EX-10.4: AMENDED AND RESTATED CONFIRMATION OF OTC WARRANT TRANSACTION

EX-10.4 7 y40913exv10w4.htm EX-10.4: AMENDED AND RESTATED CONFIRMATION OF OTC WARRANT TRANSACTION EX-10.4

Exhibit 10.4

Confirmation of OTC Warrant Transaction


Date:		October 17, 2007

To:		Morgans Hotel Group Co. (“Counterparty”)
		Attention:
		Telephone No.:
		Facsimile No.:

From:		Citibank, N.A. (“Dealer”)

Dealer Reference:

Dear Sir / Madam:

The purpose of this letter agreement (this “Confirmation”) is to amend and restate the terms and conditions of the above-referenced transaction entered into among Counterparty and Dealer on the Trade Date specified below (the “Transaction”). This Confirmation amends, restates, and supercedes in its entirety the Confirmation in respect of the Transactions dated as of October 11, 2007. This Confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2000 ISDA Definitions (the “Swap Definitions”) and the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the Swap Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Swap Definitions and the Equity Definitions, the Equity Definitions will govern, and in the event of any inconsistency between the Definitions and this Confirmation, this Confirmation will govern. References herein to a “Transaction” shall be deemed to be references to a “Share Option Transaction” for the purposes of the Equity Definitions and to a “Swap Transaction” for the purposes of the Swap Definitions. For purposes of this Transaction, “Warrant Style”, “Warrant Type”, “Number of Warrants” and “Warrant Entitlement” (each as defined below) shall be used herein as if such terms were referred to as “Option Style”, “Option Type”, “Number of Options” and “Option Entitlement”, respectively, in the Definitions.

This Confirmation evidences a complete binding agreement between you and us as to the terms of the Transaction to which this Confirmation relates. This Confirmation (notwithstanding anything to the contrary herein), shall be subject to, and form part of, an agreement in the 1992 form of the ISDA Master Agreement (Multicurrency Cross Border) (the “Master Agreement” or “Agreement”) as if we had executed an agreement in such form (but without any Schedule and with elections specified in the “ISDA Master Agreement” Section of this Confirmation) on the Trade Date. In the event of any inconsistency between the provisions of that Agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction. The parties hereby agree that the Transaction evidenced by this Confirmation shall be the only Transaction subject to and governed by the Agreement.

The terms of the particular Transaction to which this Confirmation relates are as follows:

General Terms:

Amended and Restated OTC Warrant Confirmation


Trade Date:		October 11, 2007

Effective Date:		October 17, 2007 subject to cancellation of the OTC Warrant Transaction prior to 5:00 p.m. (New York City time) on such date by the Counterparty. In the event of such cancellation, any payments previously made hereunder, including the Premium, shall be returned to the person making such payment. In addition, Counterparty shall reimburse Dealer for any costs or expenses (including market losses) relating to the unwinding of its hedging activities in connection with the Transaction (including any loss or cost incurred as a result of its terminating, liquidating, obtaining or reestablishing any hedge or related trading position).

Warrant Style:		European

Warrant Type:		Call

Seller:		Counterparty

Buyer:		Dealer

Shares:		Shares of Common Stock, $0.01 par value, of Counterparty (Security Symbol: “MHGC”).

Number of Warrants:		2,138,442

Daily Number of Warrants:		For any day, the unexercised Number of Warrants on such day divided by the remaining number of Expiration Dates (including such day) and rounded down to the nearest whole number, with the balance of the Number of Warrants exercised on the final Expiration Date.

Warrant Entitlement:		One (1) Share per Warrant

Strike Price:		$40.00

Premium:		$11,356,250

Premium Payment Date:		The Effective Date; provided that no cancellation of the Transaction has occurred prior to 5:00 p.m. (New York City time) on such date by the Counterparty.

Exchange:		Nasdaq Global Market

Related Exchange(s):		All Exchanges

Full Exchange Business Day:		A Scheduled Trading Day that has a scheduled closing time for its regular trading session at 4:00 p.m. (New York City time) or the then standard closing time for regular trading on the Exchange and is not a Disrupted Day.

Procedures for Exercise:

Expiration Time:		11:59 p.m. (New York City time).

Expiration Dates:		The 90 consecutive Full Exchange Business Days beginning on and including

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	January 15, 2015 each shall be the Expiration Date for a number of Warrants equal to the Daily Number of Warrants on such date.

Exercise Dates:	Each Expiration Date shall be an Exercise Date for a number of Warrants equal to the Daily Number of Warrants on such date. The Warrants shall not be exercised prior to the first such Exercise Date.

Automatic Exercise:	Applicable; provided that Section 3.4(a) of the Equity Definitions shall apply to Cash Settlement and Net Physical Settlement; and provided further that, unless all Warrants have been previously exercised hereunder, a number of Warrants for each Expiration Date equal to the Daily Number of Warrants for such Expiration Date shall be deemed to be automatically exercised.

