Master Confirmation of OTC ASAP Minus (VWAP Pricing) and the Form of Supplemental Confirmation of OTC ASAP Minus (VWAP Pricing), dated February 4, 2008

Date:

 

To:

 

Attention:

 

From:

 

 

 

 

 

Trade:

With respect to each Transaction, Counterparty, subject to the terms and conditions and in reliance upon the representations and warranties set forth herein, will purchase from MLI Shares in an amount equal to the Number of Shares (such Shares, the “Repurchase Shares”). On the Initial Settlement Date, (A) Counterparty will make an initial payment for the Repurchase Shares by delivering an amount equal to the Initial Settlement Amount by wire transfer of immediately available funds to an account designated by MLI and (B) MLI will deliver the Repurchase Shares to Counterparty. The parties understand and agree that the delivery of the Repurchase Shares by or on behalf of MLI upon the payment of the Initial Settlement Amount by Counterparty is irrevocable and that as of the Initial Settlement Date Counterparty shall be the sole beneficial owner of the Repurchase Shares for all purposes. The parties further understand and agree that the terms and conditions of each Transaction will have the effect of increasing or decreasing the purchase price for the Repurchase Shares to an amount greater than or less than the Initial Settlement Amount.

 

Trade Date:

 

Buyer:

 

Seller:

 

Shares:

 

Number of Shares:

 

Initial Share Price:

 

Initial Settlement Amount:

 

Initial Settlement Date:

 

Forward Price:

 

Exchange:

 

Related Exchange(s):

 

Market Disruption Event:

The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time” in the third line thereof with the words “at any time on any Scheduled Trading Day during the Valuation Period or” after the word “material”.

 

 

Valuation Period:

For each Transaction, each Scheduled Trading Day from and including the Initial Settlement Date up to and including the Valuation Date; provided, that with respect to each Suspension Event (if any) affecting such Scheduled Trading Days, MLI may, by written notice to Counterparty (which notice shall not specify the reason for MLI’s election to suspend the Valuation Period),

 

exclude the Scheduled Trading Day(s) on which such Suspension Event has occurred (such days, “Suspension Event Days”) and extend the last possible Valuation Date by the total number of such Suspension Event Days; provided, further, that notwithstanding anything to the contrary in the Equity Definitions, to the extent that any Scheduled Trading Days in the Valuation Period are Disrupted Days, the Calculation Agent may exclude such Disrupted Days and extend the last possible Valuation Date by the number of such Disrupted Days (in addition to any Suspension Event Days, without duplication).

 

Suspension Event:

Each and every one of the following events: (i) MLI concludes, in its sole discretion, that Counterparty will be engaged in a distribution of the Shares for purposes of Regulation M or that the “restricted period” in respect of such distribution has not yet been completed; (ii) MLI concludes, in its sole discretion, that it is appropriate with respect to 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 MLI), for it to refrain from purchasing Shares during any part of the Valuation Period; or (iii) Counterparty is subject to a third-party tender offer.

 

Exclusion Mechanics:

With respect to each Suspension Event Day and Disrupted Day (each, an “Exclusion Day”), the Calculation Agent must determine whether (i) such Exclusion Day should be excluded in full, in which case such Exclusion Day shall not be included for purposes of determining the Settlement Price, or (ii) such Exclusion Day should only be partially excluded, in which case the VWAP Price for such Exclusion Day shall be determined by the Calculation Agent based on Rule 10b-18 eligible transactions in the Shares on such Exclusion Day effected during the portion of the Scheduled Trading Day unaffected by such event or events, and the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period shall be adjusted by the Calculation Agent for purposes of determining the Settlement Price. If a Disrupted Day occurs during the Valuation Period, and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent, in its discretion, may either (i) determine the VWAP Price for such ninth Scheduled Trading Day and adjust the weighting of the VWAP Prices for the relevant Scheduled Trading Days during the Valuation Period as it deems appropriate for purposes of determining the Settlement Price based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares or (ii) disregard such day for purposes of determining the Settlement Price and further postpone the Valuation Date, in either case, as it deems appropriate to determine the VWAP Price.

 

Valuation Date

For each Transaction, the earlier to occur of the date as set forth in the Supplemental Confirmation (as the same may be postponed in accordance with the provisions hereof) (the “Scheduled Valuation Date”) and any Accelerated Valuation Date.

 

Accelerated Valuation Date:

For each Transaction, any date, occurring on or after the First Acceleration Date but prior to the Scheduled Valuation Date, designated by MLI to be the Valuation Date; MLI shall notify Counterparty of such designation prior to 8 p.m. New York City time on the Scheduled Trading Day immediately following such Accelerated Valuation Date.

