Conditions to Effectiveness:
The effectiveness of this Confirmation on the Effective Date shall be subject to (i) the condition that the representations and warranties of Party B contained in the Underwriting Agreement dated the date hereof among Party B, Party A and Wachovia Capital Markets, LLC and Citigroup Global Markets Inc. as Representatives of the Several Underwriters (the "Underwriting Agreement") and any certificate delivered pursuant thereto by Party B are true and correct on the Effective Date as if made as of the Effective Date, (ii) the condition that Party B shall have performed all of the obligations required to be performed by it under the Underwriting Agreement on or prior to the Effective Date, (iii) the satisfaction of all of the conditions set forth in Section 5 of the Underwriting Agreement, and (iv) the condition that neither of the following has occurred: (A) Party A is unable to borrow and deliver for sale a number of Shares equal to the Base Amount or, (B) in Party A's sole judgment , either it is impracticable to do so or Party A would incur a stock loan cost of more than a rate equal to 135 basis points per annum to do so (in which event this Confirmation shall be effective but the Base Amount for this Transaction shall be the number of Shares Party A is required to deliver in accordance with Section 3(a)(ii) of the Underwriting Agreement).
Additional Representations, Warranties and Agreements of Party B: Party B hereby represents and warrants to, and agrees with, Party A as of the date hereof that:
(a) Any Shares, when issued and delivered in accordance with the terms of the Transaction, will be duly authorized and validly issued, fully paid and nonassessable, and the issuance thereof will not be subject to any preemptive or similar rights.
(b) Party B has reserved and will keep available at all times, free from preemptive rights, out of its authorized but unissued Shares, solely for the purpose of issuance upon settlement of the Transaction as herein provided, the full number of Shares as shall be issuable at such time upon settlement of the Transaction. Party B shall use its best efforts to ensure that all Shares so issuable shall, upon such issuance, be accepted for listing or quotation on the Exchange.
(c) Party B agrees to provide Party A at least 30 days' written notice (an "Issuer Repurchase Notice") prior to executing any repurchase of Shares by Party B or any of its subsidiaries (or upon entering into any contract that would require, or give the option to, Party B or any of its subsidiaries, to purchase or repurchase Shares if the date of such contract is more than 30 days prior to the execution of such purchase or repurchase), whether out of profits or capital or whether the consideration for such repurchase is cash, securities or otherwise (an "Issuer Repurchase"), that alone or in the aggregate would result in the Base Amount Percentage (as defined below) being greater by .5% or more than the Base Amount Percentage at the time of the immediately preceding Issuer Repurchase Notice (or in the case of the first such Issuer Repurchase Notice, greater than the Base Amount Percentage as of the later of the date hereof or the immediately preceding Settlement Date, i f any). The "Base Amount Percentage" as of any day is the fraction (1) the numerator of which is the sum of (x) the Base Amount (y) the Base Amount under the Confirmation dated as of November 17, 2005 between the parties hereto and (z) the Confirmation dated as of January 5, 2006 between parties thereto and (2) the denominator of which is the number of Shares outstanding on such day.
(d) No filing with, or approval, authorization, consent, license registration, qualification, order or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the execution, delivery and performance by Party B of this Confirmation and the consummation of the Transaction (including, without limitation, the issuance and delivery of Shares on any Settlement Date) except (i) such as have been obtained under the Securities Act, and (ii) as may be required to be obtained under state securities laws.
(e) Party B agrees not to make any Issuer Repurchase if, immediately following such Issuer Repurchase, the Base Amount Percentage would be equal to or greater than 8.0%.
(f) Party B shall notify Party A within one Scheduled Trading Day if the net asset value per Share of the Issuer, as calculated by the Issuer, exceeds 75% of the Forward Price on such date, and Party B shall notify Party A as promptly as practicable on any date if the net asset value per Share of the Issuer as a percentage of the Forward Price on such date increases by an additional 5%. Party B shall also notify Party A of the net asset value per Share of the Issuer no later than the Scheduled Trading Day prior to any Settlement Date.