Counterparty’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:	Address: Attention: Facsimile No.: Telephone No.:	To be advised.

Valuation:

Valuation Dates:	Each Exercise Date

Settlement Terms:

Cash Settlement:	Applicable; provided that it shall be a condition of Counterparty’s right to elect Cash Settlement that on the date of the Cash Settlement election, none of Counterparty, its directors, executive officers, or any person controlling, or exercising influence over, its decision to elect Cash Settlement is in possession of any material non-public information with respect to Counterparty or the Shares. If Counterparty elects to settle the Transaction by Cash Settlement, Counterparty represents and agrees that:

	(i) Counterparty is not, on the date of the Cash Settlement election, and will not be, on any day during the period from and including the first Expiration Date to and including the final 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”); and

	(ii) during the period from and including the first Expiration Date to and including the final Expiration Date, without the prior written consent of Dealer, the Counterparty shall not, and shall cause its affiliates and affiliated purchasers (each as defined in Rule 10b-18 under the Exchange Act) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for the Shares.

Settlement Currency:	USD

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Settlement Price:		For each Valuation Date, the Rule 10b-18 Dollar Volume Weighted Average Price of the Shares (“VWAP”) calculated from 9:45 a.m. to 3:45 p.m., as observed under the heading Bloomberg “VWAP” on Bloomberg page MHGC.Q <equity> VAP (or any successor thereto) (or if such volume-weighted average price is unavailable, the market value of one Share on such Valuation Date, as determined by the Calculation Agent); provided that, if the scheduled weekday closing time of the Exchange for any Valuation Date is later than 4:00 p.m. (without regard to after hours or any other trading outside of the regular trading session hours) the VWAP shall be calculated for such Valuation Date from 9:45 a.m. until 15 minutes prior to such later closing time of the Exchange.

		Section 6.3(a) 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.”

Cash Settlement Payment Date:		With respect to each Valuation Date, three (3) Currency Business Days after the final Valuation Date.

Settlement Method Election:		Applicable with respect to Cash Settlement or Net Physical Settlement only.

Electing Party:		Counterparty

Settlement Method Election Date:		Ten (10) Business Days prior to the first Expiration Date

Default Settlement Method:		Net Physical Settlement.

Net Physical Settlement:		In the event that the Counterparty elects to settle this Transaction by Net Physical Settlement, Counterparty shall deliver to Dealer on the Settlement Date a number of Shares (the “Delivered Shares”) equal to the Share Delivery Quantity; provided that in the event that the number of Shares calculated comprises any fractional Share, only whole Shares shall be delivered and an amount in cash equal to the value of such fractional share shall be payable by the Counterparty to Dealer in lieu of such fractional Share. If, in the reasonable opinion of Dealer based on advice of counsel, for any reason, the Shares deliverable upon Net Physical Settlement would not be immediately freely transferable by Dealer under Rule 144(k) under the Securities Act of 1933, as amended (the “Securities Act”), then Dealer may elect to either (x) accept delivery of such Shares notwithstanding any restriction on transfer or (y) have the provisions set forth under “Registration/Private Placement” below apply, mutatis mutandis.

Share Delivery Quantity:		For each Exercise Date, a number of Shares, as calculated by the Calculation Agent, equal to the Net Physical Settlement Amount for such Exercise Date divided by the Settlement Price on the Valuation Date in respect of such Settlement Date plus an amount in cash in lieu of any fractional shares (based on the applicable Settlement Price).

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

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Strike Price Differential:		For any Valuation Date, (i) if the Settlement Price is greater than the Strike Price, an amount equal to the excess of such Settlement Price over the Strike Price for such Valuation Date or (ii) if such Settlement Price is less than or equal to the Strike Price, zero.

Settlement Date:		Settlement with respect to each Exercise Date shall occur on the third (3^rd) Full Exchange Business Day following the final Valuation Date; provided that Dealer shall have the right to request by prior written notice to Counterparty a Settlement Date with respect to any Exercise Date and the related Share Delivery Quantity that is three (3) Full Exchange Business Days following such Exercise Date. Such request shall not unreasonably be denied.

Limitations on Net Physical Settlement by Counterparty:		Notwithstanding anything herein or in the Agreement to the contrary, the number of Shares that may be delivered at settlement by Counterparty shall not exceed 3,207,663 at any time (“Maximum Deliverable Share Amount”), as adjusted by Calculation Agent to account for any subdivision, stock-split, stock combination, reclassification or similar dilutive or anti-dilutive event with respect to the Shares.

		Counterparty represents and warrants that the number of Available Shares as of the Trade Date is greater than the Maximum Deliverable Share Amount. Counterparty covenants and agrees that (i) Counterparty shall not take any action of corporate governance or otherwise to reduce the number of Available Shares below the Maximum Deliverable Share and (ii) Counterparty shall use its reasonable efforts to cause the number of Available Shares at all times to be greater than the Maximum Deliverable Share Amount. For this purpose, “Available Shares” means the number of Shares Counterparty currently has authorized (but not issued and outstanding) less the maximum number of Shares that may be required to be issued by Counterparty in connection with stock options, convertibles, and other commitments of Counterparty that may require the issuance or delivery of Shares in connection therewith.

Dividends:

Dividends:		If at any time during the period from and including the Trade Date, to and including the date on which Counterparty has fully performed its obligations to deliver Shares hereunder, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that dividend is different from the Regular Dividend on a per Share basis, then the Calculation Agent will, in its reasonable discretion, adjust the Strike Price, the Number of Warrants, the Daily Number of Warrants, the Warrant Entitlement and any other variable it deems appropriate to preserve the fair value of the Warrants after taking into account such dividend.

Regular Dividend:		Initially USD $0.00 per Share per quarter in respect of the Shares. In the event that, in any quarter, a regular quarterly Ex-Dividend Date occurs for which the amount of the corresponding cash dividend is different (the “New Dividend Amount”) from the Regular Dividend or no Ex-Dividend Date occurs (in which case the New Dividend Amount shall be zero), then following the adjustment by the Calculation Agent pursuant to “Dividends” above, the Regular Dividend shall

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		equal the New Dividend Amount.

Extraordinary Dividends:		Any dividend other than Regular Dividends. For the avoidance of doubt, if more than one Ex-Dividend Date occurs in a quarter, the Calculation Agent shall designate any cash dividend other than a Regular Dividend as an Extraordinary Dividend and will, in its reasonable discretion, adjust the Strike Price, the Number of Warrants, the Daily Number of Warrants, the Warrant Entitlement and any other variable it deems appropriate to preserve the fair value of the Warrants after taking into account such Extraordinary Dividend.

Adjustments:

Method of Adjustment:		Calculation Agent Adjustment

Extraordinary Events:

Consequences of Merger Events:		(a) Share-for-Share: Modified Calculation Agent Adjustment

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

		(c) Share-for-Combined: Component Adjustment (Calculation Agent Determination)

Tender Offer:		Applicable

Consequences of Tender Offers:		(a) Share-for-Share: Modified Calculation Agent Adjustment

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

		(b) Share-for-Combined: Component Adjustment (Calculation Agent Determination)

		With respect to any Extraordinary Events hereunder, upon the occurrence of Cancellation and Payment in whole or in part, the parties agree that the amount to be paid, in accordance with the Equity Definitions, shall constitute a Transaction Early Termination Amount, subject to satisfaction by the payment or delivery of Shares or cash as set forth in the Early Termination section below.

Nationalization, Insolvency or Delisting:		Cancellation and Payment (Calculation Agent Determination) (subject to satisfaction by payment or delivery of Shares or cash as set forth in “Early Termination” below). 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 Market or the NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

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Determining Party:		Dealer

Additional Disruption Events:

Change in Law:		Applicable

Failure to Deliver:		Not Applicable

Insolvency Filing:		Applicable

Hedging Disruption Event:		Applicable

Increased Cost of Hedging:		Not Applicable

Loss of Stock Borrow:		Applicable. Section 12.9(b)(iv) of the Equity Definitions is hereby amended by deleting the text from and including “(A)” to and including “(B)” and by deleting the words “in each case”.

Maximum Stock Loan Rate:		0.60 %

Increased Cost of Stock Borrow:		Applicable; provided that it shall be a condition to Counterparty’s right to make the election described in clause (C) of Section 12.9(b)(v) of the Equity Definitions that on the date of such election, none of Counterparty, its directors, executive officers, or any person controlling, or exercising influence over, its decision to make such election is in possession of any material non-public information with respect to Counterparty or the Shares; and provided further that, if Counterparty timely makes the election described in clause (A) or (B) of Section 12.9(b)(v) of the Equity Definitions, Counterparty shall thereafter remain entitled, subject to the foregoing condition, to terminate the Transaction pursuant to Section 12.9(b)(v)(C) of the Equity Definitions upon ten Scheduled Trading Days’ notice to Dealer. Section 12.9(b)(v) of the Equity Definitions is hereby amended by deleting the text from and including “(X)” to and including “(Y)”.

Initial Stock Loan Rate:		0.25%

Hedging Party:		Dealer

Determining Party:		Dealer

Non-Reliance:		Applicable

Agreements and Acknowledgments Regarding Hedging Activities:		Applicable

Additional Acknowledgments:		Applicable

Other Provisions:

Additional Agreements:		If Counterparty would be obligated to pay cash to Dealer pursuant to the terms of

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		this Agreement due to an event or circumstance outside Counterparty’s control without having had the right (other than pursuant to this paragraph) to elect to deliver Shares in satisfaction of such payment obligation, then Counterparty may elect to deliver to Dealer a number of Shares (whether registered or unregistered) having a cash value equal to the amount of such payment obligation. Such number of Shares to be delivered shall be the number of Shares, determined by the Calculation Agent, sufficient for Dealer to realize the cash equivalent of such payment obligation from proceeds of the sale of such number of Shares over a reasonable period of time taking into account any applicable discount (determined in a commercially reasonable manner) to reflect any restrictions on transfer as well as the market value of the Shares. Settlement relating to any delivery of Shares pursuant to this paragraph shall occur within a reasonable period of time. The number of Shares delivered pursuant to this paragraph shall not exceed the Maximum Deliverable Share Amount and shall be subject to the provisions under “Early Termination” hereof regarding Proceeds Amount and the provisions set forth in subsection (c) under “Additional Agreements, Representations and Covenants of Counterparty, Etc.” below.

Early Termination:		Notwithstanding any provision to the contrary, upon the designation of an Early Termination Date or the occurrence of Cancellation and Payment in whole or in part hereunder (except in the case of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than an (x) Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Master Agreement or (y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii), (iv), or (v) of the Master Agreement that in the case of either (x) or (y) resulted from an event or events outside Counterparty’s control), Counterparty’s payment obligation in respect of this Transaction (which shall, in the case of an Early Termination Date be determined in accordance with Second Method and Loss) (the “Transaction Early Termination Amount”) may, at the option of Counterparty, be satisfied by the delivery of a number of Shares equal to the Transaction Early Termination Amount divided by the Termination Price (“Early Termination Stock Settlement”); provided, however, that Counterparty must notify Dealer of its election of Early Termination Stock Settlement by the close of business on the day that is two Exchange Business Days following the day that the notice designating the Early Termination Date, or notice that an Extraordinary Event has resulted in the cancellation or termination of the Transaction in whole or in part, is effective. “Termination Price” means the market value per Share on the date that Shares are delivered in connection with such Early Termination Date, as determined by the Calculation Agent in a commercially reasonable manner taking into account any applicable discount to reflect any restrictions on transfer.

		A number of Shares calculated as being due in respect of any Early Termination Stock Settlement will be deliverable on the third Clearance System Business Day following the date that notice specifying the number of Shares deliverable is effective; provided that, if Counterparty is delivering Shares as a result of a Merger Event, the Settlement Date for such delivery will be immediately prior to the effective time of the Merger Event and the Shares will be deemed delivered at such time such that Dealer will be a holder of the Shares prior to such effective time and be entitled to receive such merger consideration as a holder of Shares at such time would be entitled to receive (and references in herein to Shares shall be deemed to refer to such merger consideration, as applicable). Section 6(d)(i) of the Agreement is hereby amended by adding the following words after the word

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	“paid” in the fifth line thereof: “or any delivery is to be made, as applicable.”

	On or prior to the Early Termination Date or date on which notice that an Extraordinary Event has resulted in the cancellation or termination of the Transaction in whole or in part is effective, as applicable, if Early Termination Stock Settlement is elected and if so requested by Dealer upon advice of counsel, Counterparty shall comply with the provisions set forth below opposite the caption “Registration/Private Placement”.

Registration/Private Placement:	If the provisions under this heading “Registration/Private Placement” apply, Counterparty shall (subject to its right to make the election described in the immediately succeeding paragraph) (A) afford Dealer a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty that is customary in scope for underwritten offerings of equity securities that yields a result reasonably satisfactory to Dealer; (B) enter into a registration rights agreement with Dealer (a “Registered Settlement”) in form and substance reasonably acceptable to Dealer which agreement (“Registration Rights Agreement”) will contain among other things, customary representations and warranties and indemnification, restrictions on sales during “blackout dates” as provided for in the Registration Rights Agreement and shall satisfy the conditions contained therein; and (C) promptly file and procure the effectiveness a Registration Statement pursuant to Rule 415 under the Securities Act. If and when such Registration Statement shall have been declared effective by the Securities and Exchange Commission, Counterparty shall have made available to Dealer such Prospectuses as Dealer may reasonably request to comply with the applicable prospectus delivery requirements for the resale by Dealer of such number of Shares as Dealer shall specify (or, if greater, the number of Shares that Counterparty shall specify). Such Registration Statement shall be effective and Prospectus shall be current until the earliest of the date on which (i) all the Delivered Shares or Shares delivered by Counterparty in connection with an Early Termination Date, as the case may be, have been sold, (ii) Dealer has advised Counterparty that it no longer requires that such Registration Statement be effective or (iii) all remaining Shares could be sold by Dealer without registration pursuant to Rule 144 promulgated under the Securities Act (the “Termination Registration Period”). It is understood that the Registration Statement and Prospectus will cover a number of Shares equal to the aggregate number of Shares (if any) reasonably estimated by Dealer to be potentially deliverable by Counterparty in connection with Net Physical Settlement or Early Termination Stock Settlement hereunder, as the case may be, but in no event exceeding the Maximum Deliverable Share Amount. On each day during the Termination Registration Period Counterparty shall represent that each of its filings under the Securities Act, the Exchange Act or other applicable securities laws that are required to be filed have been filed and that, as of the respective dates thereof and as of the date of this representation, they do not contain any untrue statement of a material fact or omission of a material fact required to be stated therein or necessary to make the statements made, in the light of the circumstances under which they were made, not misleading.

	In lieu of a Registered Settlement, Counterparty may elect, by notice to Dealer no later than the time the relevant delivery obligation is due , that this paragraph shall apply:

		(a) Counterparty shall afford Dealer and any potential institutional

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				purchaser of any Shares identified by Dealer a reasonable opportunity to conduct a due diligence investigation with respect to Counterparty that is customary in scope for private placements of equity securities subject to execution of any customary confidentiality agreements;

				(b) Counterparty shall enter into an agreement (a “Private Placement Agreement”) with Dealer on commercially reasonable terms in connection with the private placement of such Shares (including any additional Shares pursuant to clause (c) below) by Counterparty to Dealer or an affiliate and the private resale of such shares by Dealer or such affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance commercially reasonably satisfactory to Dealer, which Private Placement Agreement shall include provisions relating to the indemnification of, and contribution in connection with the liability of, Dealer and its affiliates, shall provide for the payment by Counterparty of all expenses in connection with such resale, including all reasonable and documented fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Counterparty reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales, and shall use commercially reasonable efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Shares;

				(c) Dealer shall sell the Delivered Shares or the Shares delivered by Counterparty in connection with Early Termination Stock Settlement, as the case may be, in a commercially reasonable manner until the amount received by Dealer for the sale of the Shares (the “Proceeds Amount”) is equal to the Net Physical Settlement Amount or the Transaction Early Termination Amount, as applicable. Any remaining delivered Shares shall be returned to Counterparty. If the Proceeds Amount is less than the Net Physical Settlement Amount or the Transaction Early Termination Amount, as applicable, Counterparty shall promptly deliver upon notice from Dealer additional Shares to Dealer until the dollar amount from the sale of such Shares by Dealer equals the difference between the Net Physical Settlement Amount or the Transaction Early Termination Amount, as applicable, and the Proceeds Amount. In no event shall Counterparty be required to deliver to Dealer a number of Shares greater than the Maximum Deliverable Share Amount.

		Notwithstanding the foregoing: (I) if Counterparty has elected to deliver Shares as described in paragraph (a) above and either (A) Counterparty does not provide for the sale of the Shares under the Registration Statement as provided in the Registration Rights Agreement, (B) some Shares cannot be registered under the Registration Statement due to Rule 415(a)(4) under the Securities Act or (C) some Shares cannot be sold due to the application of a blackout period or the failure of the Registration Statement to become effective on or prior to the date on which the relevant delivery obligation is due, then the provisions of the preceding paragraph shall apply to the extent Counterparty has not satisfied its obligations hereunder. (II) If the preceding paragraph is applicable and

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		Counterparty fails to satisfy its obligations under such paragraph, then Counterparty may deliver unregistered Shares of equivalent value to the Net Physical Settlement Amount or the Transaction Early Termination Amount, as applicable, (or, if applicable, the unsatisfied portion thereof). The value of any unregistered Shares so delivered shall be discounted to reflect an appropriate liquidity discount (determined by Dealer in a commercially reasonable manner, taking into account Dealer’s policies and determinations with respect to any transfer restrictions that Dealer deems it advisable to observe in connection with sales of such Shares). (III) If some or all of the Delivered Shares or Shares delivered in connection with an Early Termination Stock Settlement, as applicable, cannot be used to close out stock loans in the shares of Counterparty entered into to establish or maintain short positions by Dealer in connection with this Transaction without a prospectus being required by applicable law to be delivered to such lender, then the value of any such Shares shall reflect the cost (determined by Dealer in good faith and in a commercially reasonable manner) to Dealer of trading Shares in order to close out its hedge position if any, and the number of Shares required to be delivered shall be adjusted accordingly. In no event shall Counterparty be required to (i) top-up the delivery in cash or (ii) deliver to Dealer a number of Shares greater than the Maximum Deliverable Share Amount.

Compliance With Securities Laws:		Counterparty represents and agrees that it has complied, and will comply, in connection with this Transaction and all related or contemporaneous sales and purchases of Shares, with the applicable provisions of the Securities Act, the Exchange Act and the rules and regulations promulgated thereunder, including, without limitation, Rule 10b-5 and 13e and Regulation M under the Exchange Act.

		Each party 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. Accordingly, each party represents and warrants to the other party that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act and (iii) the disposition of the Transaction is restricted under this Confirmation, the Securities Act and state securities laws.

		Counterparty further represents and warrants that:

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

		(b) Counterparty represents and acknowledges that as of the date hereof and without limiting the generality of Section 13.1 of the Equity Definitions, Dealer is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 149 or 150, EITF Issue No. 00-19 (or any successor issue statements) or under FASB’s Liabilities & Equity Project;

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

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		(d) As of the Trade Date and each date on which a payment of cash is made by Counterparty hereunder, (i) the assets of Counterparty at their fair valuation exceed the liabilities of Counterparty, including contingent liabilities; (ii) the capital of Counterparty is adequate to conduct its business; and (iii) Counterparty has the ability to pay its debts and other obligations as such obligations mature and does not intend to, or believe that it will, incur debt or other obligations beyond its ability to pay as such obligations mature.

Account Details:		Account for payments to Counterparty:
		To be advised.

		Account for payments to Dealer:
		To be advised.

		Account for delivery of Shares to Dealer:
		To be advised.

Agreement Regarding Shares:		Counterparty agrees that, in respect of any Shares delivered to Dealer, such Shares shall be, upon such delivery, duly and validly authorized, issued and outstanding, fully paid and non-assessable and subject to no adverse claims of any other party. The issuance of such Shares does not and will not require the consent, approval, authorization, registration or qualification of any government authority, except such as shall have been obtained on or before the delivery date of any Shares or as may be required in connection with any Registration Statement filed with respect to any Shares.

Bankruptcy Rights:		In the event of Counterparty’s bankruptcy, Dealer’s rights in connection with this Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that Dealer’s rights with respect to any other claim arising from this 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:		Each party waives any and all rights it may have to set-off, whether arising under any agreement, applicable law or otherwise.

Transfer:		Neither party may transfer its rights or delegate its obligations under this Transaction without the prior written consent of the other party, except that Dealer, after payment in full of the Premium, may assign its rights and delegate its obligations hereunder, in whole or in part, to any other person (an “Assignee”) without the prior consent of the Counterparty, so long as Assignee makes to Counterparty the representations set forth in the second paragraph under “Compliance with Securities Laws,” effective (the “Transfer Effective Date”) upon delivery to Counterparty of an executed acceptance and assumption by the Assignee (an “Assumption”) of the transferred obligations of Dealer under this Transaction (the “Transferred Obligations”). Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of this Transaction and any such designee may assume such obligations. Dealer shall be

Amended and Restated OTC Warrant Confirmation


		discharged of its obligations to Counterparty to the extent of any such performance.

		Notwithstanding any provision of the Agreement to the contrary, Buyer shall be entitled to assign its rights and obligations hereunder to make or receive cash payments and transfer of Shares and other related rights to one or more entities that are wholly-owned, directly or indirectly, by Citigroup Inc., or any successor thereto (each, a “Citibank Affiliate”); provided that Seller shall have recourse to Buyer in the event of the failure by a Citibank Affiliate to perform any of such obligations hereunder. Notwithstanding the foregoing, recourse to Buyer shall be limited to recoupment of Seller’s monetary damages and Seller hereby waives any right to seek specific performance by Buyer of its obligations hereunder. Such failure after any applicable grace period shall be an Additional Termination Event with the Transaction to which the failure relates as the sole Affected Transaction and Buyer as the sole Affected Party.

Indemnity:		Counterparty agrees to indemnify Dealer, its Affiliates and their respective directors, officers, agents and controlling parties (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 a breach of any representation or covenant hereunder, in the Agreement or any other agreement relating to the Agreement or Transaction and will reimburse 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. Seller will not be liable under the foregoing Indemnity provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from Dealer’s gross negligence or willful misconduct.

Additional Agreements, Representations and Covenants of Counterparty, Etc.:

(a)

Counterparty hereby represents and warrants to Dealer, on each day from the Trade Date to and including the earlier of (i) November 17, 2007 and (ii) the date by which Dealer is able to initially complete a hedge of its position created by this Transaction, that:

	(1)		it will not, and will not permit any person or entity subject to its control to, bid for or purchase Shares during such period except pursuant to transactions or arrangements which have been approved by Dealer or an affiliate of Dealer; and

	(2)		it has publicly disclosed all material information necessary for it to be able to purchase or sell Shares in compliance with applicable federal securities laws.

(b)		No collateral shall be required by either party for any reason in connection with this Transaction.

(c)		Notwithstanding anything to the contrary herein, Dealer shall not be entitled to exercise any Warrant or receive any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant to the extent (but only to the extent) that after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder Dealer, or its ultimate parent entity would, directly or indirectly, be the

Amended and Restated OTC Warrant Confirmation

		beneficial owner (as such term is defined for purposes of Section 13(d) of the Exchange Act) at any time of more than 4.9 percent of the class of the Counterparty’s outstanding equity securities that is comprised of the Shares (an “Excess Share Owner”).

		Dealer shall provide prior notice to Counterparty if the exercise of any Warrant or delivery of Shares hereunder would cause Dealer to become directly or indirectly, an Excess Share Owner; provided that the failure of Dealer to provide such notice shall not alter the effectiveness of the provisions set forth in the preceding sentence and any purported exercise or delivery in violation of such provisions shall be void and have no effect. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Counterparty’s obligation to make such delivery shall not be extinguished and Counterparty shall make such delivery as promptly as practicable after Dealer gives notice that such delivery would not result in Dealer being an Excess Share Owner.

		If Dealer is not entitled to exercise any Warrant because such exercise would cause Dealer to become, directly or indirectly, an Excess Share Owner and Dealer thereafter disposes of Shares owned by it or any action is taken that would then permit Dealer to exercise such Warrant without such exercise causing it to become, directly or indirectly, an Excess Share Owner, then Dealer shall provide notice of the taking of such action to Counterparty and such Warrant shall then become exercisable by Dealer to the extent such Warrant is otherwise or had otherwise become exercisable hereunder. In such event, the Expiration Date with respect to such Warrant shall be the date on which Counterparty receives such notice from Dealer, and the related Settlement Date shall be as soon as reasonably practicable after receipt of such notice but no more than three (3) Exchange Business Days thereafter (but in no event shall the Settlement Date occur prior to the date on which it would have otherwise occurred but for the provisions of this subsection); provided that the related Net Physical Settlement Amount shall be the same as the Net Physical Settlement Amount but for the provisions of this subsection. In addition, within 30 calendar days of any Settlement Date, Counterparty shall use its reasonable efforts to refrain from activities that could reasonably be expected to result in Dealer’s ownership of Shares exceeding 10% of all issued and outstanding Shares.

ISDA Master Agreement:

With respect to the Agreement, Dealer and Counterparty each agree as follows:

“Specified Entity” means in relation to Seller and in relation to Counterparty for purposes of this Transaction: Not applicable.

The definition of “Specified Transaction” in Section 14 of this Agreement is hereby amended by adding the text “commodity transaction, credit derivative transaction, repurchase or reverse purchase transaction, securities lending transaction, futures transaction, prime brokerage or margin lending transaction” after the words “foreign exchange transaction” in the sixth line thereof and by replacing the words “any other similar transaction” in the eighth line thereof with the text “any other transaction between the parties”. “Specified Transaction” shall exclude any default under a Specified Transaction if caused solely by the general unavailability of the currency in which payments under such Specified Transaction are denominated due to exchange controls or other governmental action.

The “Cross Default” provisions of Section 5(a)(vi) of the Agreement will not apply to Dealer and will apply to Counterparty.

“Threshold Amount” means, with respect to Counterparty, $25,000,000.

The “Credit Event Upon Merger” provisions of Section 5(b)(iv) of the Agreement will not apply to Dealer or to Counterparty.

Additional Termination Event.

Amended and Restated OTC Warrant Confirmation

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

(i) within the period commencing on the Trade Date and ending on the second anniversary of the Premium Payment Date (or at the end of such shorter period as specified in Rule 144(k) under the Securities Act or any successor rule), Buyer reasonably determines that it is advisable to terminate a portion of the Transaction so that Buyer’s related hedging activities will comply with applicable securities laws, rules or regulations;

(ii) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of voting stock representing 50% or more of the total voting power of all outstanding voting stock of the company;

(iii) Counterparty consolidates with, or merges with or into, another person or Counterparty sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any person, other than any such transaction (a) entered into solely for the purpose of changing the Counterparty’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity, or (b) where immediately after such transaction the person or persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction, directly or indirectly, voting stock representing a majority of the total voting power of all outstanding voting stock of Counterparty, “beneficially own or owns” (as so determined), directly or indirectly, voting stock representing a majority of the total voting power of the outstanding voting stock of the surviving or transferee person;

(iv) during any consecutive two-year period, the continuing directors cease for any reason to constitute a majority of the board of directors of Counterparty;

(v) the adoption of a plan of liquidation or dissolution of Counterparty; or

(vi) the Shares (or other common stock into which the Shares have been converted or for which the Shares have been exchanged in connection with any merger, reclassification or recapitalization of Counterparty) cease to be listed on a U.S. national securities exchange or approved for quotation and trading on a national automated dealer quotation system or established automated over the counter trading market in the U.S. or cease to be so traded or quoted in contemplation of a delisting or withdrawal of approval.