 

First Acceleration Date:

For each Transaction, as set forth in the Supplemental Confirmation.

 

Settlement Currency:

 

Settlement Method Election:

Applicable; provided that Section 7.1 of the Equity Definitions is hereby amended by deleting the word “Physical” in the sixth line thereof and replacing it with the words “Net Share” and deleting the word “Physical” in the last line thereof and replacing it with the word “Cash”.

 

Electing Party

 

Settlement Method Election Date:

The 5th Scheduled Trading Day immediately preceding the relevant First Acceleration Date.

 

Default Settlement Method:

 

Forward Cash Settlement Amount:

Notwithstanding Section 8.5 of the Equity Definitions, an amount in the Settlement Currency equal to the sum of (a) the Number of Shares multiplied by an amount equal to (i) the Settlement Price minus (ii) the Forward Price plus (b) the Aggregate Adjustment Amount.

 

Settlement Price:

The arithmetic mean of the VWAP Prices of the Shares for each Scheduled Trading Day in the Valuation Period minus the Settlement Price Adjustment Amount.

 

Settlement Price Adjustment
Amount:

For each Transaction, as set forth in the Supplemental Confirmation.

 

VWAP Price:

The daily volume weighted average price per Share. For the purpose of calculating the VWAP Price, the Calculation Agent will include only those trades which are reported during the period of time during which Counterparty could purchase its own shares under Rule 10b-18(b)(2) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and pursuant to the conditions of Rule 10b-18(b)(3) and (b)(4) under the Exchange Act. Counterparty acknowledges that MLI may refer to the Bloomberg Page “AFL.N <Equity> AQR SEC” (or any successor thereto), in its discretion, to determine the VWAP Price.

 

 

Net Share Settlement:

In the event that Counterparty elects Net Share Settlement in accordance with the procedures described above, the Net Share Settlement Shares shall be deliverable (i) by the Counterparty, in the event that the Forward Cash Settlement Amount is positive or (ii) by MLI, in the event that the Forward Cash Settlement Amount is negative.

 

Net Share Settlement Shares:

 

 

In the event that Counterparty elects to deliver Shares registered under the Securities Act and an accompanying prospectus and prospectuses for MLI or one of its affiliates to use in connection with its sales of such Shares, such number of Shares specified by MLI by written notice to Counterparty (“Registered Net Share Settlement Notice”). It is understood and agreed that such number of Net Settlement Shares shall be exactly the number of Shares sold by or on behalf of MLI to receive (net of costs and expenses attributable to

 

such sales) an amount in cash equal to the Forward Cash Settlement Amount, subject to a maximum number of Shares equal to the number of Reserved Shares. Such Net Settlement Shares shall additionally be subject to the section titled “Registration” below.

 

 

In the event that Counterparty is not able to deliver Shares registered under the Securities Act, such number of Shares as determined by MLI to equal in value the Forward Cash Settlement Amount, subject to a maximum number of Shares equal to the number of Reserved Shares. It is understood and agreed that MLI shall determine the value of such Shares by applying a commercially reasonable discount (including a commission of up to 3%, which commission shall not reflect changes in interest rates, stock borrow costs or expected or actual dividends). Such Net Settlement Shares shall additionally be subject to the section titled “Private Placement” below.

 

 

 

 

Such number of Shares specified by MLI by written notice to Counterparty (“MLI Net Share Settlement Notice”). It is understood and agreed that such number of Net Share Settlement Shares shall be exactly the number of Shares purchased by or on behalf of MLI with an amount in cash equal to the Forward Cash Settlement Amount (taking into account costs and expenses attributable to such purchases), subject to a maximum number of Shares equal to the number of Reserved Shares.

 

Net Share Settlement Date:

 

 

With respect to Net Share Settlement Shares that are registered under the Securities Act as contemplated under the first paragraph under “Net Share Settlement Shares” above, the later of (a) the Exchange Business Day immediately following the date of the Registered Net Share Settlement Notice and (b) the third Exchange Business Day immediately following the Valuation Date.

 

 

Otherwise, the third Exchange Business Day immediately following the Valuation Date.

 

 

 

 

The later of (a) the Exchange Business Day immediately following the date of the MLI Net Share Settlement Notice and (b) the third Exchange Business Day immediately following the Valuation Date.

