant to Section 12.02(c) of the Indenture; provided that the Settlement Date will   not be prior to the latest of (i) the date one Settlement Cycle   following the final day of the relevant “Cash Settlement Averaging Period”,   (ii) the Exchange Business Day immediately following the date on which   Counterparty gives notice to Dealer of such Settlement Date prior to 4:00 PM,   New York City time, and (iii) the Exchange Business Day immediately   following the date Counterparty provides the Notice of Delivery Obligation   prior to 4:00 PM, New York City time.
    
	
 
    	
 
    	
 
    
	
Delivery Obligation:
    	
 
    	
In lieu of the obligations set forth in   Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of   Exercise” above, in respect of an Exercise Date occurring on a Conversion   Date, Dealer will deliver to Counterparty, on the related Settlement Date, a   number of Shares and/or an amount of cash in USD equal to the Applicable   Percentage of the aggregate number of Shares, if any, that Counterparty would   be obligated to deliver to the holder(s) of the Relevant Convertible   Securities converted on such Conversion
    

 

4

 

	
 
    	
Date pursuant to   Section 12.02(a)(iv) of the Indenture and/or the Applicable   Percentage of the aggregate amount of cash, if any, in excess of USD1,000 per   Convertible Security (in denominations of USD1,000) that Counterparty would   be obligated to deliver to holder(s) pursuant to   Section 12.02(a)(iv) of the Indenture (except that such aggregate   number of Shares shall be determined without taking into consideration any   rounding pursuant to Section 12.02(i) of the Indenture and shall be   rounded down to the nearest whole number) and cash in lieu of fractional   Shares, if any, resulting from such rounding, if Counterparty had elected to   satisfy its conversion obligation in respect of such Relevant Convertible   Securities by the Convertible Security Settlement Method, notwithstanding any   different actual or deemed election by Counterparty with respect to the   settlement of such Convertible Securities (the “Convertible Obligation”); provided   that such obligation shall be determined excluding any Shares and/or cash that   Counterparty is obligated to deliver to holder(s) of the Relevant   Convertible Securities as a result of any adjustments to the Conversion Rate   pursuant to a Fundamental Change Adjustment or a Discretionary Adjustment   (and, for the avoidance of doubt, the Delivery Obligation shall not include   any interest payment on the Relevant Convertible Securities that the   Counterparty is (or would have been) obligated to deliver to   holder(s) of the Relevant Convertible Securities for such Conversion   Date); and provided further that if such   exercise relates to the conversion of Relevant Convertible Securities in   connection with which holders thereof are entitled to receive additional   Shares and/or cash as a result of any adjustments to the Conversion Rate   pursuant to a Fundamental Change Adjustment, then, notwithstanding the   foregoing, the Delivery Obligation shall include the Applicable Percentage of   such additional Shares and/or cash, except that the Delivery Obligation shall   be capped so that the value of the Delivery Obligation (with the value of any   Shares included in the Delivery Obligation determined by the Calculation   Agent using the VWAP Price on the last day of the relevant “Cash Settlement   Averaging Period”) does not exceed the amount as determined by the Calculation   Agent that would be payable by Dealer pursuant to Section 6 of the   Agreement if such Conversion Date were an Early Termination Date resulting   from an Additional Termination Event with respect to which the Transaction   (except that, for purposes of determining such amount (x) the Number of   Options shall be deemed to be equal to the number of Options exercised on   such Exercise Date and (y) such amount payable will be determined as if   the section of the Indenture regarding the Fundamental Change Adjustment were   deleted) were the sole Affected Transaction and Counterparty were the sole   Affected Party (determined without regard to Section 8(b) of this   Confirmation). Notwithstanding the foregoing, and in addition to the cap   described in the further proviso to the preceding sentence, in all events the   Delivery Obligation shall be capped so that the value of the Delivery   Obligation does not exceed the Applicable Percentage of the value of the   Convertible Obligation (with the Convertible Obligation determined based on   the actual settlement method elected by Counterparty with respect to such   Relevant Convertible Securities instead of the Convertible Security   Settlement Method and with the value of any Shares included in either the   Delivery Obligation or such Convertible Obligation
    

 

5

 

	
 
    	
 
    	
determined by the Calculation Agent using   the VWAP Price on the last day of the relevant “Cash Settlement Averaging   Period”). If Counterparty is permitted or required to exercise discretion   under the terms of the Indenture with respect to any determination,   calculation or adjustment relevant to conversion of the Convertible   Securities, Counterparty shall consult with Dealer with respect thereto and   the Calculation Agent shall make such determination, calculation or   adjustment for purposes of the Transaction.
    
	
 
    	
 
    	
 
    
	
Convertible Security Settlement Method:
    	
 
    	
 

For any Relevant Convertible Securities, if   Counterparty has notified Dealer in the related Notice of Exercise (or in the   Notice of Convertible Security Settlement Method, as the case may be) that it   has elected to satisfy its conversion obligation in respect of such Relevant   Convertible Securities in cash or in a combination of cash and Shares in   accordance with Section 12.02(a)(iii) of the Indenture (a “Cash Election”) with a “Specified Dollar   Amount” (as defined in the Indenture) of at least USD1,000, the Convertible   Security Settlement Method shall be the settlement method actually so elected   by Counterparty in respect of such Relevant Convertible Securities;   otherwise, the Convertible Security Settlement Method shall (i) assume   Counterparty made a Cash Election with respect to such Relevant Convertible   Securities with a “Specified Dollar Amount” (as defined in the Indenture) of   USD1,000 per Relevant Convertible Security and (ii) be calculated as if   the relevant “Cash Settlement Averaging Period” pursuant to   Section 12.02(a)(iv) of the Indenture consisted of 120 Trading Days   commencing on (x) the third “Scheduled Trading Day” (as defined in the   Indenture) after the Conversion Date for conversions occurring prior to the   Final Conversion Period or (y) the 122nd “Scheduled Trading Day”   prior to the “Maturity Date” (each as defined in the Indenture) for   conversions occurring during the Final Conversion Period, in each case with   the “Daily Conversion Value”, “Daily Measurement Value”, “Daily Settlement   Amount” (each as defined in the Indenture) and related terms adjusted   accordingly.
    
	
 
    	
 
    	
 
    
	
Notice of Delivery Obligation:
    	
 
    	
No later than the Scheduled Trading Day   immediately following the last day of the relevant “Cash Settlement Averaging   Period”, Counterparty shall give Dealer notice of the aggregate number of   Shares and/or amount of cash comprising the Convertible Obligation; provided that, with respect to any Exercise Date occurring   during the Final Conversion Period, Counterparty may provide Dealer with a   single notice of an aggregate number of Shares and/or amount of cash   comprising the Convertible Obligations for all Exercise Dates occurring in   such period (it being understood, for the avoidance of doubt, that the   requirement of Counterparty to deliver such notice shall not limit   Counterparty’s obligations with respect to Notice of Exercise or Notice of   Convertible Security Settlement Method or Dealer’s obligations with respect   to Delivery Obligation, each as set forth above, in any way).
    
	
 
    	
 
    	
 
    
	
Other Applicable Provisions:
    	
 
    	
To the extent Dealer is obligated to   deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9,   9.10, 9.11 (except that the Representation and Agreement contained in   Section 9.11 of the Equity Definitions shall be modified by excluding   any representations therein relating to restrictions, obligations,
    

 

6

 

	
 
    	
 
    	
limitations or requirements under   applicable securities laws arising as a result of the fact that Counterparty   is the Issuer of the Shares) and 10.5 of the Equity Definitions will be   applicable as if “Physical Settlement” applied to the Transaction.
    
	
 
    	
 
    	
 
    
	
Restricted Certificated Shares:
    	
 
    	
Notwithstanding anything to the contrary in   the Equity Definitions, Dealer may, in whole or in part, deliver Shares   required to be delivered to Counterparty hereunder in certificated form in   lieu of delivery through the Clearance System. With respect to such   certificated Shares, the Representation and Agreement contained in   Section 9.11 of the Equity Definitions shall be modified by deleting the   remainder of the provision after the word “encumbrance” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Share   Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Notwithstanding and in lieu of   Section 11.2 of the Equity Definitions, upon the occurrence of any event   or condition set forth in Sections 12.04(a)-(e) of the Indenture that   would result in an adjustment under the terms of the Indenture, the   Calculation Agent shall make a corresponding adjustment to the terms relevant   to the exercise, settlement, payment or other terms of the Transaction.   Promptly following the occurrence of any event that Counterparty reasonably   expects would result in an adjustment to the “Conversion Rate” under the   terms of the Indenture, Counterparty shall notify the Calculation Agent of   such event; and once the adjustments to be made to the terms of the Indenture   and the Convertible Securities in respect of such event have been determined,   Counterparty shall reasonably promptly (but in any event prior to the   effective time of any such adjustments), notify the Calculation Agent of such   adjustments in writing in reasonable detail.
    
	
 
    	
 
    	
 
    
	
Extraordinary   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger Events:
    	
 
    	
Notwithstanding and in lieu of   Section 12.1(b) of the Equity Definitions, a “Merger Event” means   the occurrence of any event or condition set forth in Section 12.06 of   the Indenture.
    
	
 
    	
 
    	
 
    
	
Consequences of Merger Events:
    	
 
    	
Notwithstanding and in lieu of Sections   12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger   Event that results in an adjustment under the Indenture, the Calculation   Agent shall make a corresponding adjustment to the terms relevant to the   exercise, settlement, payment or other terms of the Transaction; provided that such adjustment shall be   made without regard to any adjustment to the Conversion Rate pursuant to a   Fundamental Change Adjustment or a Discretionary Adjustment; and provided further that the Calculation   Agent may limit or alter any such adjustment referenced in this paragraph so   that the fair value of the Transaction to Dealer (taking into account a   commercially reasonable hedge position) is not adversely affected as a result   of such adjustment; and provided further   that if, with respect to a Merger Event, (i) the consideration for the   Shares includes (or, at the option of a holder of Shares, may include) shares   (or depositary receipts with respect to shares) of an entity or person that   is not a corporation organized under the laws of the United States, any State   thereof or the District of Columbia or (ii) Counterparty following such   Merger Event will not be a corporation organized under the laws of the United   States, any State thereof or the
    

 

7

 

	
 
    	
 
    	
District of Columbia or will not be the   Issuer following such Merger Event, then Cancellation and Payment   (Calculation Agent Determination) may apply at Dealer’s sole discretion.
    
	
 
    	
 
    	
 
    
	
Notice of Merger   Consideration:
    	
 
    	
Upon the occurrence of a Merger Event that   causes the Shares to be converted into the right to receive more than a   single type of consideration (determined based in part upon any form of   stockholder election), Counterparty shall reasonably promptly (but, in any   event prior to the effective time of such Merger Event) notify the   Calculation Agent of (i) the weighted average of the types and amounts   of consideration to be received by the holders of Shares entitled to receive   cash, securities or other property or assets with respect to or in exchange   for such Shares in any Merger Event who affirmatively make such an election   and (ii) the adjustment to be made under the Indenture in respect of   such Merger Event in writing and in reasonable detail.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency
    	
 
    	
 
    
	
or Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that,   in addition to the provisions of Section 12.6(a)(iii) of the Equity   Definitions, it shall also constitute a Delisting if the Exchange is located   in the United States and the Shares are not immediately re-listed, re-traded   or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The NASDAQ Global Market (or their respective successors); if the   Shares are immediately re-listed, re-traded or re-quoted on any such exchange   or quotation system, such exchange or quotation system shall thereafter be   deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional   Disruption Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a)  Change   in Law:
    	
 
    	
Applicable; provided   that Section 12.9(a)(ii) of the Equity Definitions is hereby   amended by (x) adding the words “(including, for the avoidance of doubt   and without limitation, adoption or promulgation of new regulations   authorized or mandated by existing statute)” after the word “regulation” in   the second line thereof, (y) adding the words “or any Hedge Positions”   after the word “Shares” in the clause (X) thereof and (z) adding   the words “, or holding, acquiring or disposing of Shares or any Hedge Positions   relating to,” after the words “obligations under” in clause (Y) thereof.
    
	
 
    	
 
    	
 
    
	
(b)  Failure   to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(c)  Insolvency   Filing:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(d)  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 phrases at the end of such   Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“Additionally, it shall constitute a   Hedging Disruption if, as reasonably determined by the Calculation Agent, the   ADTV of the Shares (as defined in Rule 10b-18 under the Exchange Act)   decreases to or below the Liquidity Trigger provided in Annex A
    

 

8

 

	
 
    	
 
    	
to this Confirmation (as adjusted by the   Calculation Agent as it determines appropriate to account for any Potential   Adjustment Event or Merger Event). For the avoidance of doubt, the term   “equity price risk” shall be deemed to include, but shall not be limited to,   stock price and volatility risk. And, for the further avoidance of doubt, any   such transactions or assets referred to in phrases (A) or (B) above   must be available on commercially reasonable pricing terms.”; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii) Section 12.9(b)(iii) of   the Equity Definitions is hereby 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”.
    
	
 
    	
 
    	
 
    
	
(e)Increased Cost   of Hedging:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
For all applicable Potential Adjustment   Events and Extraordinary Events, Dealer
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
For all applicable Extraordinary Events,   Dealer
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Agreements and Acknowledgments
    	
 
    	
 
    
	
Regarding Hedging Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional Acknowledgments:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
3.  Calculation Agent:
    	
 
    	
Dealer; provided that all   determinations and adjustments by the Calculation Agent hereunder shall be   made in good faith and in a commercially reasonable manner; provided further that, upon receipt of a written request   from Counterparty following any determination or adjustment made by the   Calculation Agent hereunder, the Calculation Agent shall, with reasonable   promptness, provide Counterparty with a written explanation describing in   reasonable detail such determination or adjustment (including any quotations,   market data or information from internal sources used in making such   determination or adjustment, but without disclosing the Calculation Agent’s   proprietary models or other information that may be proprietary or   confidential).
    
	
 
    	
 
    	
 
    
	
4.  Account Details:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dealer Payment   Instructions:
    	
 
    	
Credit Suisse Capital LLC
    
	
 
    	
 
    	
Citibank, N.A. New York
    
	
 
    	
 
    	
ABA: 
    
	
 
    	
 
    	
SWIFT: 
    
	
 
    	
 
    	
A/C: 
    
	
 
    	
 
    	
A/C: 
    
	
 
    	
 
    	
 
    
	
Counterparty Payment Instructions:
    	
 
    	
 

To be provided by Counterparty.
    
	
 
    	
 
    	
 
    
	
5.  Offices:
    
	
 
    
	
The Office of Dealer for the Transaction is: New   York
    
	
 
    
	
The Office of   Counterparty for the Transaction is: Not applicable
    
	
 
    
	
6.  Notices:   For purposes of this Confirmation:
    
	
 
    
	
Address for notices or   communications to Counterparty:
    

 

9

 

	
To:
    	
 
    	
Ascent Capital Group, Inc.
    
	
 
    	
 
    	
c/o Monitronics International, Inc.
    
	
 
    	
 
    	
2350 Valley View Lane, Suite 100
    
	
 
    	
 
    	
Dallas, Texas 75234
    
	
Attn:
    	
 
    	
Michael Meyers, Senior Vice President and   Chief Financial Officer
    
	
Facsimile:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Ascent Capital Group, Inc.
    
	
 
    	
 
    	
5251 DTC Parkway, Suite 1000
    
	
 
    	
 
    	
Greenwood Village, CO 80111
    
	
Attn:
    	
 
    	
William E. Niles, Executive Vice President,   General Counsel and Secretary
    
	
 
    	
 
    	
 
    
	
Address for notices or   communications to Dealer:
    
	
 
    	
 
    	
 
    
	
To:
    	
 
    	
Credit Suisse Capital LLC
    
	
 
    	
 
    	
c/o Credit Suisse Securities (USA) LLC
    
	
 
    	
 
    	
Eleven Madison Avenue
    
	
 
    	
 
    	
New York, NY 10010
    
	
Attn:
    	
 
    	
Senior Legal Officer
    
	
Telephone:
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Credit Suisse Securities (USA) LLC
    
	
 
    	
 
    	
One Madison Avenue, 8th Floor
    
	
 
    	
 
    	
New York, New York 10010
    
	
 
    	
 
    	
 
    
	
For payments and deliveries:
    
	
 
    	
 
    	
 
    
	
Attn:
    	
 
    	
Mike Sergio
    
	
Telephone:
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
For all other communications:
    
	
Attn:
    	
 
    	
Peter Finnegan
    
	
Telephone:
    	
 
    	
 
    
	
Facsimile:
    	
 
    	
 
    
	
 
    
	
Designated responsible employee for the purposes   of Section 12(a)(iii) of the Agreement: Senior Legal Officer
    

 

7.  Representations, Warranties and Agreements:

 

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

 

(i)            On the Trade Date, and as of the date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 8(b) below, (A) none of Counterparty and its officers and directors is aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact

 

10

 

required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

 

(ii)           On the Trade Date, neither Counterparty nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer.

 

(iii)          Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

 

(iv)          Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

 

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

 

(vi)          Counterparty is not entering into this Confirmation or making any election hereunder or  under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.

 

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

 

(viii)        On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase the Number of Shares hereunder and any other convertible bond hedge transaction with the same Trade Date in compliance with the laws of the jurisdiction of its incorporation.

 

(ix)          No state or local (including non-U.S. jurisdictions) or non-U.S. federal 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; provided that Counterparty makes no representation or warranty regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer or its affiliates solely as a result of their being a financial institution or broker-dealer.

 

(x)           The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Underwriting Agreement dated as of July 11, 2013 between the Counterparty and Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the Underwriters party thereto (the “Underwriting Agreement”) are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.

 

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

 

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

 

(c)           Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue

 

11

 

of Section 4(2) thereof.  Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

 

(d)           Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, (B) the Agreement is a “master netting agreement” and each of the parties thereto is a “master netting agreement participant”, each as defined in the Bankruptcy Code, (C) a party’s right to liquidate a 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, to cause the liquidation, termination or acceleration” of the Transaction as described in the Bankruptcy Code, and (D) that Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

 

(e)           Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and such other matters as Dealer may reasonably request.

 

8.  Other Provisions:

 

(a)           Additional Termination Events.  The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

 

“Amendment Event” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend, in each case without the consent of Dealer.

 

(b)          Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.  If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable (“Notice of Share Termination”); provided that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and provided further that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event of (i) an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, which Event of Default or Termination Event resulted from an event or events within Counterparty’s control.

 

12

 

Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable:

 

	
Share Termination Alternative:
    	
 
    	
Applicable and means that Dealer shall   deliver to Counterparty the Share Termination Delivery Property on the date   on which the Payment Obligation would otherwise be due pursuant to   “Consequences of Merger Events” above, Section 12.7 or 12.9 of the   Equity Definitions or Section 6(d)(ii) of the Agreement, as   applicable, or such later date as the Calculation Agent may reasonably   determine (the “Share Termination   Payment Date”), in satisfaction of the Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share Termination Delivery
    	
 
    	
 
    
	
Property:
    	
 
    	
A number of Share Termination Delivery   Units, as calculated by the Calculation Agent, equal to the Payment   Obligation divided by the Share Termination Unit Price. The Calculation Agent   shall adjust the Share Termination Delivery Property by replacing any   fractional portion of the aggregate amount of a security therein with an   amount of cash equal to the value of such fractional security based on the   values used to calculate the Share Termination Unit Price.
    
	
 
    	
 
    	
 
    
	
Share Termination Unit Price:
    	
 
    	
The value of property contained in one   Share Termination Delivery Unit 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 and notified by the Calculation Agent to Dealer at the time   of notification of the Payment Obligation.
    
	
 
    	
 
    	
 
    
	
Share Termination Delivery Unit:
    	
 
    	
In the case of a Termination Event, Event   of Default, Delisting or Additional Disruption Event, one Share or, in the   case of an Insolvency, Nationalization or Merger Event, one Share or a unit   consisting of the number or amount of each type of property received by a   holder of one Share (without consideration of any requirement to pay cash or   other consideration in lieu of fractional amounts of any securities) in such   Insolvency, Nationalization or Merger Event, as applicable. If such   Insolvency, Nationalization or Merger Event involves a choice of consideration   to be received by holders, such holder shall be deemed to have elected to   receive the maximum possible amount of cash.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Other applicable provisions:
    	
 
    	
If Share Termination Alternative is   applicable, the provisions of Sections 1.27, 9.8, 9.9, 9.10, 9.11 (except   that the Representation and Agreement contained in Section 9.11 of the   Equity Definitions shall be modified by excluding any representations therein   relating to restrictions, obligations, limitations or requirements under   applicable securities laws arising as a result of the fact that Counterparty   is the issuer of the Shares or any portion of the Share Termination Delivery   Units) and 10.5 of the Equity Definitions will be applicable as if “Physical   Settlement” applied to the Transaction, except that all references to   “Shares” shall be read as references to “Share Termination Delivery Units.”
    

 

(c)           Disposition of Hedge Shares.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “Dealer”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities; provided,

 

13

 

however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to Dealer, including 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 Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer.  “VWAP Price” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen ASCMA <Equity> VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).

 

(d)           Amendment to Equity Definitions.  The following amendment shall be made to the Equity Definitions:

 

Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”

 

(e)             Repurchase and Conversion Rate Adjustment Notices.  Counterparty shall, at least 10 Scheduled Trading Days prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “Conversion Rate Adjustment Event”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is (i) greater than 7.5% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof) and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice.  The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Applicable Percentage of the Number of Shares, and the denominator of which is the number of Shares outstanding on such day.  In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act or any federal, state or local (including non-U.S.) law, regulation or regulatory order, relating to or arising out of such failure.  If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.  In addition, Counterparty will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty.  This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.

 

(f)            Transfer and Assignment.  Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the

 

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receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, and (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above.  In addition, Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, (x) without any consent of Counterparty to any affiliate of Dealer that has (or whose guarantor has) a long-term credit rating of at least BBB- or Baa3, as specified by Standard & Poor’s Rating Services or Moody’s Investors Service, Inc. (or their successors), respectively, at the time of such assignment or transfer; or (y) with the consent of Counterparty, such consent not to be unreasonably withheld or delayed, to any person; provided that Counterparty will not receive a payment from which an amount has been withheld or deducted on account of Indemnifiable Taxes in excess of that which Dealer would have been required to so withhold or deduct in the absence of such transfer or assignment, unless such transferee or assignee agrees to make additional payments such that Counterparty receives the same amount as it would have received from Dealer.  At any time at which any Excess Ownership Position or Hedging Disruption exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “Excess Ownership Position” means any of the following: (i) the Equity Percentage exceeds 7.5%, (ii) Dealer or any “affiliate” or “associate” of Dealer would own in excess of 13% of the outstanding Shares for purposes of Section 203 of the Delaware General Corporation Law or (iii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal, state or local (including non-U.S.) laws, regulations or regulatory orders or constitutive documents or contracts or agreements to which Counterparty is a party, in each case applicable to ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state or federal or non-U.S. regulator) of a Dealer Person, that could reasonably be expected to result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party, in each case minus (y) 1% of the number of Shares outstanding on the date of determination.  The “Equity 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 which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “Dealer Group”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.

 

(g)           Staggered Settlement.  Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:

 

(i)            in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “Cash Settlement Averaging Period”) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and

 

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(ii)           the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.

 

(h)           Right to Extend.  Dealer may postpone any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, that such extension is reasonably necessary or appropriate to (i) preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(i)            Adjustments.  For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

 

(j)            Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

 

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

 

(l)            No Netting and Set-off.  Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

 

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

 

(n)           Early Unwind.  In the event the sale by Counterparty of the Convertible Securities is not consummated with the “Underwriters” pursuant to the Underwriting Agreement for any reason by the close of business in New York on July 17, 2013 (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after July 17, 2013) (July 17, 2013 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities).  Following such termination, cancellation and payment, 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 either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date.  Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(o)           Wall Street Transparency and Accountability Act of 2010.  The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the

 

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enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s 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)).

 

(p)           Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act. “Tax” and “Indemnifiable Tax” each 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 U.S. Internal Revenue Code of 1986, as amended (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 the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

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

 

(r)            Governing Law; Jurisdiction.  THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

 

(s)            Tax Representation.  For the purposes of Section 3(e) and 3(f) of the Agreement, Dealer and Counterparty each represent either (i) that they are “United States persons” within the meaning of Section 7701(a)(30) of the Code or (ii) that payments received or deemed received pursuant to this Confirmation will be treated as income effectively connected with the conduct of a trade or business within the United States.

 

(t)            Matters Relating to Dealer and Agent.  Agent shall act as “agent” for Dealer and Counterparty in connection with the Transaction.  Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by Agent in connection herewith.  Agent has no obligation hereunder, by guaranty, endorsement or otherwise, with respect to performance of Dealer’s obligations hereunder or under the Agreement.  Dealer is an “OTC derivatives dealer” as such term is defined in the Exchange Act and is an affiliate of Agent.  Dealer is not a member of the Securities Investor Protection Corporation.

 

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Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.

 

	
 
    	
Yours faithfully,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CREDIT SUISSE   CAPITAL LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Bik Kwan Chung
    
	
 
    	
 
    	
Name: Bik Kwan Chung
    
	
 
    	
 
    	
Title: Authorized Signatory
    
	
 
    	
 
    
	
 
    	
CREDIT SUISSE   SECURITIES (USA) LLC,
    
	
 
    	
as Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emilie Blay
    
	
 
    	
 
    	
Name: Emilie Blay
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

 

	
Agreed and   Accepted By:
    
	
 
    
	
ASCENT CAPITAL   GROUP, INC.
    
	
 
    
	
 
    
	
By:
    	
/s/ William E. Niles
    	
 
    
	
 
    	
Name: William E. Niles
    	
 
    
	
 
    	
Title: Executive Vice President
    

 

Signature page to Base Convertible Bond Hedge Transaction

 

 

Annex A

 

Premium:              USD8,833,500.

 

Liquidity Trigger:  * Shares

 

A-1

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