(g) Party B is not insolvent, nor will Party B be rendered insolvent as a result of this Transaction.
(h) Party B is an "eligible contract participant" (as such term is defined in Section 1(a)(12) of the Commodity Exchange Act, as amended).
(i) In addition to any other requirements set forth herein, Party B agrees not to elect a Settlement Date if settlement on such Settlement Date would result in a violation of the U.S. federal securities laws or any other federal or state law or regulation applicable to Party B.
(j) The net asset value per Share of the Issuer, as reflected on the Issuer's consolidated balance sheet included in its Form 10-K filed for the year ending December 31, 2005, was USD24.37.
Covenant of Party B:
The parties acknowledge and agree that any Shares delivered by Party B to Party A on any Settlement Date will be newly issued Shares and when delivered by Party A (or an affiliate of Party A) to securities lenders from whom Party A (or an affiliate of Party A) borrowed Shares in connection with hedging its exposure to the Transaction will be freely saleable without further registration or other restrictions under the Securities Act of 1933, as amended (the "Securities Act"), in the hands of those securities lenders, irrespective of whether such stock loan is effected by Party A or an affiliate of Party A. Accordingly, Party B agrees that the Settlement Shares that it delivers to Party A on each Settlement Date will not bear a restrictive legend and that such Settlement Shares will be deposited in, and the delivery thereof shall be effected through the facilities of, the Clearance System.
Covenant of Party A:
Unless the provisions set forth below under "Private Placement Procedures" shall be applicable, Party A shall use any Shares delivered by Party B to Party A on any Settlement Date to return to securities lenders to close out open stock loans, if any, with respect to Shares.
Insolvency Filing:
Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, upon any Insolvency Filing (which, for purposes of this provision, shall include an Event of Default of the type described in Section 5(a)(vii) of the Agreement in respect of the Issuer), the Transaction shall automatically terminate on the date thereof without further liability of either party to this Confirmation to the other party (except for any liability in respect of any breach of representation or covenant by a party under this Confirmation prior to the date of such Insolvency Filing).
Acceleration Events:
(a)Stock Borrow Events. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if, in the judgment of Party A, (i) Party A is unable to hedge Party A's exposure to the Transaction because of the lack of sufficient Shares being made available for Share borrowing by lenders or (ii) Party A would incur a cost to borrow Shares directly or indirectly paid to any third party lender of Shares to hedge its exposure to the Transaction that is greater than a rate equal to 135 basis points per annum (each of (i) and (ii) a "Stock Borrow Event"), then Party A shall have the right to designate any Scheduled Trading Day to be a Settlement Date on at least two Scheduled Trading Days' notice, and to select the number of Settlement Shares for such Settlement Date;provided that the number of Settlement Shares for any Settlement Date so designated by Party A shall not exceed the number of Shares as to which such Stock Borrow Event exists.
(b)Dividends and Other Distributions. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if on any day occurring after the Trade Date Party B declares a distribution, issue or dividend, in each case, to existing holders of the Shares of (i) any cash dividend to the extent all cash dividends having an ex-dividend date during the period from and including any Forward Price Reduction Date (with each of the Trade Date and the Maturity Date being a Forward Price Reduction Date for purposes of this clause (b) only) to but excluding the next subsequent Forward Price Reduction Date exceeds, on a per Share basis, the Forward Price Reduction Amount set forth opposite the first date of any such period on Schedule I or (ii) securities or share capital of another issuer acquired or owned (directly or indirectly) by Party B as a result of a spin-off or other similar transaction or (iii) any other type of securities (other than Shares), rights or warran ts or other assets, then Party A shall have the right to designate any Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least three Scheduled Trading Days' notice.
(c)Issuer Net Asset Value. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if on any date following the Trade Date and prior to the Maturity Date the net asset value per Share of the Issuer, as most recently calculated by the Issuer, exceeds 90% of the Forward Price on such date, Party A shall have the right to designate any Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least three Scheduled Trading Days' notice.
(d)Board Approval of Merger. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if on any day occurring after the Trade Date the board of directors of Party B votes to approve any action that, if consummated, would constitute a Merger Event, then Party A shall have the right to designate any Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least three Scheduled Trading Days' notice. Party B shall notify Party A of any such vote within one Scheduled Trading Day.
(e)ISDA Early Termination Date. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if either Party A or Party B has the right to designate an Early Termination Date pursuant to Section 6 of the Agreement, such party shall have the right to designate any Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least three Scheduled Trading Days' notice.
(f)Other ISDA Events. Notwithstanding anything to the contrary herein, in the Agreement or in the Definitions, if a Nationalization, Delisting or Change in Law occurs, Party A shall have the right to designate any Scheduled Trading Day to be a Settlement Date for the entire Transaction on at least three Scheduled Trading Days' notice.
Termination Settlement:
If a Settlement Date is designated by Party A as a result of an Acceleration Event (a "Termination Settlement Date"), Physical Settlement shall apply with respect to such Termination Settlement Date.
Private Placement Procedures
If Party B is unable to comply with the provisions of "Covenant of Party B" above because of a change in law or a change in the policy of the Securities and Exchange Commission or its staff, or Party A otherwise determines that in its reasonable opinion any Settlement Shares to be delivered to Party A by Party B may not be freely returned by Party A to securities lenders as described under "Covenant of Party B" above, then delivery of any such Settlement Shares (the "Restricted Shares") shall be effected pursuant to clause (i) below, unless waived by Party A.
(i) If Party B delivers the Restricted Shares pursuant to this clause (i) (a "Private Placement Settlement"), then delivery of Restricted Shares by Party B shall be effected in accordance with customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Party A;provided that Party B 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 Party B to Party A (or any affiliate designated by Party A) of 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 Party A (or any such affiliate of Party A). The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrat ions, indemnities to Party A, due diligence rights (for Party A or any designated buyer of the Restricted Shares by Party A), opinions and certificates, and such other documentation as is customary for private placement agreements, all reasonably acceptable to Party A. In the case of a Private Placement Settlement, Party A shall, in its good faith discretion, adjust the amount of Restricted Shares to be delivered to Party A hereunder in a commercially reasonable manner to reflect the fact that such Restricted Shares may not be freely returned to securities lenders by Party A and may only be saleable by Party A at a discount to reflect the lack of liquidity in Restricted Shares. Notwithstanding the Agreement or this Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Party A to Party B of 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 fo rth in the previous sentence and not be due on the Settlement Date or Termination Settlement Date that would otherwise be applicable.
(ii) If Party B delivers any Restricted Shares in respect of the Transaction, Party B agrees that (i) such Shares may be transferred by and among Party A and its affiliates and (ii) after the minimum "holding period" within the meaning of Rule 144(d) under the Securities Act has elapsed after the applicable Settlement Date, Party B shall promptly remove, or cause the transfer agent for the Shares to remove, any legends referring to any transfer restrictions from such Shares upon delivery by Party A (or such affiliate of Party A) to Party B or such transfer agent of seller's and broker's representation letters customarily delivered by Party A or its affiliates in connection with resales of restricted securities pursuant to Rule 144 under the Securities Act, each 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 Party A (or such affiliate of Party A).
Maximum Share Delivery:
Notwithstanding any other provision of this Confirmation, in no event will Party B be required to deliver on any Settlement Date, whether pursuant to Physical Settlement, Termination Settlement or any Private Placement Settlement, more than 35,000,000 Shares to Party A, subject to reduction by the amount of any Shares delivered by Party B on any prior Settlement Date.
Market Disruption Event:
Section 6.3(a) of the 2002 Definitions is amended by deleting the words "at any time 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,".
Assignment:
Party A may assign or transfer any of its rights or delegate any of its duties hereunder to any affiliate of Party A or any entity organized or sponsored by Party A without the prior written consent of Party B. Notwithstanding any other provision of this Confirmation to the contrary requiring or allowing Party A to purchase or receive any Shares from Party B, Party A may designate any of its affiliates to purchase or receive such Shares or otherwise to perform Party A's obligations in respect of this Transaction and any such designee may assume such obligations, and Party A shall be discharged of its obligations to Party B to the extent of any such performance.
Upon the written request of Party B, Party A shall use its good faith commercially reasonable efforts to (i) assign all of its rights and obligations under this Transaction to a major financial institution designated by Party B and reasonably acceptable to Party A (the "Assignee") and (ii) provide the Assignee with the benefit of the hedge position maintained by Party A with respect to the Transaction in a manner and on terms that are commercially reasonably acceptable to Party A and that do not, in the commercially reasonable judgment of Party A (which may be based on advice of counsel), give rise to risk to Party A under applicable U.S. federal and state securities laws and regulations.
Matters Relating to Agent:
Each party agrees and acknowledges that:
(a) Wachovia Capital Markets, LLC, as agent, (the "Agent") acts solely as agent on a disclosed basis with respect to the transactions contemplated hereunder.
(b) The Agent is registered as a broker-dealer with the U.S. Securities and Exchange Commission and the National Association of Securities Dealers, is acting hereunder for and on behalf of Party A solely in its capacity as agent for Party A pursuant to instructions from Party A, and is not and will not be acting as the Party B's agent, broker, advisor or fiduciary in any respect under or in connection with this Transaction.
(c) In addition to acting as Party A's agent in executing this Transaction, the Agent is authorized from time to time to give written payment and/or delivery instructions to the Party B directing it to make its payments and/or deliveries under this Transaction to an account of the Agent for remittance to Party A (or its designee), and for that purpose any such payment or delivery by the Party B to the Agent shall be treated as a payment or delivery to Party A.
(d) Except as otherwise provided herein, any and all notices, demands, or communications of any kind transmitted in writing by either Party A or Party B under or in connection with this Transaction will be transmitted exclusively by such party to the other party through the Agent at the following address:
Wachovia Capital Markets, LLC
375 Park Avenue
New York, NY 10152
Attention: Documentation Group
Telephone No.: (212) 214-6100
Facsimile No.: (212) 214-5913
(e) The Agent shall have no responsibility or liability to Party A or Party B for or arising from (1) any failure by either Party A or Party B to perform any of their respective obligations under or in connection with this Transaction, (2) the collection or enforcement of any such obligations, or (3) the exercise of any of the rights and remedies of either Party A or Party B under or in connection with this Transaction. Each of Party A and Party B agrees to proceed solely against the other to collect or enforce any such obligations, and the Agent shall have no liability in respect of this Transaction except for its gross negligence or willful misconduct in performing its duties as the agent of Party A.
(f) Upon written request, the Agent will furnish to Party A and Party B the date and time of the execution of this Transaction and a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with this Transaction.
Indemnity:
Party B agrees to indemnify Party A and its affiliates and their respective directors, officers, agents and controlling parties (Party A and each such affiliate or person being an "Indemnified Party") from and against any and all losses, claims, damages and liabilities, joint and several, incurred by or asserted against such Indemnified Party arising out of, in connection with, or relating to, the execution or delivery of this Confirmation, the performance by the parties hereto of their respective obligations under the Transaction, any breach of any covenant or representation made by Party B in this Confirmation or the Agreement or the consummation of the transactions contemplated hereby and will reimburse any Indemnified Party for all reasonable expenses (including reasonable legal fees and expenses) as they are incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether o r not such Indemnified Party is a party thereto. Party B will not be liable under this Indemnity paragraph to the extent that any loss, claim, damage, liability or expense is found in a final and nonappealable judgment by a court to have resulted from Party A's gross negligence or willful misconduct.