 

 

(iii) In the event that MLI determines that for legal, regulatory or trade execution purposes that there should be more than one Net Share Settlement Date, MLI shall so notify Counterparty no later than the Exchange Business Day immediately preceding the day that would otherwise be the sole Net Share Settlement Date (the “First Net Share Settlement Date”). It is understood and agreed that while such notice need not specify the exact dates in addition to the First Exchange Business Day that shall be additional Net Share Settlement Dates (the “Additional Net Share Settlement Dates”) or the number of Net Share Settlement Shares to be delivered on any date other than the First Net Share Settlement Date, each Additional Net Share Settlement Date and the number of Shares to be delivered on such date shall be notified to Counterparty

 

no later than the Exchange Business Day immediately preceding such Additional Net Share Settlement Date.

 

Reserved Shares:

Initially, 12,500,000 Shares; the Reserved Shares may be increased or decreased in a Supplemental Confirmation. For the avoidance of doubt, following delivery by MLI of the Number of Shares on the Initial Settlement Date, in no event shall Counterparty or MLI be required to deliver Shares in excess of the number of Reserved Shares.

 

 

Method of Adjustment:

Calculation Agent Adjustment; provided, however, that an Extraordinary Dividend Event occurring with respect to a Transaction shall be an Additional Termination Event under the Agreement with respect to such Transaction, with such Transaction being an Affected Transaction and Counterparty being the sole Affected Party. For the avoidance of doubt, no adjustment shall be made as a result of an Extraordinary Dividend.

 

Extraordinary Dividends:

Each dividend or distribution payment (other than any dividend or distribution of the type described in Section 11.2(e)(i) or Section 11.2(e)(ii)(A) or (B) of the Equity Definitions) having an ex-dividend date during the Valuation Period, other than each dividend that is of an amount equal to the Ordinary Dividend Amount and that has an ex-dividend date on a Scheduled Ex-dividend Date. For the avoidance of doubt, the rescheduling of a Scheduled Ex-dividend Date to an earlier date shall result in an Ordinary Dividend Amount becoming an Extraordinary Dividend.

 

Ordinary Dividend Amount:

 

Scheduled Ex-dividend Dates:

For each Transaction, as set forth in the Supplemental Confirmation.

 

 

Adjusted Settlement Price:

For payments hereunder “based on Adjusted Settlement Price”, the Calculation Agent shall calculate the amount payable in accordance with the methodology employed for regular settlement, except that in lieu of “Settlement Price”, the following “Adjusted Settlement Price” shall be employed:

 

 

(1) where the Post-event Price is greater than or equal to the Pre-event Price,

 

 

(Pre-event Price — Settlement Price Adjustment Amount) * Adjustment Factor + Post-event Price * (1 — Adjustment Factor)

 

 

 

 

Pre-event Price — (Settlement Price Adjustment Amount * Adjustment Factor)

 

Adjustment Factor:

The quotient obtained by dividing the number of Scheduled Trading Days (that were not Exclusion Days) in the Valuation Period prior to the occurrence of the relevant Extraordinary Event (the “Pre-event Period”) by the total number of Scheduled Trading Days in the Valuation Period (that were not Exclusion Days), as adjusted by the Calculation Agent to take into account partial Exclusion Days.

Pre-event Price:

The arithmetic mean of the VWAP Prices for each Scheduled Trading Day in the Pre-event Period, as adjusted by the Calculation Agent to take into account partial Exclusion Days.

 

Post-event Price:

The price per Share (or any securities or other property received in respect of a Share), as determined by the Calculation Agent, in respect of a reasonable unwind period established by MLI in connection with the close-out of any open stock borrow position established in respect of the Transaction, which price shall be based on the arithmetic average of the VWAP Prices, if available, and otherwise on an appropriate valuation method under the circumstances, which may be cash payable per Share in the context of a Merger, Tender Offer or Nationalization, private market prices, third party bids or independent valuations. For the avoidance of doubt, such price shall not be adjusted for changes in interest rates, stock borrow costs or expected or actual dividends.

 

Consequences of Merger Events:

 

Share-for-Share:

 

Share-for-Other:

 

Share-for-Combined:

 

Determining Party:

 

Consequences of Tender Offers:

 

Share-for-Share:

 

Share-for-Other:

 

Share-for-Combined:

 

Determining Party:

 

New Share:

The definition of “New Shares” in Section 12.1 of the Equity Definitions shall be amended by inserting at the beginning of subsection (i) the following: “(i) where the Exchange is located in the United States, publicly quoted, traded or listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ Stock Market LLC (or their respective successors) or otherwise,”.