“Continuing directors” means, as of any date of determination, any member of the board of directors of Counterparty who was (a) a member of such board of directors on the Effective Date or (b) nominated for election or elected to such board of directors with the approval of a majority of the continuing directors who were members of such board at the time of such nomination or election.

Notwithstanding the foregoing, a transaction described in clause (ii), (iii), (iv) or (v) above will not constitute an Additional Termination Event if 90% or more of the consideration for the Shares (excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights) in the transaction or transactions consists of common stock and any associated rights listed on a United States national securities exchange or quoted on a national automated dealer quotation system, or which will be so traded or quoted when issued or exchanged in connection with such transaction, and as a result of such transaction or transactions the notes become convertible solely into such common stock.

Amended and Restated OTC Warrant Confirmation

The “Automatic Early Termination” provision of Section 6(a) of the Agreement will not apply to Dealer or to Counterparty.

Payments on Early Termination. For the purpose of Section 6(e) of the Agreement: (i) Loss shall apply; and (ii) the Second Method shall apply.

“Termination Currency” means USD.

Tax Representations.

(I)		Payer Representations. For the purpose of Section 3(e) of the Agreement, each party represents to the other party that it is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the other party under the Agreement. In making this representation, each party may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of the Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of the Agreement; provided that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or document under Section 4(a)(iii) of the Agreement by reason of material prejudice to its legal or commercial position.

(II)		Payee Representations. For the purpose of Section 3(f) of the Agreement, each party makes the following representations to the other party:

	(i)		It is a national banking association organized under the laws of the United States and its U.S. taxpayer identification number is ###-###-####. It is “exempt” within the meaning of Treasury Regulation sections 1.6041-3(p) and 1.6049-4(c) from information reporting on Form 1099 and backup withholding.

	(ii)		Counterparty represents that it is a corporation incorporated in Delaware.

Delivery Requirements. For the purpose of Sections 4(a)(i) and (ii) of the Agreement, each party agrees to deliver the following documents:

(a)		Tax forms, documents or certificates to be delivered are:

		Dealer agrees to complete (accurately and in a manner reasonably satisfactory to Counterparty), execute, and deliver to Counterparty, United States Internal Revenue Service Form W-9 and all required attachments, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such Form previously provided by Dealer has become obsolete or incorrect.

		Counterparty agrees to complete (accurately and in a manner reasonably satisfactory to Dealer), execute, and deliver to Dealer, United States Internal Revenue Service Form W-9, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by Dealer; and (iii) promptly upon learning that any such form(s) previously provided by Counterparty has become obsolete or incorrect.

Amended and Restated OTC Warrant Confirmation

(b)


			Covered by
Party Required to			Section 3(d)
Deliver Document	Document Required to be Delivered	When Required	Representation

Counterparty	Evidence of the authority and true signatures of each official or representative signing this Confirmation	Upon or before execution and delivery of this Confirmation	Yes

Counterparty	Certified copy of the resolution of the Board of Directors or equivalent document authorizing the execution and delivery of this Confirmation and such other certificate or certificates as Dealer shall reasonably request	Upon or before execution and delivery of this Confirmation	Yes


Address:		250 West Street
		10th Floor
		New York, New York 10013
Attention:		Director Derivatives Operations
Facsimile No.:		212 ###-###-####


Address:		Legal Department
		77 Water Street
		9^th Floor
		New York, New York 10004
Attention:		Department Head
Facsimile No.:		212 ###-###-####


Attention:
Facsimile No.:
Telephone No.:

In addition, in the case of notices or communications relating to Section 5, 6, 11 or 13 of this Agreement, a second copy of any such notice or communication shall be addressed to the attention of Counterparty’ General Counsel as follows:

Address:		To be advised.


Attention:
Facsimile No.:
Telephone No.:


		Very truly yours,

		CITIBANK, N.A.


		By:		/s/ Jason Shrednick

		Name:		Jason Shrednick
		Title:		Authorized Signatory

(a)		The parties acknowledge and agree that there are no other representations, agreements or other undertakings of the parties in relation to this Transaction, except as set forth in this Confirmation.

(b)		The parties hereto intend for:

	(i)		Buyer to be a “financial institution” as defined in Section 101(22) of Title 11 of the United States Code (the “Bankruptcy Code”) and this Transaction to be a “securities contract” as defined in Section 741(7) of the Bankruptcy Code and a “swap agreement” as defined in Section 101(53C) of the Bankruptcy Code, qualifying for the protections of, among other sections, Sections 362(b)(6), 362 (b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code;

	(ii)		a party’s right to liquidate this 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 defined in the Bankruptcy Code;

	(iii)		all payments for, under or in connection with this Transaction, all payments for the Shares and the transfer of such Shares to constitute “settlement payments” as defined in the Bankruptcy Code.


By:		/s/ Marc Gordon

Name:		Marc Gordon
Title:		Chief Investment Officer & Executive
		Vice President of Capital Markets