Document:

exv10w5

 

Exhibit 10.5

EXECUTION COPY

JPMorgan Chase Bank, National Association

P.O. Box 161

60 Victoria Embankment

London EC4Y 0JP

England

March 3, 2008

To: NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000

Re:  Warrants

     The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and
conditions of the Warrants issued by NuVasive, Inc. (“Company”) to JPMorgan Chase Bank, National
Association, London Branch (“Bank”) on the Trade Date specified below (the “Transaction”). This
letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified
below. This Confirmation shall replace any previous agreements and serve as the final
documentation for this Transaction.

     The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the
Equity Definitions and this Confirmation, this Confirmation shall govern. This Transaction shall
be deemed to be a Share Option Transaction within the meaning set forth in the Equity Definitions.

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

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

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

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

 

 

	 	 	 	 	 
	 
	General Terms:	 	 
	 
	 

	 	Trade Date:
	 	March 3, 2008
	 
	 	 	 	 
	 

	 	Warrants:
	 	Equity call warrants, each giving the holder the right to purchase one Share at the
Strike Price, subject to the Settlement Terms set forth below. For the purposes of
the Equity Definitions, each reference to a Warrant herein shall be deemed to be a
reference to a Call Option.
	 
	 	 	 	 
	 

	 	Warrant Style:
	 	European
	 
	 	 	 	 
	 

	 	Seller:
	 	Company
	 
	 	 	 	 
	 

	 	Buyer:
	 	Bank
	 
	 	 	 	 
	 

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

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

	 	Warrant Entitlement:
	 	One Share per Warrant
	 
	 	 	 	 
	 

	 	Strike Price:
	 	USD 49.1260
	 
	 	 	 	 
	 

	 	Premium:
	 	USD 13,820,000.00
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	March 7, 2008
	 
	 	 	 	 
	 

	 	Exchange:
	 	The NASDAQ Global Select Market
	 
	 	 	 	 
	 

	 	Related Exchange(s):
	 	All Exchanges
	 
	 	 	 	 
	Procedures for Exercise:	 	 
	 
	 	 	 	 
	 

	 	Expiration Time:
	 	The Valuation Time
	 
	 	 	 	 
	 

	 	Expiration Date(s):
	 	Each Scheduled Trading Day during the period from and including the First Expiration
Date and to and including the 80th Scheduled Trading Day following the First
Expiration Date shall be an “Expiration Date” for a number of Warrants equal to the
Daily Number of Warrants on such date; provided that, notwithstanding anything to
the contrary in the Equity Definitions, if any such date is a Disrupted Day, the
Calculation Agent shall make adjustments, if applicable, to the Daily Number of
Warrants or shall reduce such Daily Number of Warrants to zero for which such day
shall be an Expiration Date and shall designate a Scheduled Trading Day or a number
of Scheduled Trading Days as the Expiration Date(s) for the remaining Daily Number
of Warrants or a portion thereof for the originally scheduled Expiration Date; and
provided further that if such Expiration Date has not occurred pursuant to this
clause as of the eighth Scheduled Trading Day following the last scheduled
Expiration Date under this Transaction, the Calculation Agent shall have the right
to declare such Scheduled Trading Day to be the final Expiration Date and the
Calculation Agent shall

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	 	 	 	determine its good faith estimate of the fair market value
for the Shares as of the Valuation Time on that eighth Scheduled Trading Day or on
any subsequent Scheduled Trading Day, as the Calculation Agent shall determine using
commercially reasonable means.
	 
	 	 	 	 
	 

	 	First Expiration Date:
	 	June 17, 2013 (or if such day is not a Scheduled Trading Day, the next following
Scheduled Trading Day), subject to Market Disruption Event below.
	 
	 	 	 	 
	 

	 	Daily Number of Warrants:
	 	For any Expiration Date, the Number of Warrants that have not expired or been
exercised as of such day, divided by the remaining number of Expiration Dates
(including such day), rounded down to the nearest whole number, subject to
adjustment pursuant to the provisos to “Expiration Date(s)”.
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	Applicable; and means that a number of Warrants for each Expiration Date equal to
the Daily Number of Warrants (as adjusted pursuant to the terms hereof) for such
Expiration Date will be deemed to be automatically exercised; provided that
“In-the-Money” means that the Relevant Price for such Expiration Date exceeds the
Strike Price for such Expiration Date; and provided further that all references in
Section 3.4(b) of the Equity Definitions to “Physical Settlement” shall be read as
references to “Net Share Settlement”.
	 
	 

	 	Market Disruption Event:
	 	Section 6.3(a)(ii) of the Equity Definitions is hereby amended by replacing clause
(ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting
immediately following clause (iii) the phrase “; in each case that the Calculation
Agent determines is material.”
	 
	 	 	 	 
	 

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

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

	 	Valuation Date:
	 	Each Exercise Date.
	 
	 	 	 	 
	Settlement Terms:	 	 
	 
	 	 	 	 
	 

	 	Settlement Method:
	 	Net Share Settlement.
	 
	 	 	 	 
	 

	 	Net Share Settlement:
	 	On the relevant Settlement Date, Company shall deliver to Bank the Share Delivery
Quantity of Shares for such Settlement Date to the account specified hereto free of
payment through the Clearance System.
	 
	 	 	 	 
	 

	 	Share Delivery Quantity:
	 	For any Settlement Date, a number of Shares, as calculated by the Calculation Agent,
equal to the Net Share Settlement Amount for such Settlement Date divided by the
Settlement Price on the

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	 	 	 	Valuation Date in respect of such Settlement Date, rounded
down to the nearest whole number plus any Fractional Share Amount.
	 
	 	 	 	 
	 

	 	Net Share Settlement Amount:
	 	For any Settlement Date, an amount equal to the product of (i) the Number of
Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the
Strike Price Differential for such Settlement Date and (iii) the Warrant
Entitlement.
	 
	 	 	 	 
	 

	 	Settlement Price:
	 	For any Valuation Date, the per Share volume-weighted average price as displayed
under the heading “Bloomberg VWAP” on Bloomberg page NUVA.UQ AQR (or any
successor thereto) in respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time on such Valuation Date (or if such
volume-weighted average price is unavailable or is, in the Calculation Agent’s
reasonable discretion, erroneous, the market value of one Share on such Valuation
Date, as determined by the Calculation Agent). Notwithstanding the foregoing, if (i)
any Expiration Date is a Disrupted Day and (ii) the Calculation Agent determines
that such Expiration Date shall be an Expiration Date for fewer than the Daily
Number of Warrants, as described above, then the Settlement Price for the relevant
Valuation Date shall be the volume-weighted average price per Share on such
Valuation Date on the Exchange, as determined by the Calculation Agent based on such
sources as it deems appropriate using a volume-weighted methodology, for the portion
of such Valuation Date for which the Calculation Agent determines there is no Market
Disruption Event.
	 
	 	 	 	 
	 

	 	Settlement Date(s):
	 	As determined in reference to Section 9.4 of the Equity Definitions, subject to
Section 9(k)(i) hereof.
	 
	 	 	 	 
	Other Applicable Provisions:	 	The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5 of the Equity
Definitions will be applicable, except that all references in such provisions to
“Physically-settled” shall be read as references to “Net Share Settled.” “Net Share
Settled” in relation to any Warrant means that Net Share Settlement is applicable to
that Warrant.
	 
	 	 	 	 
	Representation and Agreement:	 	Notwithstanding Section 9.11 of the Equity Definitions and subject to Sections 9(k)
and 9(m) of this Confirmation, the parties acknowledge that any Shares delivered to
Bank may be, upon delivery, subject to restrictions and limitations arising from
Company’s status as issuer of the Shares under applicable securities laws.
	 
	 	 	 	 
	3. Additional Terms applicable to the
   Transaction:	 	 
	 
	 	 	 	 
	 Adjustments applicable to the Warrants:	 	 
	 
	 	 	 	 
	 Method of Adjustment:	 	Calculation Agent Adjustment. For the avoidance of doubt, in making any adjustments
under the Equity Definitions, the Calculation Agent may make adjustments, if any, to
any one or more of the Strike Price, the Number of Warrants, the Daily Number of
Warrants and the Warrant Entitlement. Notwithstanding the foregoing, any cash
dividends or

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	 	 	 	distributions on the Shares, whether or not extraordinary, shall be
governed by Section 9(f) of this Confirmation in lieu of Article 10 or Section
11.2(c) of the Equity Definitions.
	 
	 	 	 	 
	Extraordinary Events applicable to the
Transaction:	 	 
	 
	 	 	 	 
	 

	 	New Shares:
	 	Section 12.1(i) of the Equity Definitions is hereby amended by deleting the text in
clause (i) in its entirety and replacing it with the phrase “publicly quoted, traded
or listed on any of the New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or their respective
successors)”.
	 
	 	 	 	 
	 

	 	Consequence of Merger Events:	 	 
	 
	 	 	 	 
	 

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

	 	     Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

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

	 	      Share-for-Combined:
	 	Cancellation and Payment
(Calculation Agent Determination); provided that Bank may
elect, in its commercially reasonable judgment, Component Adjustment (Calculation
Agent Determination).
	 
	 	 	 	 
	 

	 	Consequence of Tender Offers:	 	 
	 
	 	 	 	 
	 

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

	 	      Share-for-Share:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	     Share-for-Other:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	      Share-for-Combined:
	 	Modified Calculation Agent Adjustment
	 
	 	 	 	 
	 

	 	Modified Calculation

Agent Adjustment:
	 	If, in respect of any Merger Event to which Modified Calculation Agent Adjustment
applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the
Equity Definitions would result in Issuer being different from the issuer of the
Shares, then with respect to such Merger Event, as a condition precedent to the
adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Issuer and
the issuer of the Shares shall, prior to the Merger Date, have entered into such
documentation containing representations, warranties and agreements relating to

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	 	 	 	securities law and other issues as requested by Bank that Bank has determined, in
its commercially reasonable discretion, to be reasonably necessary or appropriate to
allow Bank to continue as a party to the Transaction, as adjusted under Section
12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind
activities in connection with the Transaction in a manner compliant with applicable
legal, regulatory or self-regulatory requirements, or with related policies and
procedures applicable to Bank, and if such conditions are not met or if the
Calculation Agent determines that no adjustment that it could make under Section
12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result,
then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions
shall apply.
	 
	 	 	 	 
	 

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

	 	Nationalization, Insolvency or Delisting:
	 	 Cancellation and Payment
(Calculation Agent Determination); provided that, in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange, The NASDAQ Global Select Market or
The NASDAQ Global Market (or their respective successors); if the Shares are
immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange,
the American Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors), such exchange or quotation system shall
thereafter be deemed to be the Exchange.
	 
	 	 	 	 
	 

	 	Additional Disruption Events:	 	 
	 
	 	 	 	 
	 

	 	     Change in Law:
	 	Applicable
	 
	 

	 	     Failure to Deliver:
	 	Not Applicable
	 
	 

	 	     Insolvency Filing:
	 	Applicable
	 
	 

	 	     Hedging Disruption:
	 	Applicable
	 
	 

	 	     Increased Cost of Hedging:
	 	Applicable
	 

	 	     Loss of Stock Borrow:
	 	Applicable
	 

	 	     Maximum Stock Loan Rate:
	 	     100 basis points.
	 

	 	     Increased Cost of Stock Borrow:
	 	Applicable
	 
	 

	 	     Initial Stock Loan Rate:
	 	25 basis points.
	 
	 

	 	     Hedging Party:
	 	Bank for all applicable Additional Disruption Events
	 
	 	 	 	 
	 

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

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	 	     Non-Reliance:
	 	Applicable
	 
	 

	 	     Agreements and 

     Acknowledgments
     Regarding Hedging 

     Activities:
	 	Applicable
	 
	 

	 	     Additional 

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

	5.	 	Account Details:

	 	(a)	 	Account for payments to Company:
 

To be provided by Company. 

Account for delivery of Shares from Company: 

To be provided by Company.

	 	(b)	 	Account for payments to Bank: 

JPMorgan Chase Bank, N.A., New York

ABA: 021 000 021

Favour: JPMorgan Chase Bank N.A., London

A/C: 0010962009

CHASUS33
	 
	 	 	 	Account for delivery of Shares to Bank:
 

DTC 0060

	6.	 	Offices:

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

	 	 	 	The Office of Bank for the Transaction is: London

	7.	 	Notices: For purposes of this Confirmation:

	 	(a)	 	Address for notices or communications to Company:
	 
	 	 	 	NuVasive, Inc.
	 
	 	 	 	4545 Towne Centre Court
	 
	 	 	 	San Diego, CA 92121
	 
	 	 	 	Attention: Treasurer
	 
	 	 	 	Telephone No.: 858-909-1800
	 
	 	 	 	Facsimile No.: 858-909-2000

	 	(b)	 	Address for notices or communications to Bank:

	 	 	 	Bank notice information to follow:

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	 	 	 	JPMorgan Chase Bank, National Association

277 Park Avenue, 11th Floor

New York, NY 10172

Attention: Mariusz Kwasnik

Title: Operations Analyst

EDG Corporate Marketing 

Telephone No: (212) 622-6707

Facsimile No: (212) 622-8534

	8.	 	Representations, Warranties and Agreements of Company and Bank

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

	 	(i)	 	Company has all necessary corporate power and authority
to execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on Company’s part; and this
Confirmation has been duly and validly executed and delivered by Company
and constitutes its valid and binding obligation, enforceable against
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution hereunder may be
limited by federal or state securities laws or public policy relating
thereto.
	 
	 	(ii)	 	Neither the execution and delivery of this Confirmation
nor the incurrence or performance of obligations of Company hereunder will
conflict with or result in a breach of the certificate of incorporation or
by-laws (or any equivalent documents) of Company, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency applicable to the Company, or any
agreement or instrument to which Company or any of its subsidiaries is a
party or by which Company or any of its subsidiaries is bound or to which
Company or any of its subsidiaries is subject, or constitute a default
under, or result in the creation of any lien under, any such agreement or
instrument.
	 
	 	(iii)	 	No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required in
connection with the execution, delivery or performance by Company of this
Confirmation, except such as have been obtained or made and such as may be
required under the Securities Act of 1933, as amended (the “Securities
Act”) or state securities laws.
	 
	 	(iv)	 	The Shares of Company initially issuable upon exercise
of the Warrant by the net share settlement method (the “Warrant Shares”)
have been reserved for issuance by all required corporate action of
Company. The Warrant Shares have been duly authorized and, when delivered
against payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant following
the exercise of the Warrant in accordance with the terms and conditions of
the Warrant, will be validly issued, fully-paid and non-assessable, and the
issuance of the Warrant Shares will not be subject to any preemptive or
similar rights. The Warrant Shares have been approved for listing on The
NASDAQ Global Select Market, subject to official notice of issuance.

8

 

	 	(v)	 	Company is not and will not be required to register as
an “investment company” as such term is defined in the Investment Company
Act of 1940, as amended.
	 
	 	(vi)	 	Company is an “eligible contract participant” (as such
term is defined in Section 1a(12) of the Commodity Exchange Act, as
amended).
	 
	 	(vii)	 	During the period starting on the first Expiration
Date and ending on the last Expiration Date (the “Settlement Period”),
neither Company nor any “affiliate” or “affiliated purchaser” (each as
defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly
or indirectly (including, without limitation, by means of any cash-settled
or other derivative instrument) purchase, offer to purchase, place any bid
or limit order that would effect a purchase of, or commence any tender
offer relating to, any Shares (or an equivalent interest, including a unit
of beneficial interest in a trust or limited partnership or a depository
share) or any security convertible into or exchangeable or exercisable for
Shares, except through Bank.
	 
	 	(viii)	 	Without limiting the generality of Section 13.1 of the Equity
Definitions, Company acknowledges that Bank is not making any
representations or warranties with respect to the treatment of the
Transaction under FASB Statements 128, 133 (as amended), 149 or 150, EITF
Issue No. 00-19, 01-6 or 03-6 (or any successor issue statements) or under
any accounting standards including FASB’s Liabilities & Equity Project.
	 
	 	(ix)	 	Prior to the Trade Date, Company shall deliver to Bank
a resolution of Company’s board of directors authorizing the Transaction
and such other certificate or certificates as Bank shall reasonably
request.
	 
	 	(x)	 	Company is not “insolvent” (as such term is defined
under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United
States Code) (the “Bankruptcy Code”)).
	 
	 	(xi)	 	Company understands no obligations of Bank to it
hereunder will be entitled to the benefit of deposit insurance and that
such obligations will not be guaranteed by any affiliate of Bank or any
governmental agency.
	 
	 	(xii)	 	Company agrees that it (A) will not during the
Settlement Period make, or permit to be made, any public announcement (as
defined in Rule 165(f) under the Securities Act) of any Merger Transaction
or potential Merger Transaction unless such public announcement is made
prior to the opening or after the close of the regular trading session on
the Exchange for the Shares; (B) shall promptly (but in any event prior to
the next opening of the regular trading session on the Exchange) notify
Bank following any such announcement that such announcement has been made;
and (C) shall promptly (but in any event prior to the next opening of the
regular trading session on the Exchange) provide Bank with written notice
specifying (i) Company’s average daily Rule 10b-18 Purchases (as defined in
Rule 10b-18) during the three full calendar months immediately preceding
the announcement date that were not effected through Bank or its affiliates
and (ii) the number of Shares purchased pursuant to the proviso in Rule
10b-18(b)(4) under the Exchange Act for the three full calendar months
preceding the announcement date. Such written notice shall be deemed to be
a certification by Company to Bank that such information is true and
correct. In addition, Company shall promptly notify Bank of the earlier to
occur of the completion of such transaction and the completion of the vote
by target shareholders. “Merger Transaction” means any merger, acquisition
or similar transaction involving a recapitalization as contemplated by Rule
10b-18(a)(13)(iv) under the Exchange Act.

	 	(b)	 	Each of Bank and Company acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act,
by virtue of Section 4(2) thereof.

9

 

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

	 	9.	 	Other Provisions:

	 	(a)	 	Opinions. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to Bank with respect to the matters set forth in Sections 8(a)(i) through
(iv) of this Confirmation; provided that, with respect to “any agreement or instrument”
referred to in Section 8(a)(ii), such opinion shall only refer to agreements and
instruments filed as exhibits to Counterparty’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2007, as updated by any exhibits to Current Reports on
Form 8-K filed on January 11, 2008, January 31, 2008 and February 29, 2008.
	 
	 	(b)	 	Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give Bank a written notice of such repurchase (a
“Repurchase Notice”) on such day if following such repurchase, the quotient of (x) the
product of (a) the Number of Warrants and (b) the Warrant Entitlement divided by (y)
the number of Company’s outstanding Shares (such quotient expressed as a percentage,
the “Warrant Equity Percentage”) would be (i) greater than 7.5% or (ii) 0.5% greater
than the Warrant Equity Percentage included in the immediately preceding Repurchase
Notice. Company agrees to indemnify and hold harmless Bank and its affiliates and
their respective officers, directors, employees, affiliates, advisors, agents and
controlling persons (each, an “Indemnified Person”) from and against any and all losses
(including losses relating to Bank’s hedging activities as a consequence of becoming,
or of the risk of becoming, a Section 16 “insider”, including without limitation, any
forbearance from hedging activities or cessation of hedging activities and any losses
in connection therewith with respect to this Transaction), claims, damages, judgments,
liabilities and expenses (including reasonable attorney’s fees), joint or several,
which an Indemnified Person actually may become subject to, as a result of Company’s
failure to provide Bank with a Repurchase Notice on the day and in the manner specified
in this paragraph, and to reimburse, within 30 days, upon written request, each of such
Indemnified Persons for any reasonable legal or other expenses incurred in connection
with investigating, preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or asserted
against the Indemnified Person, such Indemnified Person shall promptly notify Company
in writing, and Company, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified Person
and any others Company may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Company shall not be liable for
any settlement of any proceeding effected without its written consent, but if settled
with such consent or if there be a final judgment for the plaintiff, Company agrees to
indemnify any Indemnified Person from and against any loss or liability by reason of
such settlement or judgment. Company shall not, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened proceeding
in respect of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional

10

 

	 	 	 	release of such Indemnified Person from all liability on claims that are the subject
matter of such proceeding on terms reasonably satisfactory to such Indemnified
Person. If the indemnification provided for in this paragraph is unavailable to an
Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Company under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid
or payable by such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Person at law or in equity. The indemnity and contribution agreements
contained in this paragraph shall remain operative and in full force and effect
regardless of the termination of this Transaction.
	 
	 	(c)	 	Regulation M. Company shall not, during the period starting on the
first Expiration Date and ending on second Scheduled Trading Day immediately following
the last Expiration Date, engaged in a distribution, as such term is used in Regulation
M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any
securities of Company, other than a distribution meeting the requirements of the
exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M.
	 
	 	(d)	 	No Manipulation. Company is not entering into this Transaction (i) on
the basis of, and it is not aware of, any material non-public information with respect
to itself or the Shares (ii) in anticipation of, in connection with, or to facilitate,
a distribution of its securities, a self tender offer or a third-party tender offer or
(iii) to create actual or apparent trading activity in the Shares (or any security
convertible into or exchangeable for the Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible into or exchangeable
for the Shares) or otherwise in violation of the Exchange Act.
	 
	 	(e)	 	Transfer or Assignment. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent of Bank. Bank may,
without Company’s consent, transfer or assign all or any part of its rights or
obligations under this Transaction to any third party. If after Bank’s commercially
reasonable efforts, Bank is unable to effect such a transfer or assignment on pricing
terms reasonably acceptable to Bank and within a time period reasonably acceptable to
Bank of a sufficient number of Warrants to reduce (i) Bank Group’s “beneficial
ownership” (within the meaning of Section 13 of the Exchange Act and rules promulgated
thereunder) to 8.0% of Company’s outstanding Shares or less or (ii) the Warrant Equity
Percentage to 14.5% or less, Bank may designate any Exchange Business Day as an Early
Termination Date with respect to a portion (the “Terminated Portion”) of this
Transaction, such that (i) Bank Group’s “beneficial ownership” following such partial
termination will be equal to or less than 8.0% or (ii) the Warrant Equity Percentage
following such partial termination will be equal to or less than 14.5%. In the event
that Bank so designates an Early Termination Date with respect to a portion of this
Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a Transaction having terms
identical to this Transaction and a Number of Warrants equal to the Terminated Portion,
(ii) Company shall be the sole Affected Party with respect to such partial termination
and (iii) such Transaction shall be the only Terminated Transaction (and, for the
avoidance of doubt, the provisions of paragraph 9(j) shall apply to any amount that is
payable by Company to Bank pursuant to this sentence). Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing Bank to purchase,
sell, receive or deliver any Shares or other securities to or from Company, Bank may
designate any of its affiliates to purchase, sell, receive or deliver such Shares or
other securities and otherwise to perform Bank’s obligations in respect of this
Transaction and any such designee may assume such obligations. Bank shall be
discharged of its obligations to Company to the extent of any such performance. “Bank
Group” means Bank or any affiliate of Bank subject to aggregation with Bank under such
Section 13 of the Exchange Act and rules promulgated thereunder and all persons who
may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with
Bank.
	 
	 	(f)	 	Dividends. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, an ex-dividend date for a cash
dividend or distribution occurs with respect to

11

 

	 	 	 	the Shares, then the Calculation Agent will adjust any of the Strike Price, Number
of Warrants and/or Daily Number of Warrants to preserve the fair value of the
Warrants to Bank after taking into account such dividend or distribution or lack
thereof.
	 
	 	(g)	 	Role of Agent. Each party agrees and acknowledges that (i) J.P. Morgan
Securities Inc., an affiliate of Bank (“JPMSI”), has acted solely as agent and not as
principal with respect to this Transaction and (ii) JPMSI has no obligation or
liability, by way of guaranty, endorsement or otherwise, in any manner in respect of
this Transaction (including, if applicable, in respect of the settlement thereof). Each
party agrees it will look solely to the other party (or any guarantor in respect
thereof) for performance of such other party’s obligations under this Transaction.
	 
	 	(h)	 	Additional Provisions.

	 	(i)	 	Amendments to the Equity Definitions:

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

(B) Section 11.2(c) of the Equity Definitions is hereby amended by (x)
replacing the words “a diluting or concentrative” with “an”, (y) adding the
phrase “or Warrants” after the words “the relevant Shares” in the same sentence
and (z) deleting the phrase “(provided that no adjustments will be made to
account solely for changes in volatility, expected dividends, stock loan rate
or liquidity relative to the relevant Shares)” and replacing it with the phrase
“(and, for the avoidance of doubt, adjustments may be made to account solely
for changes in volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares).”

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

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

	 	(E)	 	Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:

(x) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)”
following subsection (A) and (3) the phrase “in each case” in subsection
(B); and

(y) deleting the phrase “neither the Non-Hedging Party nor the Lending
Party lends Shares in the amount of the Hedging Shares or” in the
penultimate sentence.

	 	(F)	 	Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

(x) adding the word “or” immediately before subsection “(B)” and
deleting the comma at the end of subsection (A); and

(y) (1) deleting subsection (C) in its entirety, (2) deleting the word
“or” immediately preceding subsection (C) and (3) deleting the
penultimate sentence in its entirety and replacing it with the sentence
“The Hedging Party will, in a commercially reasonable manner, determine
the Cancellation Amount payable by one party to the other.”

12

 

(ii) Notwithstanding anything to the contrary in this Confirmation, upon the
occurrence of one of the following events, with respect to this Transaction, (1)
Bank shall have the right to designate such event an Additional Termination Event
and designate an Early Termination Date pursuant to Section 6(b) of the Agreement,
and (2) Company shall be deemed the sole Affected Party and the Transaction shall be
deemed the sole Affected Transaction:

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

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

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

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

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

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

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

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

13

 

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

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

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

	 	(i)	 	No Collateral or Setoff. Notwithstanding any provision of the
Agreement, the Confirmation or the Equity Definitions or any other agreement between
the parties to the contrary, the obligations of Company hereunder are not secured by
any collateral. Obligations under this Transaction shall not be set off by Company
against any other obligations of the parties, whether arising under the Agreement, this
Confirmation or the Equity Definitions, under any other agreement between the parties
hereto, by operation of law or otherwise. Any provision in the Agreement with respect
to the satisfaction of Company’s payment obligations to the extent of Bank’s payment
obligations to Company in the same currency and in the same Transaction (including,
without limitation Section 2(c) thereof) shall not apply to Company and, for the
avoidance of doubt, Company shall fully satisfy such payment obligations
notwithstanding any payment obligation to Company by Bank in the same currency and in
the same Transaction. In calculating any amounts under Section 6(e) of the Agreement or
Section 12 of the Equity Definitions, notwithstanding anything to the contrary in the
Agreement or the Equity Definitions, (1) separate amounts shall be calculated as set
forth in Section 6(e) of the Agreement or Section 12 of the Equity Definitions, as
applicable, with respect to this Transaction, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement or Section 12 of the Equity
Definitions. For the avoidance of doubt and notwithstanding anything to the contrary
provided in this Section 9(i), in the event of bankruptcy or liquidation of Company
neither party shall have the right to set off any obligation that it may have to the
other party under this Transaction against any obligation such other party may have to
it, whether arising under the Agreement, this Confirmation, the Equity Definitions or
any other agreement between the parties hereto, by operation of law or otherwise.
	 
	 	(j)	 	Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If, in respect of this Transaction, an amount is payable by
Company to Bank, (i) pursuant to Section 12.2, 12.3, 12.6, 12.7 or Section 12.9 of the
Equity Definitions (except in the event of an Insolvency, Nationalization, Tender Offer
or Merger Event in which the consideration or proceeds to be paid to holders of shares
consists solely of cash) or (ii) pursuant to Sections 6(d) and 6(e) of the Agreement
(except in the event of an Event of Default in which Company is the Defaulting Party or
a Termination Event in which Company is the Affected Party, other than an Event of
Default of the type described in (x) Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or (y) a Termination Event of the type described in Section 5(b) of the
Agreement, in the case of both (x) and (y), resulting from an event or events outside
Company’s control) (a “Payment Obligation”), Company shall have the right, in its sole
discretion, to satisfy any such Payment Obligation by the Share Termination Alternative
(as defined below) by giving irrevocable telephonic notice to Bank, confirmed in
writing within one Scheduled Trading Day, no later than 12:00 p.m. New York local time
on the Merger Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination Date or, in the case of an
Additional Disruption Event, date of cancellation, as applicable; provided that if

14

 

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

	 	 	 	 	 
	 

	 	Share Termination Alternative:
	 	If applicable, Company shall deliver
to Bank the Share Termination Delivery Property on the date (the “Share
Termination Payment Date”) on which the Payment Obligation would otherwise be
due pursuant to Section 12.2, 12.3, 12.6, 12.7 or Section 12.9 of the Equity
Definitions and Sections 6(d) and 6(e) of the Agreement, as applicable, subject
to paragraph (k)(i) below, in satisfaction, subject to paragraph (k)(ii) below,
of the Payment Obligation in the manner reasonably requested by Bank free of
payment.
	 
	 	 	 	 
	 

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

	 	Share Termination Unit Price:
	 	The value to Bank of property
contained in one Share Termination Delivery Unit on the date such Share
Termination Delivery Units are to be delivered as Share Termination Delivery
Property, as determined by the Calculation Agent in its discretion by
commercially reasonable means. The Calculation Agent shall notify Company of
such Share Termination Unit Price at the time of notification of the Payment
Obligation. In the case of a Private Placement of Share Termination Delivery
Units that are Restricted Shares (as defined below), as set forth in paragraph
(k)(i) below, the Share Termination Unit Price shall be determined by the
discounted price applicable to such Share Termination Delivery Units. In the
case of a Registration Settlement of Share Termination Delivery Units that are
Restricted Shares (as defined below) as set forth in paragraph (k)(ii) below,
the Share Termination Unit Price shall be the Settlement Price on the Merger
Date, the Tender Offer Date, the Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), the date of cancellation or the
Early Termination Date, as applicable.
	 
	 	 	 	 
	 

	 	Share Termination Delivery Unit:
	 	In the case of a Termination Event,
Event of Default, Additional Disruption Event or Delisting, one Share or, in
the case of Nationalization, Insolvency, Tender Offer or Merger Event, a unit
consisting of the

15

 

	 	 	 	 	 
	 

	 	 	 	number or amount of each type of property
received by a holder of one Share (without
consideration of any requirement to pay cash
or other consideration in lieu of fractional
amounts of any securities) in such
Nationalization, Insolvency, Tender Offer or
Merger Event. If such Nationalization,
Insolvency, Tender Offer or Merger Event
involves a choice of consideration to be
received by holders, such holder shall be
deemed to have elected to receive the maximum
possible amount of cash.
	 
	 

	 	Failure to Deliver: 	 	Inapplicable
	 
	 	 	 	 
	 

	 	Other applicable provisions:
	 	If Share Termination Alternative is
applicable, the provisions of Sections 9.8, 9.9, 9.11, 9.12 and 10.5 (as
modified above) of the Equity Definitions will be applicable, except that all
references in such provisions to “Physically-settled” shall be read as
references to “Share Termination Settled” and all references to “Shares” shall
be read as references to “Share Termination Delivery Units”. “Share
Termination Settled” in relation to this Transaction means that Share
Termination Alternative is applicable to this Transaction.

	 	(k)	 	Registration/Private Placement Procedures. If, in the reasonable
opinion of Bank, following any delivery of Shares or Share Termination Delivery
Property to Bank hereunder, such Shares or Share Termination Delivery Property would be
in the hands of Bank subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery requirement for such
Shares or Share Termination Delivery Property pursuant to any applicable federal or
state securities law (including, without limitation, any such requirement arising under
Section 5 of the Securities Act as a result of such Shares or Share Termination
Delivery Property being “restricted securities”, as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule 145 under the
Securities Act) (such Shares or Share Termination Delivery Property, “Restricted
Shares”), then delivery of such Restricted Shares shall be effected pursuant to either
clause (i) or (ii) below at the election of Company, unless Bank waives the need for
registration/private placement procedures set forth in (i) and (ii) below.
Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants
exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the
first Settlement Date for the first Expiration Date, a Private Placement Settlement or
Registration Settlement for all deliveries of Restricted Shares for all such Expiration
Dates which election shall be applicable to all Settlement Dates for such Warrants and
the procedures in clause (i) or clause (ii) below shall apply for all such delivered
Restricted Shares on an aggregate basis commencing after the final Settlement Date for
such Warrants. The Calculation Agent shall make reasonable adjustments to settlement
terms and provisions under this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered hereunder.

	 	(i)	 	If Company elects to settle the Transaction pursuant to this
clause (i) (a “Private Placement Settlement”), then delivery of Restricted
Shares by Company shall be effected in customary private placement procedures
with respect to such Restricted Shares of similar size, in form and substance
reasonably acceptable to Bank, in its good faith and commercially reasonable
discretion; provided that Company may not elect a Private Placement Settlement
if, on the date of its election, it has taken, or caused to be taken, any
action that would make unavailable either the exemption pursuant to Section
4(2) of the Securities Act for the sale by Company to Bank (or any affiliate
designated by Bank) of

16

 

	 	 	 	the Restricted Shares or the exemption pursuant to Section 4(1) or Section
4(3) of the Securities Act for resales of the Restricted Shares by Bank (or
any such affiliate of Bank). The Private Placement Settlement of such
Restricted Shares shall include customary representations, covenants, blue
sky and other governmental filings and/or registrations, indemnities to
Bank, due diligence rights (for Bank or any designated buyer of the
Restricted Shares by Bank), opinions and certificates, and such other
documentation as is customary for private placement agreements, all
reasonably acceptable to Bank. In the case of a Private Placement
Settlement, Bank shall, in a commercially reasonable manner, determine the
appropriate discount to the Share Termination Unit Price (in the case of
settlement of Share Termination Delivery Units pursuant to paragraph (j)
above) or any Settlement Price (in the case of settlement of Shares pursuant
to Section 2 above) applicable to such Restricted Shares in a commercially
reasonable manner and appropriately adjust the number of such Restricted
Shares to be delivered to Bank hereunder; provided that in no event shall
such number be greater than two times the Number of Shares (the “Maximum
Amount”). Notwithstanding the Agreement or this Confirmation, the date of
delivery of such Restricted Shares shall be the Exchange Business Day
following notice by Bank to Company, of such applicable discount and the
number of Restricted Shares to be delivered pursuant to this clause (i).
For the avoidance of doubt, delivery of Restricted Shares shall be due as
set forth in the previous sentence and not be due on the Share Termination
Payment Date (in the case of settlement of Share Termination Delivery Units
pursuant to paragraph (j) above) or on the Settlement Date for such
Restricted Shares (in the case of settlement in Shares pursuant to Section 2
above).
	 
	 	 	 	In the event Company shall not have delivered the full number of Restricted
Shares otherwise applicable as a result of the proviso above relating to the
Maximum Amount (such deficit, the “Deficit Restricted Shares”), Company
shall be continually obligated to deliver, from time to time until the full
number of Deficit Restricted Shares have been delivered pursuant to this
paragraph, Restricted Shares when, and to the extent, that (i) Shares are
repurchased, acquired or otherwise received by Company or any of its
subsidiaries after the Trade Date (whether or not in exchange for cash, fair
value or any other consideration), (ii) authorized and unissued Shares
reserved for issuance in respect of other transactions prior to such date
which prior to the relevant date become no longer so reserved and (iii)
Company additionally authorizes any unissued Shares that are not reserved
for other transactions. Company shall immediately notify Bank of the
occurrence of any of the foregoing events (including the number of Shares
subject to clause (i), (ii) or (iii) and the corresponding number of
Restricted Shares to be delivered) and promptly deliver such Restricted
Shares thereafter.
	 
	 	(ii)	 	If Company elects to settle the Transaction pursuant to this
clause (ii) (a “Registration Settlement”), then Company shall promptly (but in
any event no later than the beginning of the Resale Period) file and use its
reasonable best efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding registration
statement in form and substance reasonably satisfactory to Bank, to cover the
resale of such Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions, representations,
underwriting discounts (if applicable), commissions (if applicable),
indemnities due diligence rights, opinions and certificates, and such other
documentation as is customary for equity resale underwriting agreements, all
reasonably acceptable to Bank. If Bank, in its sole reasonable discretion, is
not satisfied with such procedures and documentation Private Placement
Settlement shall apply. If Bank is satisfied with such procedures and
documentation, it shall sell the Restricted Shares pursuant to such
registration statement during a period (the “Resale Period”) commencing on the
Exchange Business Day following delivery of such Restricted Shares (which, for
the avoidance of doubt, shall be (x) the Share Termination Payment Date in case
of settlement in Share Termination Delivery Units pursuant to paragraph (j)
above or (y) the Settlement Date in respect of the final Expiration Date for
all Daily Number of Warrants) and ending on the earliest of (i) the Exchange
Business

17

 

	 	 	 	Day on which Bank completes the sale of all Restricted Shares or, in the
case of settlement of Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds of such sales equals
or exceeds the Payment Obligation (as defined above), (ii) the date upon
which all Restricted Shares have been sold or transferred pursuant to Rule
144 (or similar provisions then in force) or Rule 145(d)(1) or (2) (or any
similar provision then in force) under the Securities Act and (iii) the date
upon which all Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144 (or any similar provision then in force)
or Rule 145(d)(3) (or any similar provision then in force) under the
Securities Act. If the Payment Obligation exceeds the realized net proceeds
from such resale, Company shall transfer to Bank by the open of the regular
trading session on the Exchange on the Exchange Trading Day immediately
following the last day of the Resale Period the amount of such excess (the
“Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”)
in an amount that, based on the Settlement Price on the last day of the
Resale Period (as if such day was the “Valuation Date” for purposes of
computing such Settlement Price), has a dollar value equal to the Additional
Amount. The Resale Period shall continue to enable the sale of the
Make-whole Shares. If Company elects to pay the Additional Amount in
Shares, the requirements and provisions for Registration Settlement shall
apply. This provision shall be applied successively until the Additional
Amount is equal to zero. In no event shall Company deliver a number of
Restricted Shares greater than the Maximum Amount.
	 
	 	(iii)	 	Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Bank, as purchaser of such
Restricted Shares, (i) may be transferred by and among Bank and its affiliates
and Company shall effect such transfer without any further action by Bank and
(ii) after the period of 6 months from the Trade Date (or 1 year from the Trade
Date if, at such time, informational requirements of Rule 144(c) are not
satisfied with respect to the Company) has elapsed after any Settlement Date
for such Restricted Shares, Company shall promptly remove, or cause the
transfer agent for such Restricted Shares to remove, any legends referring to
any such restrictions or requirements from such Restricted Shares upon request
by Bank (or such affiliate of Bank) to Company or such transfer agent, without
any requirement for the delivery of any certificate, consent, agreement,
opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Bank (or such affiliate of
Bank).

	 	 	 	If (x) Company shall fail to effectuate the Private Placement Settlement as set
forth in clause (i) or (y) Company shall fail to effectuate the Registration
Settlement as set forth in clause (ii) and Company shall fail to effectuate the
Private Placement Settlement following its failure to effectuate the Registration
Settlement, then either the failure set forth in clause (x) or the failure set forth
in clause (y) shall constitute an Event of Default with respect to which Company
shall be the Defaulting Party.
	 
	 	(l)	 	Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, Bank may not exercise any Warrant hereunder or be entitled to take delivery of
any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect
to any Warrant hereunder, to the extent (but only to the extent) that, after such
receipt of any Shares upon the exercise of such Warrant or otherwise hereunder, the
Bank Group would directly or indirectly beneficially own (as such term is defined for
purposes of Section 13(d) of the Exchange Act) in excess of 8.0% of the outstanding
Shares. Any purported delivery hereunder shall be void and have no effect to the
extent (but only to the extent) that, after such delivery, the Bank Group would
directly or indirectly so beneficially own in excess of 8.0% of the outstanding Shares.
If any delivery owed to Bank hereunder is not made, in whole or in part, as a result
of this provision, Company’s obligation to make such delivery shall not be extinguished
and Company shall make such delivery as promptly as practicable after, but in no event
later than one Business Day after, Bank gives notice to Company that, after such
delivery, the Bank Group would not directly or indirectly so beneficially own in excess
of 8.0% of the outstanding Shares.

18

 

	 	(m)	 	Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been an affiliate for
90 days (it being understood that Bank will not be considered an affiliate under this
paragraph solely by reason of its receipt of Shares pursuant to this Transaction), and
otherwise satisfies all holding period and other requirements of Rule 144 of the
Securities Act applicable to it, any delivery of Shares or Share Termination Delivery
Property hereunder at any time after 6 months from the Trade Date (or 1 year from the
Trade Date if, at such time, informational requirements of Rule 144(c) are not
satisfied with respect to the Company) shall be eligible for resale under Rule 144 of
the Securities Act and Company agrees to promptly remove, or cause the transfer agent
for such Shares or Share Termination Delivery Property, to remove, any legends
referring to any restrictions on resale under the Securities Act from the Shares or
Share Termination Delivery Property. Company further agrees that any delivery of
Shares or Share Termination Delivery Property prior to the date that is 6 months from
the Trade Date (or 1 year from the Trade Date if, at such time, informational
requirements of Rule 144(c) are not satisfied with respect to the Company), may be
transferred by and among Bank and its affiliates and Company shall effect such transfer
without any further action by Bank. Notwithstanding anything to the contrary herein,
Company agrees that any delivery of Shares or Share Termination Delivery Property shall
be effected by book-entry transfer through the facilities of DTC, or any successor
depositary, if at the time of delivery, such class of Shares or class of Share
Termination Delivery Property is in book-entry form at DTC or such successor
depositary. Notwithstanding anything to the contrary herein, to the extent the
provisions of Rule 144 of the Securities Act or any successor rule are amended, or the
applicable interpretation thereof by the Securities and Exchange Commission or any
court change after the Trade Date, the agreements of Company herein shall be deemed
modified to the extent necessary, in the opinion of outside counsel of Company, to
comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the
relevant Shares or Share Termination Delivery Property.
	 
	 	(n)	 	Governing Law. New York law (without reference to choice of law
doctrine other than Title 14 of Article 5 of the New York General Obligations Law).
	 
	 	(o)	 	Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.
	 
	 	(p)	 	Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees, representatives, or
other agents may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to Company relating to
such tax treatment and tax structure.
	 
	 	(q)	 	Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will Company be required to deliver more
than the Maximum Amount of Shares in the aggregate to Bank in connection with this
Transaction, subject to the provisions regarding Deficit Restricted Shares
	 
	 	(r)	 	Right to Extend. Bank may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with respect to some or all
of the relevant Warrants (in which event the Calculation Agent shall make appropriate
adjustments to the Daily Number of Warrants with respect to one or more Expiration
Dates) if Bank determines, in its commercially reasonable judgment, that such extension
is reasonably necessary or appropriate to preserve Bank’s hedging or hedge unwind
activity hereunder in light of existing liquidity conditions or to enable Bank to
effect purchases of Shares in connection with its hedging, hedge unwind or settlement
activity hereunder in a manner that would, if Bank were Issuer or an affiliated
purchaser of Issuer, be in

19

 

	 	 	 	compliance with applicable legal, regulatory or self-regulatory requirements, or
with related policies and procedures applicable to Bank.
	 
	 	(s)	 	Status of Claims in Bankruptcy. Bank acknowledges and agrees that this
Confirmation is not intended to convey to Bank rights against Company with respect to
the Transaction that are senior to the claims of common stockholders of Company in any
U.S. bankruptcy proceedings of Company; provided that nothing herein shall limit or
shall be deemed to limit Bank’s right to pursue remedies in the event of a breach by
Company of its obligations and agreements with respect to the Transaction; provided,
further, that nothing herein shall limit or shall be deemed to limit Bank’s rights in
respect of any transactions other than the Transaction.
	 
	 	(t)	 	Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a “securities contract” and a “swap agreement” as defined in
the Bankruptcy Code, and the parties hereto to be entitled to the protections afforded
by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560
of the Bankruptcy Code; (b) a party’s right to liquidate the Transaction and to
exercise any other remedies upon the occurrence of any Event of Default under the
Agreement with respect to the other party to constitute a “contractual right” as
described in the Bankruptcy Code; and (c) each payment and delivery of cash, securities
or other property hereunder to constitute a “margin payment” or “settlement payment”
and a “transfer” as defined in the Bankruptcy Code.
	 
	 	(u)	 	Delivery or Receipt of Cash. For the avoidance of doubt, other than
receipt of the Premium by Company, nothing in this Confirmation shall be interpreted as
requiring Company to deliver or receive cash in respect of the settlement of the
Transactions contemplated by this Confirmation, except in circumstances where the cash
settlement thereof is within Company’s control (including, without limitation, where
Company elects to deliver or receive cash or fails timely to elect to deliver or
receive Share Termination Delivery Property in respect of the settlement of such
Transactions or in those circumstances in which holders of the Shares would also
receive cash).
	 
	 	(v)	 	Payment by Bank. In the event that (a) an Early Termination Date occurs
or is designated with respect to the Transaction as a result of a Termination Event or
an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or
5(a)(iv) of the Agreement) and, as a result, Bank owes to Company an amount calculated
under Section 6(e) of the Agreement, or (b) Bank owes to Company, pursuant to Section
12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8
of the Equity Definitions, such amount shall be deemed to be zero.

20

 

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

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,

	 	 	 	 
	 	 	 	 	J.P. Morgan Securities Inc., as agent for	 	 
	 	 	 	 	JPMorgan Chase Bank, National Association

	 	 
	 

	 	 	 	By:
	 	Jason M. Wood
 

	 	 
	 	 	 	 	Authorized Signatory	 	 
	 	 	 	 	Name: Jason M. Wood	 	 

Accepted and confirmed

as of the Trade Date:

NuVasive, Inc.

By:  /s/ Alexis V. Lukianov                                        

Authorized Signatory

Name: Alexis V. Lukianov

JPMorgan Chase Bank, National Association

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

Main Office 1111 Polaris Parkway, Columbus, Ohio 43271

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

Branch Office 125 London Wall, London EC2Y 5AJ

Authorised and regulated by the Financial Services Authority

21exv10w6

 

Exhibit 10.6

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

EXECUTION COPY

March 11, 2008

To: NuVasive, Inc.

4545 Towne Centre Court

San Diego, CA 92121

Attention: Treasurer

Telephone No.: 858-909-1800

Facsimile No.: 858-909-2000

Re: Call Option Transaction

     This letter agreement (the “Amendment”) amends the terms and conditions of the Transaction
(the “Transaction”) entered into between Goldman, Sachs & Co. (“Bank”) and NuVasive, Inc.
(“Counterparty”), pursuant to a letter agreement dated March 3, 2008 (the “Confirmation”) pursuant
to which Counterparty purchased from Bank a Number of Options equal to 200,000 in connection with
the issuance by Counterparty of USD 200,000,000 principal amount of 2.25% Convertible Senior Notes
due 2013 (the “Initial Convertible Notes”). This Amendment relates to, and sets forth the terms
of, the purchase by Counterparty from Bank of an additional Number of Options (the “Additional
Number of Options”) in connection with the issuance (the “Additional Convertible Notes Issuance”)
by Counterparty of an additional USD 30,000,000 principal amount of 2.25% Convertible Senior Notes
due 2013 (the “Additional Convertible Notes”, and together with the Initial Convertible Notes, the
“Convertible Notes”) to the initial purchasers of the Convertible Notes.

     Upon the effectiveness of this Amendment, all references in the Confirmation to (i) the
“Number of Options” will be deemed to be to the Number of Options as amended hereby, (ii) the
“Transaction” will be deemed to be to the Transaction, as amended hereby, and (iii) “Convertible
Notes” will be deemed to include the Additional Convertible Notes. Except to the extent specified
below, all other provisions of the Confirmation shall apply to the Additional Number of Options as
if such Additional Number of Options were originally subject to the Confirmation. Capitalized
terms used herein without definition shall have the meanings assigned to them in the Confirmation.

	The terms relating to the purchase of the Additional Number of Options are as follows:
	 
	1.	 	The “Trade Date” with respect to the Additional Number of Options will be March 11, 2008.
	 
	2.	 	The “Number of Options” for the Transaction will be “230,000” reflecting an addition of 30,000
Additional Number of Options.
	 
	3.	 	The “Premium” for the Transaction will be “$22,879,250” reflecting an increase of the premium
payable by Counterparty to Bank in the amount of $2,984,250 for the Additional Number of Options.
	 
	4.	 	Each of Bank and Counterparty hereby repeats the representations, warranties and agreements
made by such party in the Confirmation, with respect to the Amendment or with respect to the
Confirmation, as amended by the Amendment, as the context requires.
	 
	5.	 	Except as amended hereby, all the terms of the Transaction and provisions in the Confirmation
shall remain and continue in full force and effect and are hereby confirmed in all respects.
	 
	6.	 	This Amendment may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if all of the signatures thereto and hereto were upon the same instrument.
	 
	7.	 	The provisions of this Amendment shall be governed by the New York law (without reference to
choice of law doctrine).

 

 

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

Very truly yours,

Goldman, Sachs & Co.

By: David G. Goldenberg          

Authorized Signatory

Name: David G. Goldenberg

Accepted and confirmed

as of the Trade Date:

NuVasive, Inc.

By:/s/ Kevin C. O’Boyle          

Authorized Signatory

Name: Kevin C. O’Boyle

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