 

Announcement Event:

If an Announcement Event occurs, MLI may treat such Announcement Event as an Extraordinary Event having the same consequences as “Change in Law” or “Insolvency Filing” pursuant to Section 12.9(b)(i) of the Equity Definitions, with the Cancellation Amount to be based on Adjusted Settlement Price. “Announcement Event” shall mean the occurrence of the Announcement Date of a Merger Event or Tender Offer.

 

Nationalization, Insolvency or
Delisting:

 

Determining Party:

 

Additional Disruption Events:

Change in Law:

 

Insolvency Filing:

 

Increased Cost of Stock Borrow:

 

Hedging Party:

 

Determining Party;

Acknowledgements:

Compliance with
Securities Laws:

Each party represents and agrees that it has complied, and will comply, in connection with each Transaction and all related or contemporaneous sales and purchases of Shares, with the applicable provisions of the Securities Act, and the Exchange Act, and the rules and regulations each thereunder, including, without limitation, Rules 10b-5 and Regulation M under the Exchange Act; provided that each party shall be entitled to rely conclusively on any information communicated by the other party concerning such other party’s market activities.

 

 

Each party further represents and warrants that if such party (“X”) purchases any Shares from the other party pursuant to any Transaction, such purchase(s) will comply in all material respects with (i) all laws and regulations applicable to X and (ii) all contractual obligations of X.

 

 

Each party acknowledges that the offer and sale of each Transaction to it is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof and the provisions of Regulation D thereunder (“Regulation D”). Accordingly, each party represents and warrants to the other that (i) it has the financial ability to bear the economic risk of its investment in each Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined under Regulation D, (iii) it will purchase each Transaction for investment and not with a view to the distribution or resale thereof, and (iv) the disposition of each Transaction is restricted under this Confirmation, the Securities Act and state securities laws.

 

 

 

 

(a) each of its filings under the Exchange Act that are required to be filed from and including the ending date of Counterparty’s most recent prior fiscal year have been filed, and that, as of the respective dates thereof and hereof, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading;

 

 

(b) Counterparty is not in possession of material non-public information regarding the Shares or the Counterparty; Counterparty additionally makes this representation as of any Settlement Method Election Date;

 

 

(c) Counterparty is not entering into any Transaction to facilitate a distribution of the common stock or in connection with a future distribution of securities;

 

 

(d) Counterparty is not entering into any Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares);

 

 

(e) Counterparty is entering into each Transaction in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under the

 

Exchange Act (“Rule 10b5-1”); it is the intent of the parties that each Transaction comply with the requirements of Rule l0b5-l(c)(1)(i)(A) and (B) and each Transaction shall be interpreted to comply with the requirements of Rule 10b5-l(c) (the “Plan”); Counterparty will not seek to control or influence MLI or MLPF&S to make “purchases or sales” (within the meaning of Rule 10b5-1(c)(l)(i)(B)(3)) under any Transaction, including, without limitation, any decision to enter into any hedging transactions; Counterparty represents and warrants that it has consulted with its own advisors as to the legal aspects of its adoption and implementation of each Transaction under Rule 10b5-1;

 

 

(f) Neither it nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act) has made any purchases of blocks pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act during the four full calendar weeks immediately preceding the applicable Trade Date;

 

 

(g) The purchase or writing of each Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act, and Counterparty is not entering into any Transaction in anticipation of, or in connection with, or to facilitate a self-tender offer or a third-party tender offer;

 

 

(h) Each Transaction is consistent with the publicly announced program of Counterparty to repurchase, from time to time, Shares (the “Repurchase Program”); and

 

 

(i) Counterparty has full power and authority to undertake the Repurchase Program, and the Repurchase Program has been duly authorized and remains valid.

 

 

Counterparty covenants and agrees that:

 

 

(a) during the term of each Transaction to promptly notify MLI telephonically (which oral communication shall be promptly confirmed by telecopy to MLI) if Counterparty determines that as a result of an acquisition or other business transaction or for any other reason Counterparty will be engaged in a distribution of Shares or other securities for which the Shares are a reference security for purposes of Rule 102 of Regulation M under the Exchange Act and to promptly notify MLI by telecopy of the period commencing on the date that is one (1) business day before the commencement of such distribution and ending on the day on which Counterparty completes the distribution (the “Distribution Period”); for the purposes of this Confirmation, the “term” of a Transaction shall not be considered to have been completed until all Shares required to be transferred to a party hereto have been duly transferred and all cash amounts required to be paid to a party hereto have been duly paid;

 

 

(b) without the prior written consent of MLI, neither Counterparty nor any “affiliated purchaser” (as such term is defined in Rule 10b-18 under the Exchange Act) will acquire Shares (or equivalent interests or securities exchangeable, convertible or exercisable into Shares) or be a party to any repurchase or similar agreements pursuant to which a valuation, averaging or hedging period or similar such period overlaps or potentially overlaps with the term of any Transaction, other than in those transactions already disclosed in writing to MLI; in connection with such disclosed transactions

 

and otherwise, although Counterparty acknowledges that Rule 10b-18 under the Exchange Act cannot be applied to MLI’s or MLPF&S’s purchases of Shares in connection with any Transaction, Counterparty will not take any action that would or could cause MLI’s or MLPF&S’s purchases of Shares during any Transaction term not to comply with Rule 10b-18 under the Exchange Act, as if such rule could be applied to such Transaction; and

 

 

(c) Counterparty shall report each Transaction as required in any applicable report filed by the Counterparty pursuant to the Exchange Act in compliance with Regulation S-K and/or Regulation S-B under the Exchange Act, as applicable.

 

 

 

 

(a) In connection with each Transaction, MLI will engage in customary hedging activities in its sole discretion and for its own account and that such activities may involve sales or purchases at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of such Transaction; and

 

 

(b) Notwithstanding the generality of Section 13.1 of the Equity Definitions, MLI is not making any representations or warranties with respect to the treatment of any Transaction under FASB Statements 133 as amended or 150, EITF 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

 

 

 

 

Bankruptcy Rights:

In the event of Counterparty’s bankruptcy, MLI’s rights in connection with any Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that MLI’s rights with respect to any other claim arising from any Transaction prior to Counterparty’s bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith.

 

Set-Off:

 

Collateral:

 

Transfer:

Counterparty may transfer any of its rights or delegate its obligations under any Transaction with the prior written consent of MLI. MLI may assign and delegate its rights and obligations under any Transaction (the “Transferred Obligations”) to any subsidiary of ML & Co. (the “Assignee”) by notice specifying the effective date of such transfer (“Effective Date”) and including an executed acceptance and assumption by the Assignee of the Transferred Obligations; provided that (i) Counterparty will not, as a

 

result of such transfer, be required to pay to the Assignee an amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) greater than the amount in respect of which Counterparty would have been required to pay to MLI in the absence of such transfer; and (ii) the Assignee will not, as a result of such transfer, be required to withhold or deduct on account of a Tax under Section 2(d)(i) of the Agreement (except in respect of interest under Section 2(e), 6(d)(ii), or 6(e)) an amount in excess of that which MLI would have been required to withhold or deduct in the absence of such transfer, unless the Assignee would be required to make additional payments pursuant to Section 2(d)(i)(4) of the Agreement corresponding to such excess. On the Effective Date, (a) MLI shall be released from all obligations and liabilities arising under the Transferred Obligations; and (b) if MLI has not assigned and delegated its rights and obligations under the Agreement and all Transactions thereunder, the Transferred Obligations shall cease to be a Transaction under the Agreement and shall be deemed to be a Transaction under the master agreement, if any, between Assignee and Counterparty, provided that, if at such time Assignee and Counterparty have not entered into a master agreement, Assignee and Counterparty shall be deemed to have entered into an ISDA form of Master Agreement (Multicurrency-Cross Border) and Schedule substantially in the form of the Agreement but amended to reflect the name of the Assignee and the address for notices and any amended representations under Part 2 of the Agreement as may be specified in the notice of transfer.

 

Regulation:

MLI is regulated by The Securities and Futures Authority Limited and has entered into each Transaction as principal.

 

Indemnity:

Counterparty agrees to indemnify MLI, its Affiliates and their respective directors, officers, agents and controlling parties (MLI and each such person being an “Indemnified Party”) from and against any and all losses, claims, damages and liabilities, joint and several, to which such Indemnified Party may become subject because of the untruth of any representation by Counterparty or a breach by Counterparty of any agreement or covenant under this Confirmation, in the Agreement, the Plan or any other agreement relating to the Agreement or any Transaction 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 or not such Indemnified Party is a party thereto.

Evidence of the authority and true signatures of each official or representative signing this Confirmation

Certified copy of the resolution of the Board of Directors or equivalent document authorizing the execution and delivery of this Confirmation

Executed Supplemental Confirmation, substantially in the form of Exhibit A hereto, in respect of each Transaction

Guarantee of its Credit Support Provider, substantially in the form of Exhibit B attached hereto, together with evidence of the authority and true signatures of the signatories, if applicable

Address: