UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8
‑
K
______________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 2018
LIGAND PHARMACEUTICALS INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
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Delaware
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001-33093
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77-0160744
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(State or other jurisdiction of
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(Commission File Number)
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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3911 Sorrento Valley Boulevard, Suite 110
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92121
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San Diego, CA
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(Zip Code)
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(Address of principal executive offices)
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(858) 550-7500
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
On May 22, 2018, Ligand Pharmaceuticals Incorporated (the “Company”) issued $750 million in aggregate principal amount of its 0.75% convertible senior notes due 2023 (the “Notes”), including the exercise in full by the initial purchasers of the Notes (the “Initial Purchasers”) of their option (the “Option”) to purchase up to $100 million aggregate principal amount of Notes to cover over-allotments, in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).
Indenture
The Notes were issued pursuant to an Indenture, dated as of May 22, 2018 (the “Indenture”), between the Company and Wilmington Trust, National Association, as trustee. The Notes are the Company’s unsecured senior obligations. The Notes bear interest semi-annually at a rate of 0.75% per year, payable on May 15 and November 15 of each year. The Notes will mature on May 15, 2023, unless earlier repurchased or converted in accordance with their terms prior to such date. The initial conversion rate for the Notes is 4.0244 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $248.48 per share of common stock, and is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the Notes represents a premium of approximately 30% to the $191.14 per share closing price of the Company’s common stock on May 17, 2018. Holders may convert their Notes at their option prior to the close of business on the business day immediately preceding November 15, 2022, in multiples of $1,000 principal amount, only upon satisfaction of certain conditions and during certain periods. On or after November 15, 2022, to the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at the applicable conversion rate at any time, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election but subject to certain restrictions. The Company will be required to settle conversions solely in cash in respect of any conversion of Notes for which the relevant conversion date occurs prior to the first date on which the Company’s stockholders have approved an increase in the number of authorized but unissued shares of the Company’s common stock that are not reserved for other purposes or the Company otherwise has a number of authorized but unissued shares of its common stock that are not reserved for other purposes, in each case sufficient for the Company to issue and deliver shares of its common stock upon conversion of all outstanding Notes.
If the Company undergoes a fundamental change (as defined in the Indenture) prior to the maturity date, holders may, subject to a limited exception, require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate in certain circumstances for a holder who elects to convert its Notes in connection with such a corporate event.
The Indenture includes customary terms and covenants, including certain events of default after which the Notes may be due and payable immediately.
The Notes are general unsecured obligations of the Company. The Notes rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; rank equal in right of payment to the Company’s unsecured indebtedness that is not so subordinated; are effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and are structurally subordinated to all existing and future indebtedness and liabilities of the Company’s subsidiaries.
The net proceeds from the sale of the Notes, including net proceeds from the exercise in full by the Initial Purchasers of the Option, were approximately $733.1 million, after deducting the Initial Purchasers’ discounts and commissions and the estimated offering expenses payable by the Company. The Company used approximately $50.3 million of the net proceeds to pay the cost of the Convertible Note Hedge Transactions (as defined below), after taking into account the proceeds to the Company of the Warrant Transactions (as defined below), and approximately $49.7
million of the net proceeds to repurchase shares of the Company’s common stock from purchasers of the Notes in privately negotiated transactions concurrently with the offering of the Notes. The Company expects to use the remainder of the net proceeds from the offering of the Notes to acquire or invest in complementary businesses, companies, products and technologies and for working capital and other general corporate purposes, including, without limitation, research and development activities to maintain the Company’s platform technologies or for development of its product candidates being developed internally. The Company has no current commitments or obligations with respect to any acquisitions or other strategic transactions.
Convertible Note Hedge Transactions
In connection with the pricing of the Notes on May 17, 2018, the Company entered into privately negotiated convertible note hedge transactions (together, the “Base Convertible Note Hedge Transactions”) with Barclays Capital Inc., Deutsche Bank AG and Goldman Sachs & Co. LLC (together, the “Option Counterparties”). In addition, on May 18, 2018, the Company entered into additional convertible note hedge transactions (the “Additional Convertible Note Hedge Transactions,” and, together with the Base Convertible Note Hedge Transactions, the “Convertible Note Hedge Transactions”) with each of the Option Counterparties. The Convertible Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the Notes, and are expected generally to reduce or offset potential dilution to the Company’s common stock upon any conversion of notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be. On May 17, 2018 and May 18, 2018, the Company also entered into separate warrant transactions (the “Base Warrant Transactions” and the “Additional Warrant Transactions,” respectively, and together, the “Warrant Transactions”) with each of the Option Counterparties, under which the Company sold to the Option Counterparties warrants relating to the same number of shares of the Company’s common stock. The Warrant Transactions could separately have a dilutive effect to the extent that the market value per share of the Company’s common stock exceeds the strike price of the warrants. To the extent the Company has insufficient authorized shares available to satisfy its obligations under the warrants in shares of the Company’s common stock, it would be required to satisfy these obligations in cash. The strike price of the Warrant Transactions will initially be $315.381 per share of the Company’s common stock and is subject to certain adjustments under the terms of the Warrant Transactions. The Convertible Note Hedge Transactions and the Warrant Transactions are separate transactions, in each case, entered into by the Company with the Option Counterparties, and are not part of the terms of the Notes and will not affect any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Convertible Note Hedge Transactions or the Warrant Transactions.
Supplemental Indenture
On May 22, 2018, the Company and Wilmington Trust, National Association, as trustee, entered into a Second Supplemental Indenture (the “Supplemental Indenture”) to the Indenture, dated as of August 18, 2014 (as supplemented by the Supplemental Indenture, dated February 20, 2018), between the Company and Wilmington Trust, National Association (the “Original Indenture”), which governs the Company’s 0.75% convertible senior notes due 2019 (the “2019 Notes”). The Company and Wilmington Trust, National Association entered into the Supplemental Indenture to effect an amendment to the Original Indenture whereby the Company agreed to surrender its right to settle conversions of the 2019 Notes in a combination of shares of common stock and cash and elected to settle all conversions going forward solely in cash.
The foregoing description of the Indenture and the Notes is qualified in its entirety by reference to the Indenture (including the form of the Note), which is attached hereto as Exhibit 4.1 and incorporated herein by reference. The foregoing description of the Supplemental Indenture is qualified in its entirety by reference to the Supplemental Indenture, which is attached hereto as Exhibit 4.2 and incorporated herein by reference. The foregoing description of the Convertible Notes Hedge Transactions and Warrant Transactions is qualified in its entirety by reference to the confirmations for the Convertible Notes Hedge Transactions and Warrant Transactions, which are attached as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.11 and 10.12 and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The Company offered and sold the Notes to the Initial Purchasers in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, and for resale by the Initial Purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A under the Securities Act. The Company relied on these exemptions from registration based in part on representations made by the Initial Purchasers. The offer and sale of the Notes and the shares of the Company’s common stock issuable upon conversion of the Notes, if any, have not been registered under the Securities Act, and the Notes and any such shares may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company expects any shares of common stock issued upon conversion of the Notes to be issued pursuant to the exemption provided by Section 3(a)(9) of the Securities Act. A maximum of 3,923,775 shares of common stock are initially issuable upon conversion of the Notes, based on the initial maximum conversion rate of 5.2317 shares per $1,000 principal amount of notes, subject to customary anti-dilution adjustments.
The Company entered into the Warrant Transactions with the Option Counterparties in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company relied on this exemption from registration based in part on representations made by the Option Counterparties. The Warrant Transactions and the shares of the Company’s common stock issuable upon exercise of the warrants comprising the Warrant Transactions, if any, have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. A maximum of 4,527,450 shares of common stock are issuable upon exercise of the warrants issued in the Warrant Transactions.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit No.
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Description
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Indenture, dated as of May 22, 2018, between the Company and Wilmington Trust, National Association, as trustee, including the form of 0.75% Convertible Senior Notes due 2023
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Second Supplemental Indenture, dated as of May 22, 2018, between the Company and Wilmington Trust, National Association, as trustee
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Letter Agreement, dated as of May 17, 2018, between Barclays Capital Inc. and the Company regarding the Base Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 17, 2018, between Barclays Capital Inc. and the Company regarding the Base Warrant Transaction.
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Letter Agreement, dated as of May 17, 2018, between Deutsche Bank AG and the Company regarding the Base Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 17, 2018, between Deutsche Bank AG and the Company regarding the Base Warrant Transaction.
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Letter Agreement, dated as of May 17, 2018, between Goldman Sachs & Co. LLC and the Company regarding the Base Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 17, 2018, between Goldman Sachs & Co. LLC and the Company regarding the Base Warrant Transaction.
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Letter Agreement, dated as of May 18, 2018, between Barclays Capital Inc. and the Company regarding the Additional Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 18, 2018, between Barclays Capital Inc. and the Company regarding the Additional Warrant Transaction.
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Letter Agreement, dated as of May 18, 2018, between Deutsche Bank AG and the Company regarding the Additional Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 18, 2018, between Deutsche Bank AG and the Company regarding the Additional Warrant Transaction.
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Letter Agreement, dated as of May 18, 2018, between Goldman Sachs & Co. LLC and the Company regarding the Additional Convertible Note Hedge Transaction.
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Letter Agreement, dated as of May 18, 2018, between Goldman Sachs & Co. LLC and the Company regarding the Additional Warrant Transaction.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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LIGAND PHARMACEUTICALS INCORPORATED
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Date: May 22, 2018
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By:
/s/ Charles Berkman
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
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LIGAND PHARMACEUTICALS INCORPORATED
AND
WILMINGTON TRUST, NATIONAL ASSOCIATION,
as Trustee
INDENTURE
Dated as of May 22, 2018
0.75% Convertible Senior Notes due 2023
TABLE OF CONTENTS
PAGE
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. References to Interest
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13
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ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
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. Designation and Amount
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13
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. Date and Denomination of Notes; Payments of Interest and Defaulted Amounts
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14
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. Execution, Authentication and Delivery of Notes
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15
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. Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary
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. Mutilated, Destroyed, Lost or Stolen Notes
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23
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. Cancellation of Notes Paid, Converted, Etc
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. Additional Notes; Repurchases
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. Satisfaction and Discharge
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ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
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. Payment of Principal and Interest
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. Maintenance of Office or Agency
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. Appointments to Fill Vacancies in Trustee’s Office
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. Provisions as to Paying Agent
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. Rule 144A Information Requirement and Annual Reports
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28
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. Stay, Extension and Usury Laws
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30
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. Compliance Certificate; Statements as to Defaults
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30
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. Further Instruments and Acts
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ARTICLE 5
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
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. Preservation and Disclosure of Lists
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Acceleration; Rescission and Annulment
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. Payments of Notes on Default; Suit Therefor
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. Application of Monies Collected by Trustee
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. Proceedings by Holders
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. Proceedings by Trustee
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. Remedies Cumulative and Continuing
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. Direction of Proceedings and Waiver of Defaults by Majority of Holders
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. Undertaking to Pay Costs
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. Duties and Responsibilities of Trustee
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. Reliance on Documents, Opinions, Etc
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. No Responsibility for Recitals, Etc
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. Trustee, Paying Agents, Conversion Agents, Bid Solicitation Agent or Note Registrar May Own Notes
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. Monies to Be Held in Trust
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. Compensation and Expenses of Trustee
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. Officer’s Certificate as Evidence
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. Eligibility of Trustee
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. Resignation or Removal of Trustee
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. Acceptance by Successor Trustee
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. Succession by Merger, Etc
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. Trustee’s Application for Instructions from the Company
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. Proof of Execution by Holders
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. Who Are Deemed Absolute Owners
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. Company-Owned Notes Disregarded
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. Revocation of Consents; Future Holders Bound
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. Call of Meetings by Trustee
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. Call of Meetings by Company or Holders
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. Qualifications for Voting
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. No Delay of Rights by Meeting
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. Supplemental Indentures Without Consent of Holders
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. Supplemental Indentures with Consent of Holders
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. Effect of Supplemental Indentures
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. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee
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ARTICLE 11
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
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. Company May Consolidate, Etc. on Certain Terms
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. Successor Corporation to Be Substituted
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ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
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. Indenture and Notes Solely Corporate Obligations
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. Conversion Privilege
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. Conversion Procedure; Settlement Upon Conversion.
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Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change
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. Adjustment of Conversion Rate
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. Adjustments of Prices
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. Shares to Be Fully Paid
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. Effect of Recapitalizations, Reclassifications and Changes of the Common Stock.
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. Responsibility of Trustee
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. Stockholder Rights Plans
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Exchange In Lieu Of Conversion
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ARTICLE 15
REPURCHASE OF NOTES AT OPTION OF HOLDERS
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. Intentionally Omitted.
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. Repurchase
at Option of Holders Upon a Fundamental Change
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. Withdrawal of Fundamental Change Repurchase Notice
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. Deposit of Fundamental Change Repurchase Price
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Covenant to Comply with Applicable Laws Upon Repurchase of Notes
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. Provisions Binding on Company’s Successors
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. Official Acts by Successor Corporation
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. Addresses for Notices, Etc
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. Governing Law; Jurisdiction
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. Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee
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84
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. No Security Interest Created
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85
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. Benefits of Indenture
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. Table of Contents, Headings, Etc
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85
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. Authenticating Agent
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85
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. Execution in Counterparts
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86
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. Waiver of Jury Trial
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86
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EXHIBIT
Exhibit A Form of Note A-1
INDENTURE, dated as of May 22, 2018, between LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation, as issuer (the “
Company
”, as more fully set forth in Section 1.01) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as trustee (the “
Trustee
”, as more fully set forth in Section 1.01).
W I T N E S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 0.75% Convertible Senior Notes due 2023 (the “
Notes
”), initially in an aggregate principal amount not to exceed $750,000,000, and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Indenture; and
WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and
WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in this Indenture provided, the valid, binding and legal obligations of the Company, and this Indenture a valid, binding and legal agreement of the Company and the Trustee, have been done and performed, and the execution of this Indenture and the issuance hereunder of the Notes have in all respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes (except as otherwise provided below), as follows:
Article 1
DEFINITIONS
Section 1.01
. Definitions.
The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article include the plural as well as the singular.
“
Additional Interest
” means all amounts, if any, payable pursuant to Section 4.06(d), Section 4.06(e) and Section 6.03, as applicable.
“
Additional Shares
” shall have the meaning specified in Section 14.03(a).
“
Affiliate
” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. Notwithstanding anything to the contrary herein, the determination of whether one Person is an “Affiliate” of another Person for purposes of this Indenture shall be made based on the facts at the time such determination is made or required to be made, as the case may be, hereunder.
“
Bid Solicitation Agent
” means the Company or the Person appointed by the Company to solicit bids for the Trading Price of the Notes in accordance with Section 14.01(b)(i). The Company shall initially act as the Bid Solicitation Agent.
“
Board of Directors
” means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.
“
Board Resolution
” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, and to be in full force and effect on the date of such certification, and delivered to the Trustee.
“
Business Day
” means, with respect to any Note, any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York or place of payment is authorized or required by law or executive order to close or be closed.
“
Capital Stock
” means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity;
provided
that debt securities that are convertible into or exchangeable for Capital Stock shall not constitute Capital Stock prior to their conversion or exchange, as the case may be.
“
Cash Settlement
” shall have the meaning specified in Section 14.02(a).
“
Certain Distributions Notification
” shall have the meaning specified in Section 14.01(b)(ii).
“
Certain Distributions Conversion Period End Date
” shall have the meaning specified in Section 14.01(b)(ii).
“
close of business
” means 5:00 p.m. (New York City time).
“
Combination Settlement
” shall have the meaning specified in Section 14.02(a).
“
Commission
” means the U.S. Securities and Exchange Commission.
“
Common Equity
” of any Person means Capital Stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.
“
Common Stock
” means the common stock of the Company, par value $0.001 per share, at the date of this Indenture, subject to Section 14.07.
“
Common Stock Change Event
” shall have the meaning specified in Section 14.07(a).
“
Company
” shall have the meaning specified in the first paragraph of this Indenture, and subject to the provisions of Article 11, shall include its successors and assigns.
“
Company Order
” means a written order of the Company, signed on behalf of the Company by an Officer.
“
Conversion Agent
” shall have the meaning specified in Section 4.02.
“
Conversion Consideration
” shall have the meaning specified in Section 14.11(a).
“
Conversion Date
” shall have the meaning specified in Section 14.02(c).
“
Conversion Obligation
” shall have the meaning specified in Section 14.01(a).
“
Conversion Price
” means as of any time, $1,000,
divided by
the Conversion Rate as of such time.
“
Conversion Rate
” shall have the meaning specified in Section 14.01(a).
“
Corporate Event
” shall have the meaning specified in Section 14.01(b).
“
Corporate Trust Office
” means the designated office of the Trustee at which at any time this Indenture shall be administered, which office at the date hereof is located at 50 South Sixth Street, Suite 1290, Minneapolis, MN 55402, Attention: Ligand Pharmaceuticals Incorporated Account Manager or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the designated corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Company).
“
Custodian
” means the Trustee, as custodian for The Depository Trust Company, with respect to the Global Notes, or any successor entity thereto.
“
Daily Conversion Value
” means, for each of the 60 consecutive VWAP Trading Days during the relevant Observation Period, 1/60th (one-sixtieth) of the product of (a) the Conversion Rate on such VWAP Trading Day and (b) the Daily VWAP on such VWAP Trading Day.
“
Daily Measurement Value
” means the Specified Dollar Amount,
divided by
60.
“
Daily Settlement Amount
,” for each of the 60 consecutive VWAP Trading Days during the relevant Observation Period, shall consist of:
(a) cash in an amount equal to the lesser of (i) the Daily Measurement Value and (ii) the Daily Conversion Value on such VWAP Trading Day; and
(b) if the Daily Conversion Value on such VWAP Trading Day exceeds the Daily Measurement Value, a number of shares of Common Stock equal to (i) the difference between the Daily Conversion Value and the Daily Measurement Value,
divided by
(ii) the Daily VWAP for such VWAP Trading Day.
“
Daily VWAP
” means, for any VWAP Trading Day, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “LGND <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such VWAP Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such VWAP Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The “
Daily VWAP
” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
“
Default
” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.
“
Default Settlement Method
” means, as of the Share Reservation Date, Combination Settlement with a Specified Dollar Amount of $1,000 per $1,000 principal amount of Notes and may be changed from time to time by the Company in accordance with Section 14.02(a)(iv).
“
Defaulted Amounts
” means any amounts on any Note (including, without limitation, the Fundamental Change Repurchase Price, principal and interest) that are payable but are not punctually paid or duly provided for.
“
delivered
” with respect to any notice to be delivered, given or mailed to a Holder pursuant to this Indenture, shall mean notice (x) given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices or procedures at the Depositary (in the case of a Global Note) or (y) mailed to such Holder by first class mail, postage prepaid, at its address as it appears on the Note Register, in each case in accordance with Section 17.03. Notice so “delivered” shall be deemed to include any notice to be “mailed” or “given,” as applicable, under this Indenture.
“
Depositary
” means, with respect to each Global Note, the Person specified in Section 2.05(c) as the Depositary with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “
Depositary
” shall mean or include such successor.
“
Designated Institution
” shall have the meaning specified in Section 14.11(a).
“
Distributed Property
” shall have the meaning specified in Section 14.04(c).
“
Distributions Trigger Irrevocable Physical Settlement Period
” shall have the meaning specified in Section 14.01(b)(ii).
“
Effective Date
” shall have the meaning specified in Section 14.03(c), except that, as used in Section 14.04 and Section 14.05, “
Effective Date
” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.
“
Event of Default
” shall have the meaning specified in Section 6.01.
“
expiration date
” shall have the meaning specified in Section 14.04(e).
“
Ex-Dividend Date
” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.
“
Exchange Act
” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Exchange Election
” shall have the meaning specified in Section 14.11(a).
“
Exempted Fundamental Change
” shall have the meaning specified in Section 15.02(f).
“
Form of Assignment and Transfer
” shall mean the “Form of Assignment and Transfer” attached as Attachment 3 to the Form of Note attached hereto as Exhibit A.
“
Form of Fundamental Change Repurchase Notice
” shall mean the “Form of Fundamental Change Repurchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.
“
Form of Note
” shall mean the “Form of Note” attached hereto as Exhibit A.
“
Form of Notice of Conversion
” shall mean the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.
“
Fundamental Change
” shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs:
(a) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Company, its Wholly Owned Subsidiaries and the employee benefit plans of the Company and its Wholly Owned Subsidiaries, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the voting power of the Common Stock;
(b) the consummation of (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s Wholly Owned Subsidiaries;
provided
,
however
, that a transaction described in clause (B) in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the direct or indirect parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (b);
(c) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or
(d) the Common Stock ceases to be listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors);
provided
,
however
, that (x) a transaction or transactions described in (b) above shall not constitute a Fundamental Change if at least 90% of the consideration received or to be received by the common stockholders of the Company (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions (“
Publicly Traded Securities
”) and such transaction(s) constitutes a Common Stock Change Event whose Reference Property consists of such consideration and (y) for purposes of this definition, any transaction that constitutes a Fundamental Change pursuant to both clause (a) and clause (b) (excluding the proviso to such clause (b)) of this definition shall be deemed a Fundamental Change solely under clause (b) of this definition (subject to such proviso). If any transaction in which the Common Stock is replaced by the securities of another entity occurs, following completion of any related Make-Whole Fundamental Change Period (or, in the case of a transaction that would have been a Fundamental Change or a Make-Whole Fundamental Change but for the
proviso
in the immediately preceding paragraph, following the effective date of such transaction) references to the Company in this definition shall instead be references to such other entity.
“
Fundamental Change Company Notice
” shall have the meaning specified in Section 15.02(c).
“
Fundamental Change Repurchase Date
” shall have the meaning specified in Section 15.02(a).
“
Fundamental Change Repurchase Notice
” shall have the meaning specified in Section 15.02(b)(i).
“
Fundamental Change Repurchase Price
” shall have the meaning specified in Section 15.02(a).
“
Global Note
” shall have the meaning specified in Section 2.05(b).
“
Holder
,” as applied to any Note, or other similar terms (but excluding the term “beneficial holder”), shall mean any Person in whose name at the time a particular Note is registered on the Note Register.
“
Indenture
” means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented.
“
Initial Purchasers
” means Barclays Capital Inc., Goldman Sachs & Co. LLC., CJS Securities, Inc., Craig-Hallum Capital Group LLC, H.C. Wainwright & Co., LLC, Roth Capital Partners, LLC and Stephens Inc.
“
Interest Payment Date
” means each May 15 and November 15 of each year, beginning on November 15, 2018.
“
Last Reported Sale Price
” of the Common Stock on any date means the closing sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) per share of the Common Stock on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “
Last Reported Sale Price
” shall be the last quoted bid price per share of the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “
Last Reported Sale Price
” shall be the average of the mid-point of the last bid and ask prices per share of the Common Stock on the relevant date from a nationally recognized independent investment banking firm selected by the Company for this purpose, which may include any of the Initial Purchasers. The “Last Reported Sale Price” shall be determined without regard to after-hours trading or any other trading outside of regular trading session hours.
“
Make-Whole Fundamental Change
” means any transaction or event that constitutes a Fundamental Change (as defined above and determined after giving effect to any exceptions to or exclusions from such definition, but without regard to the
proviso
in clause (b) of the definition thereof).
“
Make-Whole Fundamental Change Period
” shall have the meaning specified in Section 14.03(a).
“
Market Disruption Event
” means (a) a failure by the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its regular trading session or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.
“
Maturity Date
” means May 15, 2023.
“
Maximum Number of Underlying Shares
” shall have the meaning specified in Section 14.02(a)(iii).
“
Measurement Period
” shall have the meaning specified in Section 14.01(b)(i).
“
Note
” or “
Notes
” shall have the meaning specified in the first paragraph of the recitals of this Indenture.
“
Note Register
” shall have the meaning specified in Section 2.05(a).
“
Note Registrar
” shall have the meaning specified in Section 2.05(a).
“
Notice of Conversion
” shall have the meaning specified in Section 14.02(b).
“
Observation Period
” with respect to any Note surrendered for conversion means: (i) if the relevant Conversion Date occurs prior to November 15, 2022, the 60 consecutive VWAP Trading Day period beginning on, and including, the second VWAP Trading Day immediately succeeding such Conversion Date; and (ii) if the relevant Conversion Date occurs on or after November 15, 2022, the 60 consecutive VWAP Trading Days beginning on, and including, the 61st Scheduled Trading Day immediately preceding the Maturity Date.
“
Offering Memorandum
” means the preliminary offering memorandum dated May 16, 2018, as supplemented by the related pricing term sheet dated May 17, 2018, relating to the offering and sale of the Notes.
“
Officer
” means, with respect to the Company, the Chief Executive Officer, the Chief Financial Officer, the Chief Legal Officer, the Chief Accounting Officer, the Treasurer, any assistant Treasurer, the Secretary, any assistant Secretary, or any President or Vice President (whether or not designated by a number or numbers or word or words added before or after the title “President” or “Vice President”).
“
Officer’s Certificate
,” when used with respect to the Company, means a certificate that is delivered to the Trustee and that is signed by an Officer of the Company. Each such certificate shall include the statements provided for in Section 17.05 if and to the extent required by the provisions of such Section. The Officer giving an Officer’s Certificate pursuant to Section 4.08 shall be the principal executive, financial or accounting officer of the Company.
“
1% Provision
” shall have the meaning specified in Section 14.04(i).
“
open of business
” means 9:00 a.m. (New York City time).
“
Opinion of Counsel
” means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or other counsel who is reasonably acceptable to the Trustee, that is delivered to the Trustee, which opinion may contain customary exceptions and qualifications as to the matters set forth therein. Each such opinion shall include the statements provided for in Section 17.05 if and to the extent required by the provisions of such Section 17.05.
“
outstanding
,” when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or accepted by the Trustee for cancellation;
(b) Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent);
(c) Notes that have been paid pursuant to Section 2.06 or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.06 unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;
(d) Notes surrendered for purchase in accordance with Article 15 for which Paying Agent holds money sufficient to pay the Fundamental Change Repurchase Price, in accordance with Section 15.04(b);
(e) Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.08; and
(f) Notes repurchased by the Company pursuant to the penultimate sentence of Section 2.10.
“
Paying Agent
” shall have the meaning specified in Section 4.02.
“
Person
” means an individual, a corporation, a limited liability company, an association, a partnership, a joint venture, a joint stock company, a trust, an unincorporated organization or a government or an agency or a political subdivision thereof.
“
Physical Notes
” means permanent certificated Notes in registered form issued in minimum denominations of $1,000 principal amount and integral multiples of $1,000 in excess thereof.
“
Physical Settlement
” shall have the meaning specified in Section 14.02(a).
“
Predecessor Note
” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.06 in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.
“
Record Date
” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, by statute, by contract or otherwise).
“
Reference Property
” shall have the meaning specified in Section 14.07(a).
“
Reference Property Unit
” shall have the meaning specified in Section 14.07(a).
“
Regular Record Date
,” with respect to any Interest Payment Date, shall mean the May 1 or November 1 (whether or not such day is a Business Day) immediately preceding the applicable May 15 or November 15 Interest Payment Date, respectively.
“
Resale Restriction Termination Date
” shall have the meaning specified in Section 2.05(c).
“
Responsible Officer
” means, when used with respect to the Trustee, any officer within the Corporate Trust Office of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter relating to this Indenture is referred because of such person’s knowledge of and familiarity with the particular subject and who, in each case, shall have direct responsibility for the administration of this Indenture.
“
Restrictive Legend
” shall have the meaning specified in Section 2.05(c).
“
Restricted Securities
” shall have the meaning specified in Section 2.05(c).
“
Rule 144
” means Rule 144 as promulgated under the Securities Act.
“
Rule 144A
” means Rule 144A as promulgated under the Securities Act.
“
Scheduled Trading Day
” means a day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, “
Scheduled Trading Day
” means a Business Day.
“
Securities Act
” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Settlement Amount
” has the meaning specified in Section 14.02(a)(v).
“
Settlement Method
” means, with respect to any conversion of Notes, Physical Settlement, Cash Settlement or Combination Settlement, as elected (or deemed to have been elected) by the Company.
“
Settlement Notice
” has the meaning specified in Section 14.02(a)(iv).
“S
hare Reservation Date
” shall have the meaning specified in Section 14.02(a)(iii).
“
Significant Subsidiary
” means a Subsidiary that is a “significant subsidiary” as defined under Rule 1-02(w) of Regulation S-X under the Exchange Act;
provided
that, in the case of a Subsidiary that meets the criteria of clause (3) of the definition thereof but not clause (1) or (2) thereof, such Subsidiary shall not be deemed to be a Significant Subsidiary unless the Subsidiary’s income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle exclusive of amounts attributable to any non-controlling interests for the last completed fiscal year prior to the date of such determination exceeds $35.0 million.
“
Specified Dollar Amount
” means the maximum cash amount (excluding cash payable in lieu of any fractional share) per $1,000 principal amount of Notes to be received upon conversion).
“
Spin-Off
” shall have the meaning specified in Section 14.04(c).
“
Stock Price
” shall have the meaning specified in Section 14.03(c).
“
Subsidiary
” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
“
Successor Company
” shall have the meaning specified in Section 11.01(a).
“
Trading Day
” means a day on which (i) trading in the Common Stock (or other security for which a closing sale price must be determined) generally occurs on The Nasdaq Global Market or, if the Common Stock (or such other security) is not then listed on The Nasdaq Global Market, on the principal other U.S. national or regional securities exchange on which the Common Stock (or such other security) is then listed or, if the Common Stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock (or such other security) is then traded and (ii) a Last Reported Sale Price for the Common Stock (or closing sale price for such other security) is available on such securities exchange or market;
provided
that if the Common Stock (or such other security) is not so listed or traded, “
Trading Day
” means a Business Day.
“
Trading Price
” of the Notes on any date of determination means the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $5,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company selects for this purpose;
provided
that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of Notes from a nationally recognized securities dealer on any determination date, then the Trading Price per $1,000 principal amount of Notes on such determination date shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.
“
Trading Price Condition
” shall have the meaning specified in Section 14.01(b).
“
transfer
” shall have the meaning specified in Section 2.05(c).
“
Trigger Event
” shall have the meaning specified in Section 14.04(c).
“
Trust Indenture Act
” means the Trust Indenture Act of 1939, as amended, as it was in force at the date of execution of this Indenture;
provided
,
however
, that in the event the Trust Indenture Act of 1939 is amended after the date hereof, the term “Trust Indenture Act” shall mean, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended.
“
Trustee
” means the Person named as the “
Trustee
” in the first paragraph of this Indenture until a successor trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “
Trustee
” shall mean or include each Person who is then a Trustee hereunder.
“
Valuation Period
” shall have the meaning specified in Section 14.04(c).
“
VWAP Trading Day
” means a day on which (x) there is no Market Disruption Event and (y) trading in the Common Stock generally occurs on The Nasdaq Global Market or, if the Common Stock is not then listed on The Nasdaq Global Market, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading, except that if the Common Stock is not so listed or admitted for trading, “
VWAP
Trading Day
” means a Business Day.
“
Wholly Owned Subsidiary
” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed replaced by a reference to “100%”.
Section 1.02
. References to Interest.
Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in this Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of Section 4.06(d), Section 4.06(e) and Section 6.03. Unless the context otherwise requires, any express mention of Additional Interest in any provision hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01
. Designation and Amount.
The Notes shall be designated as the “0.75% Convertible Senior Notes due 2023.” The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is initially limited to $750,000,000 subject to Section 2.10 and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes to the extent permitted hereunder.
Section 2.02
. Form of Notes.
The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of this Indenture. To the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. In the case of any conflict between this Indenture and a Note, the provisions of this Indenture shall control and govern to the extent of such conflict.
Any Global Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by the Custodian or the Depositary, or as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.
Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the Officer executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of this Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.
Each Global Note shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect repurchases, cancellations, conversions, transfers or exchanges permitted hereby. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Notes in accordance with this Indenture. Payment of principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, a Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.
Section 2.03
. Date and Denomination of Notes; Payments of Interest and Defaulted Amounts.
(i) The Notes shall be issuable in registered form without coupons in minimum denominations of $1,000 principal amount and integral multiples of $1,000 in excess thereof. Each Note shall be dated the date of its authentication and shall bear interest from the date specified on the face of such Note. Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of the number of days actually elapsed in a 30-day month.
(a)
The Person in whose name any Note (or its Predecessor Note) is registered on the Note Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive interest payable on such Interest Payment Date. The principal amount of any Note (x) in the case of any Physical Note, shall be payable at the office or agency designated by the Company for such purposes in the contiguous United States, which shall initially be the Corporate Trust Office and (y) in the case of any Global Note, shall be payable by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Company shall pay or cause the Paying Agent to pay interest (i) on any Physical Notes (A) to Holders holding Physical Notes having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Notes at their address as it appears in the Note Register and (A) to Holders holding Physical Notes having an aggregate principal amount of more than $5,000,000, either by check mailed to each such Holder or, upon written application by such a Holder to the Note Registrar (containing the requisite information for the Trustee or Paying Agent to make such wire transfer) not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s account within the United States of America, which application shall remain in effect until the Holder notifies, in writing, the Note Registrar to the contrary or (A) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.
(b)
Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate borne by the Notes from, and including, such relevant payment date, and such Defaulted Amounts together with such interest thereon shall be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:
(i)
The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee shall consent to an earlier date), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided. Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such special record date at least 5 Business Days before notice is to be sent to Holders and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be delivered to each Holder at its address as it appears in the Note Register, or by electronic means to the Depositary in the case of Global Notes, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so delivered, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (ii) of this Section 2.03(c). The Trustee shall have no responsibility whatsoever for the calculation of the Defaulted Amounts.
(ii)
The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.
Section 2.04
. Execution, Authentication and Delivery of Notes.
The Notes shall be signed in the name and on behalf of the Company by the manual or facsimile signature of any of its Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary or any of its Executive or Senior Vice Presidents.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Notes, and the Trustee in accordance with such Company Order shall authenticate and deliver such Notes, without any further action by the Company hereunder;
provided
that the Trustee shall be entitled to receive an Officer’s Certificate and an Opinion of Counsel of the Company with respect to the issuance, authentication and delivery of such Notes.
Only such Notes as shall bear thereon a certificate of authentication substantially in the form set forth on the Form of Note attached as Exhibit A hereto, executed manually by an authorized signatory of the Trustee (or an authenticating agent appointed by the Trustee as provided by Section 17.10), shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee (or such an authenticating agent) upon any Note executed by the Company shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.
In case any Officer of the Company who shall have signed any of the Notes shall cease to be such Officer before the Notes so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Notes nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Notes had not ceased to be such Officer of the Company; and any Note may be signed on behalf of the Company by such persons as, at the actual date of the execution of such Note, shall be the Officers of the Company, although at the date of the execution of this Indenture any such Person was not such an Officer.
Section 2.05
. Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.
(A) The Company shall cause to be kept at the Corporate Trust Office a register (the register maintained in such office or in any other office or agency of the Company designated pursuant to Section 4.02, the “
Note Register
”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers of Notes. Such register shall be in written form or in any form capable of being converted into written form within a reasonable period of time. The Trustee is hereby initially appointed the “
Note Registrar
” for the purpose of registering Notes and transfers of Notes as herein provided. The Company may appoint one or more co-Note Registrars in accordance with Section 4.02.
Upon surrender for registration of transfer of any Note to the Note Registrar or any co-Note Registrar, and satisfaction of the requirements for such transfer set forth in this Section 2.05, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and bearing such restrictive legends as may be required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and of a like aggregate principal amount, upon surrender of the Notes to be exchanged at any such office or agency maintained by the Company pursuant to Section 4.02. Whenever any Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Notes that the Holder making the exchange is entitled to receive, bearing registration numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of transfer or for exchange, repurchase or conversion shall (if so required by the Company, the Trustee, the Note Registrar or any co-Note Registrar) be duly endorsed, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Note Registrar and duly executed, by the Holder thereof or its attorney-in-fact duly authorized in writing.
No service charge shall be imposed by the Company, the Trustee, the Note Registrar, any co-Note Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or other similar governmental charge required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer or otherwise required by law.
None of the Company, the Trustee, the Note Registrar or any co-Note Registrar shall be required to exchange or register a transfer of (i) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion, (ii) any Notes, or a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with Article 15 or (iii) any Notes between a Regular Record Date and corresponding Interest Payment Date.
All Notes issued upon any registration of transfer or exchange of Notes in accordance with this Indenture shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Notes surrendered upon such registration of transfer or exchange.
(a)
So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the fourth paragraph from the end of Section 2.05(c) all Notes shall be represented by one or more Notes in global form (each, a “
Global Note
”) registered in the name of the Depositary or the nominee of the Depositary. The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary (but not the Trustee or the Custodian) in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depositary therefor.
(b)
Every Note that bears or is required under this Section 2.05(c) to bear the legend set forth in this Section 2.05(c) (together with any Common Stock issued upon conversion of the Notes that is required to bear the legend set forth in Section 2.05(d), collectively, the “
Restricted Securities
”) shall be subject to the restrictions on transfer set forth in this Section 2.05(c) (including those contained in the legend set forth below), unless such restrictions on transfer shall be eliminated or otherwise waived by written consent of the Company, and the Holder of each such Restricted Security, by such Holder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this Section 2.05(c) and Section 2.05(d), the term “
transfer
” encompasses any sale, pledge, transfer or other disposition whatsoever of any Restricted Security.
Until the date (the “
Resale Restriction Termination Date
”) that is the later of (1) the date that is one year after the last original issuance date of the Notes, or such shorter period of time as permitted by Rule 144 or any successor provision thereto, and (2) such later date, if any, as may be required by applicable law, any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof, other than Common Stock, if any, issued upon conversion thereof, which shall bear the legend set forth in Section 2.05(d), if applicable) shall bear a legend in substantially the following form (the “
Restrictive Legend
”) (unless such Notes have been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or sold pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company in writing, with notice thereof to the Trustee):
THIS SECURITY AND THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT
”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF LIGAND PHARMACEUTICALS INCORPORATED (THE “
COMPANY
”) THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER FOR THE COMPANY TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No transfer of any Note prior to the Resale Restriction Termination Date will be registered by the Note Registrar unless the applicable box on the Form of Assignment and Transfer has been checked.
Any Note (or security issued in exchange or substitution therefor) (i) as to which such restrictions on transfer shall have expired in accordance with their terms, (ii) that has been transferred pursuant to a registration statement that has become effective or been declared effective under the Securities Act and that continues to be effective at the time of such transfer or (iii) that has been sold pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, may, upon surrender of such Note for exchange to the Note Registrar in accordance with the provisions of this Section 2.05, be exchanged for a new Note or Notes, of like tenor and aggregate principal amount, which shall not bear the Restrictive Legend required by this Section 2.05(c) and shall not be assigned (or deemed assigned) a restricted CUSIP number. The Restrictive Legend set forth above and affixed on any Note will be deemed, in accordance with the terms of the certificate representing such Note, to be removed therefrom upon the Company’s delivery to the Trustee of written notice to such effect, without further action by the Company, the Trustee, the Holder(s) thereof or any other Person (it being understood, for the avoidance of doubt, that no delivery of an Opinion of Counsel will be required in connection therewith); at such time, such Note will be deemed to be assigned an unrestricted CUSIP number as provided in the certificate representing such Note, it being understood that the Depositary of any Global Note may require a mandatory exchange or other process to cause such Global Note to be identified by an unrestricted CUSIP number in the facilities of such Depositary. Without limiting the generality of any other provision of this Indenture, the Trustee will be entitled to receive an instruction letter (but not an Opinion of Counsel) from the Company before taking any action with respect to effecting any such mandatory exchange or other process. The Company and the Trustee reserve the right to require the delivery of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that any proposed transfer of any Note is being made in compliance with the Securities Act and applicable state securities laws.
The Company shall be entitled to instruct the Custodian in writing to so surrender any Global Note as to which any of the conditions set forth in clause (i) through (iii) of the immediately preceding sentence have been satisfied, and, upon such instruction, the Custodian shall so surrender such Global Note for exchange; and any new Global Note so exchanged therefor shall not bear the Restrictive Legend specified in this Section 2.05(c) and shall not be assigned (or deemed assigned) a restricted CUSIP number. The Company shall promptly notify the Trustee in writing upon the occurrence of the Resale Restriction Termination Date and promptly after a registration statement, if any, with respect to the Notes or any Common Stock issued upon conversion of the Notes has been declared effective under the Securities Act.
Notwithstanding any other provisions of this Indenture (other than the provisions set forth in this Section 2.05(c)), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for exchange of a Global Note or a portion thereof for one or more Physical Notes in accordance with the second immediately succeeding paragraph.
The Depositary shall be a clearing agency registered under the Exchange Act. The Company initially appoints The Depository Trust Company to act as Depositary with respect to each Global Note. Initially, each Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.
If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days or (iii) an Event of Default with respect to the Notes has occurred and is continuing and, subject to the Depositary’s applicable procedures, a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note, the Company shall execute, and the Trustee, upon receipt of an Officer’s Certificate and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owner’s beneficial interest and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in an aggregate principal amount equal to the aggregate principal amount of such Global Notes in exchange for such Global Notes, and upon delivery of the Global Notes to the Trustee such Global Notes shall be canceled.
Physical Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.05(c) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, or, in the case of clause (iii) of the immediately preceding paragraph, the relevant beneficial owner, shall instruct the Trustee. Upon execution and authentication, the Trustee shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.
At such time as all interests in a Global Note have been converted, canceled, repurchased or transferred, such Global Note shall be, upon receipt thereof, canceled by the Trustee in accordance with standing procedures and existing instructions between the Depositary and the Custodian. At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, canceled, repurchased or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase.
None of the Company, the Trustee or any agent of the Company or the Trustee shall have any responsibility or liability for the payment of amounts to owners of beneficial interest in a Global Note, for any aspect of the records relating to or payments made on account of those interests by the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating to such beneficial ownership those interests.
Neither the Company nor the Trustee shall have any responsibility or liability for any act or omission of the Depositary. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to, or upon the order of, the registered Holder(s) (which shall be the Depositary or its nominee in the case of a Global Note).
The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the Applicable Procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.
(c)
Until the Resale Restriction Termination Date, any stock certificate representing Common Stock issued upon conversion of such Note shall bear a legend in substantially the following form (unless the Note or such Common Stock has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or such Common Stock has been issued upon conversion of a Note that has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer, or pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, or unless otherwise agreed by the Company with written notice thereof to the Trustee and any transfer agent for the Common Stock):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
SECURITIES ACT
”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF LIGAND PHARMACEUTICALS INCORPORATED (THE “
COMPANY
”) THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE SERIES OF NOTES UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND THE TRANSFER AGENT FOR THE COMPANY’S COMMON STOCK RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER FOR THE COMPANY TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
Any such Common Stock (i) as to which such restrictions on transfer shall have expired in accordance with their terms, (ii) that has been transferred pursuant to a registration statement that has become or been declared effective under the Securities Act and that continues to be effective at the time of such transfer or (iii) that has been sold pursuant to the exemption from registration provided by Rule 144 or any similar provision then in force under the Securities Act, may, upon surrender of the certificates representing such shares of Common Stock for exchange in accordance with the procedures of the transfer agent for the Common Stock, be exchanged for a new certificate or certificates for a like aggregate number of shares of Common Stock, which shall not bear the restrictive legend required by this Section 2.05(d).
(d)
Any Note that is owned by any Affiliate of the Company (or any Person who was an Affiliate of the Company at any time during the three months immediately preceding) may not be resold by such Affiliate (or such Person, as the case may be) unless registered under the Securities Act or resold pursuant to an exemption from the registration requirements of the Securities Act in a transaction that results in such Note or Common Stock, as the case may be, no longer being a “restricted security” (as defined under Rule 144). The Company shall cause any Note that is repurchased or owned by it to be surrendered to the Trustee for cancellation in accordance with Section 2.08.
(e)
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any securities laws or restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.
(f)
Neither the Trustee nor any agent shall have any responsibility or liability for any actions taken or not taken by the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and beneficial owners.
None of the Company, the Trustee or any agent of the Company or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Neither the Company nor the Trustee shall have any responsibility or liability for any act or omission of the Depositary. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to, or upon the order of, the registered Holder(s) (which shall be the Depositary or its nominee in the case of a Global Note).
Section 2.06
. Mutilated, Destroyed, Lost or Stolen Notes.
In case any Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon receipt of a Company Order the Trustee or an authenticating agent appointed by the Trustee shall authenticate and deliver, a new Note, bearing a registration number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless from any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company, to the Trustee and, if applicable, to such authenticating agent evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such substituted Note and deliver the same upon the receipt of a Company Order and of such security or indemnity as the Trustee, the Company and, if applicable, such authenticating agent may require. No service charge shall be imposed by the Company, the Trustee, the Note Registrar, any co-Note Registrar or the Paying Agent upon the issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or other similar governmental charge required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen. In case any Note that has matured or is about to mature or has been surrendered for required repurchase or is about to be converted in accordance with Article 14 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section 2.06 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of (but shall be subject to all the limitations set forth in) this Indenture equally and proportionately with any and all other Notes duly issued hereunder. To the extent permitted by law, all Notes shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement, payment, conversion or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement, payment, conversion or repurchase of negotiable instruments or other securities without their surrender.
Section 2.07
. Temporary Notes.
Pending the preparation of Physical Notes, the Company may execute and the Trustee or an authenticating agent appointed by the Trustee shall, upon receipt of a Company Order, authenticate and deliver temporary Notes (printed or lithographed). Temporary Notes shall be issuable in any authorized denomination, and substantially in the form of the Physical Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be executed by the Company and authenticated by the Trustee or such authenticating agent upon the same conditions and in substantially the same manner, and with the same effect, as the Physical Notes. Without unreasonable delay, the Company shall execute and deliver to the Trustee or such authenticating agent Physical Notes (other than any Global Note) and thereupon any or all temporary Notes (other than any Global Note) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 4.02 and the Trustee or such authenticating agent shall, upon receipt of a Company Order, authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of Physical Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Physical Notes authenticated and delivered hereunder.
Section 2.08
. Cancellation of Notes Paid, Converted, Etc.
The Company shall cause all Notes surrendered for payment, repurchase, registration of transfer or exchange or conversion, if surrendered to any Person other than the Trustee (including any of the Company’s agents, Subsidiaries or Affiliates), to be delivered, together with a Company Order directing the Trustee to cancel such Notes, to the Trustee for cancellation. All Notes delivered to the Trustee shall be canceled promptly by it upon receipt of such Company Order and in accordance with its customary procedures, and no Notes shall be authenticated in exchange therefor except for Notes surrendered for registration of transfer or exchange. The Trustee shall dispose of canceled Notes in accordance with its customary procedures and, after such cancellation, shall deliver a certificate of such cancellation to the Company upon the Company’s written request in a Company Order.
Section 2.09
. CUSIP Numbers.
The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in all notices issued to Holders as a convenience to such Holders;
provided
that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee in writing of any change in the “CUSIP” numbers.
Section 2.10
. Additional Notes; Repurchases.
The Company may, without the consent of the Holders and notwithstanding Section 2.01, reopen the Indenture and issue additional Notes hereunder with the same terms as the Notes initially issued hereunder (other than differences in the issue date, the issue price, interest accrued prior to the issue date of such additional Notes and, if applicable, restrictions on transfer in respect of such additional Notes) in an unlimited aggregate principal amount;
provided
that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal securities law or income tax purposes, such additional Notes shall have one or more separate CUSIP numbers. Prior to the issuance of any such additional Notes, the Company shall deliver to the Trustee a Company Order, an Officer’s Certificate and an Opinion of Counsel, such Officer’s Certificate and Opinion of Counsel to cover such matters required by Section 17.05. In addition, the Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other cash-settled derivatives. The Company shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other cash-settled derivatives) to be surrendered to the Trustee for cancellation. The Trustee shall cancel such repurchased Notes in accordance with Section 2.08, and such Notes shall no longer be considered outstanding under this Indenture upon their repurchase.
ARTICLE 3
SATISFACTION AND DISCHARGE
Section 3.01
. Satisfaction and Discharge.
This Indenture and the Notes shall upon request of the Company contained in an Officer’s Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute such instruments reasonably requested by the Company acknowledging satisfaction and discharge of this Indenture, when (A) (i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced, paid or converted as provided in Section 2.06 and (y) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 4.04(d)) have been delivered to the Trustee for cancellation; or (ii) the Company has irrevocably deposited with the Trustee or delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, any Fundamental Change Repurchase Date or otherwise, cash (or cash and/or shares of Common Stock (or other Reference Property), if applicable, solely to satisfy the Conversion Obligation), sufficient to pay all of the outstanding Notes; (A) all other sums due and payable under this Indenture by the Company have been paid; and (A) the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.06 shall survive.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
Section 4.01
. Payment of Principal and Interest.
The Company covenants and agrees that it will cause to be paid the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.
Section 4.02
. Maintenance of Office or Agency.
The Company will maintain in the contiguous United States of America an office or agency where the Notes may be presented for registration of transfer or exchange or for payment or repurchase (“
Paying Agent
”) or for conversion (“
Conversion Agent
”) and where notices in respect of the Notes and this Indenture may be made. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders and notices (but not service of process) may be made at the Corporate Trust Office.
The Company may also from time to time designate as co-Note Registrars one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations;
provided
that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the contiguous United States of America so designated by the Trustee as a place for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The terms “
Paying Agent
” and “
Conversion Agent
” include any such additional or other offices or agencies, as applicable.
The Company hereby initially designates the Trustee as the Paying Agent, Note Registrar, Custodian and Conversion Agent and the Corporate Trust Office as the office or agency in the contiguous United States of America where Notes may be presented for registration of transfer or exchange or for payment or repurchase (if applicable) or for conversion and where notices in respect of the Notes and this Indenture may be presented.
Section 4.03
. Appointments to Fill Vacancies in Trustee’s Office.
The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 7.09, a Trustee, so that there shall at all times be a Trustee hereunder.
Section 4.04
. Provisions as to Paying Agent.
(A) If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.04:
(i)
that it will hold all sums held by it as such agent for the payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes in trust for the benefit of the Holders of the Notes;
(ii)
that it will give the Trustee prompt written notice of any failure by the Company to make any payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes when the same shall be due and payable; and
(iii)
that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes, deposit with the Paying Agent a sum in immediately available U.S. Dollars sufficient to pay such principal (including the Fundamental Change Repurchase Price, if applicable) or accrued and unpaid interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee in writing of any failure to take such action;
provided
that if such deposit is made on the due date, such deposit must be received by the Paying Agent by 11:00 a.m., New York City time, on such date.
(b)
If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Fundamental Change Repurchase Price, if applicable) and accrued and unpaid interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when the same shall become due and payable.
(c)
Anything in this Section 4.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture, or for any other reason, pay, cause to be paid or deliver to the Trustee all sums or amounts held in trust by the Company or any Paying Agent hereunder as required by this Section 4.04, such sums or amounts to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts. Upon the occurrence of any event specified in Section 6.01(i) or Section 6.01(j), the Trustee shall automatically become the Paying Agent.
(d)
Subject to applicable escheatment laws, any money deposited with the Trustee, the Conversion Agent or any Paying Agent, or any money and shares of Common Stock then held by the Company, in trust for the payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on and the consideration due upon conversion of any Note and remaining unclaimed for two years after such principal (including the Fundamental Change Repurchase Price, if applicable), interest or consideration due upon conversion has become due and payable shall be paid to the Company on request of the Company contained in an Officer’s Certificate, or (if then held by the Company) shall be discharged from such trust and the Trustee shall have no further liability with respect to such funds; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money and shares of Common Stock, and all liability of the Company as trustee thereof, shall thereupon cease.
Section 4.05
. Existence.
Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.
Section 4.06
. Rule 144A Information Requirement and Annual Reports.
(A) At any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company shall, so long as any of the Notes or any shares of Common Stock issuable upon conversion thereof shall, at such time, constitute “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, promptly provide to the Trustee and will, upon written request, provide to any Holder, beneficial owner or prospective purchaser of such Notes or any shares of Common Stock issuable upon conversion of such Notes, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Notes or shares of Common Stock pursuant to Rule 144A.
(a)
The Company shall file with the Trustee, within 15 days after the same are required to be filed with the Commission (giving effect to any grace period provided by Rule 12b-25 (or any successor rule)) under the Exchange Act, copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the Commission). Any such document or report that the Company files with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee for purposes of this Section 4.06(b) at the time such documents are filed via the EDGAR system, it being understood that the Trustee shall not be responsible for determining whether such filings have been made and shall have no responsibility for the filing, timing or content of any such filings or reports.
(b)
Delivery of the reports, information and documents described in subsection (b) above to the Trustee under this Indenture is for informational purposes only, and the information and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein, or determinable from information contained therein, including the Company’s compliance with any of its covenants under this Indenture (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate).
(c)
If, at any time during the six-month period beginning on, and including, the date that is six months after the last original issuance date of the Notes, the Company fails to timely file any document or report that it is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act, as applicable (after giving effect to all applicable grace periods thereunder and other than reports on Form 8-K), or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or Holders that were the Company’s Affiliates at any time during the preceding three months (as a result of restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes), the Company shall pay Additional Interest on the Notes. Such Additional Interest shall accrue on the Notes at the rate of 0.50% per annum of the principal amount of the Notes outstanding for each day during such period for which the Company’s failure to file has occurred and is continuing or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates (or Holders that were the Company’s Affiliates at any time during the preceding three months) as a result of restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes. As used in this Section 4.06(d), documents or reports that the Company is required to “file” with the Commission pursuant to Section 13 or 15(d) of the Exchange Act does not include documents or reports that the Company furnishes to the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
(d)
If, and for so long as, the Restrictive Legend on the Notes specified in Section 2.05(c) has not been removed (or deemed removed as provided in Section 2.05(c)), the Notes are assigned a restricted CUSIP number or the Notes are not otherwise freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates or Holders that were the Company’s Affiliates at any time during the three months immediately preceding (without restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes) as of the 380th day after the last original issuance date of such Notes, the Company shall pay Additional Interest on such Notes at a rate equal to 0.50% per annum of the principal amount of Notes outstanding until the Restrictive Legend on the Notes has been removed in accordance with Section 2.05(c), the Notes are assigned an unrestricted CUSIP number and the Notes are freely tradable pursuant to Rule 144 by Holders other than the Company’s Affiliates (or Holders that were the Company’s Affiliates at any time during the preceding three months) (as a result of restrictions pursuant to U.S. securities laws or the terms of this Indenture or the Notes). The Restrictive Legend on the Notes shall be deemed removed pursuant to the terms of the Indenture as provided in Section 2.05(c), and, at such time, the Notes will, pursuant to, and subject to the provisions of, such Section, be deemed assigned an unrestricted CUSIP number. However, for the avoidance of doubt, for Notes that are not in certificated form, the Notes will continue to bear Additional Interest pursuant to this paragraph until such time as they are identified by an unrestricted CUSIP in the facilities of the Depositary or any successor depositary for the Notes, as a result of completion of the Depositary’s mandatory exchange process or otherwise.
(e)
Additional Interest will be payable in arrears on each Interest Payment Date following accrual in the same manner as regular interest on the Notes.
(f)
The Additional Interest that is payable in accordance with Section 4.06(d) or Section 4.06(e) shall be in addition to any Additional Interest that may accrue on the Notes as a result of the Company’s election pursuant to Section 6.03;
provided
,
however
, that in no event shall any Additional Interest payable in accordance with Section 4.06(d) or Section 4.06(e), when taken together with that of any Additional Interest payable at the Company’s election pursuant to Section 6.03, exceed a total rate of 0.50% per annum on any Note, regardless of the number of events or circumstances giving rise to the requirement to pay such Additional Interest.
(g)
If Additional Interest is payable by the Company pursuant to Section 4.06(d) or Section 4.06(e), the Company shall deliver to the Trustee an Officer’s Certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such Additional Interest is payable. Unless and until a Responsible Officer of the Trustee receives at the Corporate Trust Office such a certificate, the Trustee may assume without inquiry that no such Additional Interest is payable.
Section 4.07
. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
Section 4.08
. Compliance Certificate; Statements as to Defaults.
The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2018) an Officer’s Certificate stating whether the signer thereof knows of any Default or Event of Default that occurred during the previous year.
In addition, the Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any Event of Default or Default under the Indenture, its status and what action the Company is taking or proposing to take in respect thereof.
Section 4.09
. Further Instruments and Acts.
Upon request of the Trustee, Paying Agent or Conversion Agent, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.
ARTICLE 5
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 5.01
. Lists of Holders.
The Company covenants and agrees that it will furnish or cause to be furnished to the Trustee, semi-annually, not more than 5 days after each May 1 and November 1 in each year beginning with November 1, 2018, and at such other times as the Trustee may request in writing, within 5 days after receipt by the Company of any such request (or such lesser time as the Trustee may reasonably request in order to enable it to timely provide any notice to be provided by it hereunder), a list in such form as the Trustee may reasonably require of the names and addresses of the Holders as of a date not more than 15 days (or such other date as the Trustee may reasonably request in order to so provide any such notices) prior to the time such information is furnished, except that no such list need be furnished so long as the Trustee is acting as Note Registrar.
Section 5.02
. Preservation and Disclosure of Lists.
The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 5.01 or maintained by the Trustee in its capacity as Note Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 5.01 upon receipt of a new list so furnished.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01
. Events of Default.
Each of the following events shall be an “
Event of Default
” with respect to the Notes:
(a)
default in any payment of interest on any Note when due and payable, and the default continues for a period of 30 consecutive days;
(b)
default in the payment of principal of any Note when due and payable on the Maturity Date, upon any required repurchase, upon declaration of acceleration or otherwise;
(c)
failure by the Company to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holder’s conversion right, and such failure continues for a period of five Business Days;
(d)
failure by the Company to (i) issue a Fundamental Change Company Notice in accordance with Section 15.02(c) or (ii) notice of a specified corporate event in accordance with Section 14.01(b)(iii), in each case when due, and such failure is not cured within two calendar days;
(e)
failure by the Company to comply with its obligations under Article 11;
(f)
failure by the Company for 60 days after written notice from the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding has been received by the Company to comply with any of its other agreements contained in the Notes or this Indenture;
(g)
default by the Company or any Significant Subsidiary of the Company with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $35,000,000 (or its foreign currency equivalent) in the aggregate of the Company and/or any such Significant Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal of any such indebtedness when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, in each case, after the expiration of any applicable grace period, if such default is not cured or waived, or such acceleration is not rescinded, within 30 days after written notice to the Company by the Trustee or to the Company and the Trustee by Holders of at least 25% in aggregate principal amount of Notes then outstanding, in accordance with this Indenture;
(h)
a final judgment or judgments for the payment of $35,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any of its Significant Subsidiaries, which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;
(i)
the Company shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or
(j)
an involuntary case or other proceeding shall be commenced against the Company seeking liquidation, reorganization or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive days.
Section 6.02
.
Acceleration; Rescission and Annulment
. If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default specified in Section 6.01(i) or Section 6.01(j)), unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 8.04, by notice in writing to the Company may declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding. If an Event of Default specified in Section 6.01(i) or Section 6.01(j) occurs and is continuing, 100% of the principal of, and accrued and unpaid interest, if any, on, all Notes shall become and shall automatically be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest, and on such principal at the rate borne by the Notes at such time) and amounts due to the Trustee pursuant to Section 7.06, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under this Indenture, other than the nonpayment of the principal of and accrued and unpaid interest, if any, on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.09, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon. Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, any Notes, (ii) a failure to repurchase any Notes when required or (iii) a failure to pay or deliver, as the case may be, the consideration due upon conversion of the Notes.
Section 6.03
.
Additional Interest
. Notwithstanding anything in this Indenture or in the Notes to the contrary, to the extent the Company elects, the sole remedy for an Event of Default relating to the Company’s failure to comply with its obligations as set forth in Section 4.06(b) shall, for the first 360 days after the occurrence of such an Event of Default, consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the Notes outstanding for each day during the first 180 days after the occurrence of such an Event of Default and 0.50% per annum of the principal amount of the Notes outstanding from the 181st day until the 360th day following the occurrence of such an Event of Default during which such Event of Default is continuing. If the Company so elects, such Additional Interest shall be payable in the same manner and on the same dates as the stated interest payable on the Notes. On the 361st day after such an Event of Default (if the Event of Default relating to the obligations as set forth in Section 4.06(b) is not cured or waived prior to such 361st day), the Notes shall be subject to acceleration as provided in Section 6.02. The provisions of this paragraph will not affect the rights of any Holders in the event of the occurrence of any Event of Default other than the Company’s failure to comply with its obligations as set forth in Section 4.06(b). In the event the Company does not elect to pay Additional Interest following an Event of Default in accordance with this Section 6.03 or the Company elected to make such payment but does not pay the Additional Interest when due, the Notes shall be immediately subject to acceleration as provided in Section 6.02.
In order to elect to pay Additional Interest as the sole remedy during the first 360 days after the occurrence of an Event of Default relating to the Company’s failure to comply with its obligations as set forth in Section 4.06(b) in accordance with the immediately preceding paragraph, the Company must notify, in writing, all Holders, the Trustee and the Paying Agent of such election on or before the close of business on the fifth Business Day immediately following the date on which such Event of Default would otherwise occur. Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in Section 6.02.
Additional Interest that accrues on any Note pursuant to the provision in this Section 6.03 shall be in addition to any Additional Interest that may accrue on such Note pursuant to the provisions set forth in Section 4.06(d) and Section 4.06(e);
provided
,
however
, that in no event shall the rate of any such Additional Interest payable under this Section 6.03, when taken together with any such Additional Interest payable as set forth in Section 4.06(d) and Section 4.06(e), exceed a total rate of 0.50% per annum on any Note, regardless of the number of events or circumstances giving rise to the requirement to pay such Additional Interest.
Section 6.04
. Payments of Notes on Default; Suit Therefor.
If an Event of Default described in clause (a) or (b) of Section 6.01 shall have occurred and be continuing, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal and interest, if any, with interest on any overdue principal and interest, if any, at the rate borne by the Notes at such time, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under this Indenture. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.
In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the event of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.04, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under this Indenture; and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances and disbursements, including agents and counsel fees, and including any other amounts due to the Trustee under this Indenture, incurred by it up to the date of such distribution. To the extent that such payment of reasonable compensation, expenses, advances and disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.
In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to Section 6.09 or any rescission and annulment pursuant to Section 6.02 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders and the Trustee shall continue as though no such proceeding had been instituted.
Section 6.05
. Application of Monies Collected by Trustee.
Any monies or property collected by the Trustee pursuant to this Article 6 with respect to the Notes shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:
First
, to the payment of all amounts due the Trustee (including its agents and counsel) (acting in any capacity hereunder) under this Indenture;
Second
, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on, and any cash due upon conversion of, the Notes in default in the order of the date due of the payments of such interest and cash due upon conversion, as the case may be, with interest (to the extent that such interest has been collected by the Trustee) upon such overdue payments at the rate borne by the Notes at such time, such payments to be made ratably to the Persons entitled thereto;
Third
, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid to the payment of the whole amount (including, if applicable, the payment of the Fundamental Change Repurchase Price and any cash due upon conversion) then owing and unpaid upon the Notes for principal and interest, if any, with interest on the overdue principal and, to the extent that such interest has been collected by the Trustee, upon overdue installments of interest at the rate borne by the Notes at such time, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Fundamental Change Repurchase Price and any cash due upon conversion) and interest without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Fundamental Change Repurchase Price and any cash due upon conversion) and accrued and unpaid interest; and
Fourth
, to the payment of the remainder, if any, to the Company.
Section 6.06
. Proceedings by Holders.
Except to enforce the right to receive payment of principal (including, if applicable, the Fundamental Change Repurchase Price) or interest when due, or the right to institute suit for the enforcement of its right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture or the Notes to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:
(a)
such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;
(b)
Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder;
(c)
such Holders shall have offered to the Trustee such security or indemnity satisfactory to it against any loss, liability or expense to be incurred therein or thereby;
(d)
the Trustee for 60 days after its receipt of such notice, request and offer of such security or indemnity, shall have neglected or refused to institute any such action, suit or proceeding; and
(e)
no direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to Section 6.09,
it being understood and intended, and being expressly covenanted by the taker and Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder (it being understood that the Trustee shall not have an affirmative duty to ascertain whether or not any such direction is unduly prejudicial to any other Holder), or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein). For the protection and enforcement of this Section 6.06, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of any Note, the right to institute suit for the enforcement of the right of any Holder to receive payment or delivery, as the case may be, of (x) the principal (including the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest, if any, on, and (z) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in this Indenture, and the right to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates, and such rights against the Company shall not be impaired or affected without the consent of such Holder.
Section 6.07
. Proceedings by Trustee.
In case of an Event of Default, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.
Section 6.08
. Remedies Cumulative and Continuing.
Except as provided in the last paragraph of Section 2.06, all powers and remedies given by this Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of Section 6.06, every power and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.
Section 6.09
. Direction of Proceedings and Waiver of Defaults by Majority of Holders.
The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes;
provided
,
however
, that (A) such direction shall not be in conflict with any rule of law or with this Indenture, and (A) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. The Trustee may refuse to follow any direction that it determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability (it being understood that the Trustee shall not have an affirmative duty to ascertain whether or not any such direction is unduly prejudicial to any other Holder). The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 8.04 may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest, if any, on, or the principal (including any Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.01, (i) a failure by the Company to pay or deliver, as the case may be, the consideration due upon conversion of the Notes or (i) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected. Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.09, said Default or Event of Default shall for all purposes of the Notes and this Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.
Section 6.10
. Notice of Defaults.
The Trustee must, within 90 days after the occurrence and continuance of a Default of which the Trustee receives written notice at the Corporate Trust Office, deliver to all Holders written notice of all such Defaults, unless such Defaults shall have been cured or waived before the giving of such notice;
provided
that, except in the case of a Default in the payment of the principal of (including the Fundamental Change Repurchase Price, if applicable), or accrued and unpaid interest on, any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interests of the Holders.
Section 6.11
. Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant;
provided
that the provisions of this Section 6.11 (to the extent permitted by law) shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding determined in accordance with Section 8.04, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or accrued and unpaid interest, if any, on any Note (including, but not limited to, the Fundamental Change Repurchase Price with respect to the Notes being repurchased as provided in this Indenture) on or after the due date expressed or provided for in such Note or to any suit for the enforcement of the right to convert any Note or receive the consideration due upon conversion in accordance with the provisions of Article 14.
ARTICLE 7
CONCERNING THE TRUSTEE
Section 7.01
. Duties and Responsibilities of Trustee.
The Trustee, prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge and after the curing or waiver of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In the event an Event of Default has occurred and is continuing of which a Responsible Officer of the Trustee has written notice or actual knowledge, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs;
provided
that if an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any of the Holders unless such Holders have offered (and, if requested, provided) to the Trustee indemnity or security satisfactory to it against any loss, liability or expense that might be incurred by it in compliance with such request or direction.
No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act or its own willful misconduct, except that:
(a)
prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee has written notice or actual knowledge and after the curing or waiving of all Events of Default that may have occurred:
(i)
the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii)
in the absence of bad faith or willful misconduct on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of any mathematical calculations or other facts stated therein);
(b)
the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts;
(c)
the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority of the aggregate principal amount of the Notes at the time outstanding determined as provided in Section 8.04 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture;
(d)
whether or not therein provided, every provision of this Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee shall be subject to the provisions of this Section;
(e)
the Trustee shall not be liable in respect of any payment (as to the correctness of amount, entitlement to receive or any other matters relating to payment) or notice effected by the Company or any Paying Agent or any records maintained by any co-Note Registrar with respect to the Notes;
(f)
if any party fails to deliver a notice relating to an event the fact of which, pursuant to this Indenture, requires notice to be sent to the Trustee, the Trustee may conclusively rely on its failure to receive such notice as reason to act as if no such event occurred;
(g)
in the event that the Trustee is also acting as Custodian, Note Registrar, Paying Agent, Conversion Agent, Bid Solicitation Agent or transfer agent hereunder, the rights and protections afforded to the Trustee pursuant to this Article 7 shall also be afforded to such Custodian, Note Registrar, Paying Agent, Conversion Agent, Bid Solicitation Agent or transfer agent;
(h)
under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Notes; and
(i)
in the absence of written investment direction from the Company, all cash received by the Trustee shall be placed in a non-interest bearing trust account, and in no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon or for losses incurred as a result of the liquidation of any such investment prior to its maturity date or the failure of the party directing such investments prior to its maturity date or the failure of the party directing such investment to provide timely written investment direction and the Trustee shall have no written obligation to invest or reinvest any amounts held hereunder in the absence of such written investment direction from the Company.
None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.
Section 7.02
. Reliance on Documents, Opinions, Etc.
Except as otherwise provided in Section 7.01:
(a)
the Trustee may conclusively rely and shall be fully protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, coupon or other paper or document (whether in its original or facsimile form) believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties;
(b)
any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;
(c)
the Trustee may consult with counsel of its selection and require an Opinion of Counsel and any written or verbal advice of such counsel or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel;
(d)
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the expense of the Company and shall incur no liability of any kind by reason of such inquiry or investigation;
(e)
the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent, custodian, nominee or attorney appointed by it with due care hereunder;
(f)
the permissive rights of the Trustee enumerated herein shall not be construed as duties;
(g)
the Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder;
(h)
the Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture; and
(i)
before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith reliance on such Officer’s Certificate or Opinion of Counsel;
(j)
the Trustee shall not be responsible or liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; and
(k)
neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance or any action of the Company, or any of their respective directors, members, officers, agents, affiliates or employees, nor shall it have any liability in connection with the malfeasance or nonfeasance by such party. The Trustee shall not be responsible for any inaccuracy in the information obtained from the Company or for any inaccuracy or omission in the information obtained from the Company or for any inaccuracy or omission in the records which may result from such information or any failure by the Trustee to perform its duties as set forth herein as a result of any inaccuracy or incompleteness.
In no event shall the Trustee be liable for any consequential, punitive, special or indirect loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes, unless either (1) a Responsible Officer shall have actual knowledge of such Default or Event of Default or (2) written notice of such Default or Event of Default shall have been given to a Responsible Officer of the Trustee by the Company or by any Holder of the Notes at the Corporate Trust Office and such notice references the Notes and/or this Indenture and states that it is a notice of Default or Event of Default.
Section 7.03
. No Responsibility for Recitals, Etc.
The recitals contained herein and in the Notes (except in the Trustee’s certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of any Notes or the proceeds of any Notes authenticated and delivered by the Trustee in conformity with the provisions of this Indenture or any money paid to the Company or upon the Company’s direction under any provision of the Indenture.
Section 7.04
. Trustee, Paying Agents, Conversion Agents, Bid Solicitation Agent or Note Registrar May Own Notes.
The Trustee, any Paying Agent, any Conversion Agent, Bid Solicitation Agent (if other than the Company or any Affiliate thereof) or Note Registrar, in its individual or any other capacity, may become the owner or pledgee of Notes with the same rights it would have if it were not the Trustee, Paying Agent, Conversion Agent, Bid Solicitation Agent or Note Registrar.
Section 7.05
. Monies to Be Held in Trust.
All monies received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as may be agreed from time to time by the Company and the Trustee.
Section 7.06
. Compensation and Expenses of Trustee.
The Company covenants and agrees to pay to the Trustee, in any capacity under this Indenture, from time to time, and the Trustee shall be entitled to, compensation for all services rendered by it hereunder in any capacity (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) as mutually agreed to in writing between the Trustee and the Company, and the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any of the provisions of this Indenture in any capacity thereunder (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel and of all Persons not regularly in its employ and including reasonable attorneys’ fees in connection with enforcement of its rights to indemnity herein) except any such expense, disbursement or advance as shall have been caused by its gross negligence or willful misconduct as determined by a final, non-appealable decision of a court of competent jurisdiction. The Company also covenants to indemnify the Trustee in any capacity under this Indenture and any other document or transaction entered into in connection herewith and its officers, directors, attorneys, employees and agents and any authenticating agent for, and to hold them harmless against, any loss, claim (whether asserted by the Company, a Holder or any Person), damage, liability or expense (including reasonable attorneys’ fees) incurred without gross negligence or willful misconduct on the part of the Trustee, its officers, directors, attorneys, agents or employees, or such agent or authenticating agent, as the case may be, as determined by a final, non-appealable decision of a court of competent jurisdiction, and arising out of or in connection with the acceptance or administration of this Indenture or in any other capacity hereunder, including the costs and expenses of defending themselves against any claim of liability in the premises and including the costs and expenses of enforcing this Indenture (including this Section 7.06) and the Notes against the Company. The obligations of the Company under this Section 7.06 to compensate or indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall be secured by a senior lien to which the Notes are hereby made subordinate on all money or property held or collected by the Trustee, except, subject to the effect of Section 6.05, funds held in trust herewith for the benefit of the Holders of particular Notes. The Trustee’s right to receive payment of any amounts due under this Section 7.06 shall not be subordinate to any other liability or indebtedness of the Company. The obligation of the Company under this Section 7.06 shall survive the satisfaction and discharge of this Indenture, the payment of the Notes and the earlier resignation or removal of the Trustee. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The indemnification provided in this Section 7.06 shall extend to the officers, directors, attorneys, agents and employees of the Trustee.
Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee and its agents and any authenticating agent incur expenses or render services after an Event of Default specified in Section 6.01(i) or Section 6.01(j) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any bankruptcy, insolvency or similar laws.
Section 7.07
. Officer’s Certificate as Evidence.
Except as otherwise provided in Section 7.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of gross negligence and willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Trustee, and such Officer’s Certificate, in the absence of gross negligence or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.
Section 7.08
. Eligibility of Trustee.
There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act (as if, for this purpose, the Trust Indenture Act were applicable hereto) to act as such and has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 7.09
. Resignation or Removal of Trustee.
(i) The Trustee may at any time resign by giving written notice of such resignation to the Company. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation to the Company, the resigning Trustee may, upon ten Business Days’ notice to the Company and the Holders and at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor trustee, or any Holder who has been a bona fide holder of a Note or Notes for at least six months (or since the date of this Indenture) may, subject to the provisions of Section 6.11, on behalf of himself or herself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee.
(a)
In case at any time any of the following shall occur:
(i)
the Trustee shall cease to be eligible in accordance with the provisions of Section 7.08 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(ii)
the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in either case, the Company may by a Board Resolution remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 6.11, any Holder who has been a bona fide holder of a Note or Notes for at least six months (or since the date of this Indenture) may, on behalf of himself or herself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(b)
The Holders of a majority in aggregate principal amount of the Notes at the time outstanding, as determined in accordance with Section 8.04, may at any time remove the Trustee and nominate a successor trustee that shall be deemed appointed as successor trustee unless within ten days after notice to the Company of such nomination the Company objects thereto, in which case the Trustee so removed or any Holder, upon the terms and conditions and otherwise as in Section 7.09(a) provided, may petition any court of competent jurisdiction for an appointment of a successor trustee.
(c)
Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section 7.09 shall become effective upon acceptance of appointment by the successor trustee as provided in Section 7.10.
Section 7.10
. Acceptance by Successor Trustee.
Any successor trustee appointed as provided in Section 7.09 shall execute, acknowledge and deliver to the Company and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 7.06, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a senior lien to which the Notes are hereby made subordinate on all money or property held or collected by such trustee as such, except for funds held in trust for the benefit of Holders of particular Notes, to secure any amounts then due it pursuant to the provisions of Section 7.06.
No successor trustee shall accept appointment as provided in this Section 7.10 unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 7.08.
Upon acceptance of appointment by a successor trustee as provided in this Section 7.10, each of the Company and the successor trustee, at the written direction and at the expense of the Company shall deliver or cause to be delivered notice of the succession of such trustee hereunder to the Holders. If the Company fails to deliver such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be delivered at the expense of the Company. The retiring or removed Trustee shall have no liability or responsibility for the action or inaction of the successor Trustee.
Section 7.11
. Succession by Merger, Etc.
Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee (including the administration of this Indenture), shall be the successor to the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto;
provided
that in the case of any corporation or other entity succeeding to all or substantially all of the corporate trust business of the Trustee such corporation or other entity shall be eligible under the provisions of Section 7.08.
In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee or authenticating agent appointed by such predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee or an authenticating agent appointed by such successor trustee may authenticate such Notes either in the name of any predecessor trustee hereunder or in the name of the successor trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have;
provided
,
however
, that the right to adopt the certificate of authentication of any predecessor trustee or to authenticate Notes in the name of any predecessor trustee shall apply only to its successor or successors by merger, conversion or consolidation.
Section 7.12
. Trustee’s Application for Instructions from the Company.
Any application by the Trustee for written instructions from the Company (other than with regard to any action proposed to be taken or omitted to be taken by the Trustee that affects the rights of the Holders of the Notes under this Indenture) may, at the option of the Trustee, set forth in writing any action proposed to be taken or omitted by the Trustee under this Indenture and the date on and/or after which such action shall be taken or such omission shall be effective. The Trustee shall not be liable for any action taken by, or omission of, the Trustee in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after notice to the Company has been deemed to have been given pursuant to Section 17.03, unless any such officer shall have consented in writing to any earlier date), unless, prior to taking any such action (or the effective date in the case of any omission), the Trustee shall have received written instructions in accordance with this Indenture in response to such application specifying the action to be taken or omitted.
ARTICLE 8
CONCERNING THE HOLDERS
Section 8.01
. Action by Holders.
Whenever in this Indenture it is provided that the Holders of a specified percentage of the aggregate principal amount of the Notes may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action, the Holders of such specified percentage have joined therein may be evidenced (i) by any instrument or any number of instruments of similar tenor executed by Holders in person or by agent or proxy appointed in writing, or (i) by the record of the Holders voting in favor thereof at any meeting of Holders duly called and held in accordance with the provisions of Article 9, or (i) by a combination of such instrument or instruments and any such record of such a meeting of Holders. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may fix, but shall not be required to, in advance of such solicitation, a date as the record date for determining Holders entitled to take such action. The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.
Section 8.02
. Proof of Execution by Holders.
Subject to the provisions of Section 7.01, Section 7.02 and Section 9.05, proof of the execution of any instrument by a Holder or its agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The holding of Notes shall be proved by the Note Register or by a certificate of the Note Registrar. The record of any Holders’ meeting shall be proved in the manner provided in Section 9.06.
Section 8.03
. Who Are Deemed Absolute Owners.
The Company, the Trustee, any authenticating agent, any Paying Agent, any Conversion Agent and any Note Registrar may deem the Person in whose name a Note shall be registered upon the Note Register to be, and may treat it as, the absolute owner of such Note (whether or not such Note shall be overdue and notwithstanding any notation of ownership or other writing thereon made by any Person other than the Company or any Note Registrar) for the purpose of receiving payment of or on account of the principal (including any Fundamental Change Repurchase Price) of and (subject to Section 2.03) accrued and unpaid interest on such Note, for conversion of such Note and for all other purposes under this Indenture; and neither the Company nor the Trustee nor any Paying Agent nor any Conversion Agent nor any Note Registrar shall be affected by any notice to the contrary. The sole registered holder of a Global Note shall be the Depositary or its nominee. All such payments or deliveries so made to any Holder for the time being, or upon its order, shall be valid, and, to the extent of the sums or shares of Common Stock so paid or delivered, effectual to satisfy and discharge the liability for monies payable or shares deliverable upon any such Note. Notwithstanding anything to the contrary in this Indenture or the Notes following an Event of Default, any owner of an interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such holder’s right to exchange such beneficial interest for a Note in certificated form in accordance with the provisions of this Indenture.
Section 8.04
. Company-Owned Notes Disregarded.
In determining whether the Holders of the requisite aggregate principal amount of Notes have concurred in any direction, consent, waiver or other action under this Indenture, Notes that are owned by the Company, by any Subsidiary thereof or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Subsidiary thereof shall be disregarded and deemed not to be outstanding for the purpose of any such determination;
provided
that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent, waiver or other action, only Notes with respect to which a Responsible Officer has received an Officer’s Certificate that such Notes are so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as outstanding for the purposes of this Section 8.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to so act with respect to such Notes and that the pledgee is not the Company, a Subsidiary thereof or a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or a Subsidiary thereof. In the case of a dispute as to such right, any decision or indecision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee promptly an Officer’s Certificate listing and identifying all Notes, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to Section 7.01, the Trustee shall be entitled to accept such Officer’s Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any such determination.
Section 8.05
. Revocation of Consents; Future Holders Bound.
At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 8.01, of the taking of any action by the Holders of the percentage of the aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note that is shown by the evidence to be included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at its Corporate Trust Office and upon proof of holding as provided in Section 8.02, revoke such action so far as concerns such Note. Except as aforesaid, any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor or upon registration of transfer thereof, irrespective of whether any notation in regard thereto is made upon such Note or any Note issued in exchange or substitution therefor or upon registration of transfer thereof.
ARTICLE 9
HOLDERS’ MEETINGS
Section 9.01
. Purpose of Meetings.
A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article 9 for any of the following purposes:
(a)
to give any notice to the Company or to the Trustee or to give any directions to the Trustee permitted under this Indenture, or to consent to the waiving of any Default or Event of Default hereunder (in each case, as permitted under this Indenture) and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article 6;
(b)
to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article 7;
(c)
to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Article 10; or
(d)
to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture or under applicable law.
Section 9.02
. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Holders to take any action specified in Section 9.01, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 8.01, shall be delivered to Holders of such Notes. Such notice shall also be delivered to the Company. Such notices shall be delivered not less than 20 nor more than 90 days prior to the date fixed for the meeting.
Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.
Section 9.03
. Call of Meetings by Company or Holders.
In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the aggregate principal amount of the Notes then outstanding, shall have requested the Trustee to call a meeting of Holders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have delivered the notice of such meeting within 20 days after receipt of such request, then the Company or such Holders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 9.01, by delivering notice thereof as provided in Section 9.02.
Section 9.04
. Qualifications for Voting.
To be entitled to vote at any meeting of Holders a Person shall (i) be a Holder of one or more Notes on the record date pertaining to such meeting or (i) be a Person appointed by an instrument in writing as proxy by a Holder of one or more Notes on the record date pertaining to such meeting. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.
Section 9.05
. Regulations.
Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 9.03, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in aggregate principal amount of the Notes represented at the meeting and entitled to vote at the meeting.
Subject to the provisions of Section 8.04, at any meeting of Holders each Holder or proxyholder shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by him or her;
provided
,
however
, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by it or instruments in writing as aforesaid duly designating it as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 9.02 or Section 9.03 may be adjourned from time to time by the Holders of a majority of the aggregate principal amount of Notes represented at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.
Section 9.06
. Voting.
The vote upon any resolution submitted to any meeting of Holders shall be by written ballot on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the outstanding aggregate principal amount of the Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was delivered as provided in Section 9.02. The record shall show the aggregate principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters therein stated.
Section 9.07
. No Delay of Rights by Meeting.
Nothing contained in this Article 9 shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes. Nothing contained in this Article 9 shall be deemed or construed to limit any Holder’s actions pursuant to the applicable procedures of the Depositary so long as the Notes are Global Notes.
ARTICLE 10
SUPPLEMENTAL INDENTURES
Section 10.01
. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for one or more of the following purposes:
(a)
to cure any ambiguity, omission, defect or inconsistency in this Indenture or the Notes in a manner that does not adversely affect the rights of any Holder in any material respect;
(b)
to provide for the assumption by a Successor Company of the obligations of the Company under this Indenture pursuant to Article 11;
(c)
to add guarantees with respect to the Notes;
(d)
to secure the Notes;
(e)
to add to the covenants or Events of Default of the Company for the benefit of the Holders or surrender any right or power conferred upon the Company under this Indenture or the Notes;
(f)
to make any change that does not adversely affect the rights of any Holder;
(g)
to increase the Conversion Rate as provided in this Indenture;
(h)
to provide for the acceptance of appointment by a successor trustee pursuant to Section 7.09 or to facilitate the administration of the trusts under this Indenture by more than one trustee;
(i)
to irrevocably elect a Settlement Method or a Specified Dollar Amount, or eliminate the Company’s right to elect a Settlement Method;
(j)
to comply with the rules of any applicable securities depositary, including the Depositary;
(k)
to provide for the issuance of additional Notes;
(l)
in connection with any Common Stock Change Event, to provide that the Notes are convertible into Reference Property, subject to the provisions of Section 14.02 and in accordance with Section 14.07; and
(m)
to conform the provisions of the Indenture or the Notes to any provision of the “Description of Notes” section of the Offering Memorandum.
Upon the written request of the Company, the Trustee is hereby authorized to, and shall join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained, except that the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section 10.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.02.
Section 10.02
. Supplemental Indentures with Consent of Holders.
With the consent (evidenced as provided in Article 8) of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (determined in accordance with Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, the Notes), the Company and the Trustee, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture, the Notes or any supplemental indenture or of modifying in any manner the rights of the Holders;
provided
,
however
, that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:
(a)
reduce the amount of Notes whose Holders must consent to an amendment, supplement or waiver;
(b)
reduce the rate of or extend the stated time for payment of interest on any Note;
(c)
reduce the principal of or extend the Maturity Date of any Note;
(d)
make any change that adversely affects the conversion rights of any Notes;
(e)
reduce the Fundamental Change Repurchase Price of any Note or amend or modify in any manner adverse to the Holders the Company’s obligation to make such payment, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;
(f)
make any Note payable in money, or at a place of payment, other than that stated in the Note;
(g)
change the ranking of the Notes;
(h)
impair the right of any Holder to receive payment of principal and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes; or
(i)
make any change in this Article 10 that requires each Holder’s consent or in the waiver provisions in Section 6.02 or Section 6.09.
Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of the requisite Holders as aforesaid and subject to Section 10.05, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.
Holders do not need under this Section 10.02 to approve the particular form of any proposed supplemental indenture. It shall be sufficient if such Holders approve the substance thereof. After any such supplemental indenture becomes effective, the Company shall deliver to the Holders (with a copy to the Trustee) a notice briefly describing such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.
Section 10.03
. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitation of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Section 10.04
. Notation on Notes.
Notes authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may, at the Company’s request and expense, bear a notation as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any modification of this Indenture contained in any such supplemental indenture may, at the Company’s expense, be prepared and executed by the Company, authenticated upon receipt of a Company Order by the Trustee (or an authenticating agent duly appointed by the Trustee pursuant to Section 17.10) and delivered in exchange for the Notes then outstanding, upon surrender of such Notes then outstanding.
Section 10.05
. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee.
In addition to the documents required by Section 17.05, the Trustee shall receive an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article 10 and is permitted or authorized by this Indenture and that the supplemental indenture constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms.
ARTICLE 11
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.01
. Company May Consolidate, Etc. on Certain Terms.
Subject to the provisions of Section 11.02, the Company shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another Person, unless:
(a)
the resulting, surviving or transferee Person (the “
Successor Company
”), if not the Company, shall be a corporation organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Company) shall expressly assume, by supplemental indenture (in form satisfactory to the Trustee) all of the obligations of the Company under the Notes and this Indenture;
(b)
immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under this Indenture; and
(c)
the Company and the Successor Company have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that each of such consolidation, merger, conveyance, transfer or lease and such supplemental indenture complies with this Article 11 and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
For purposes of this Section 11.01, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Company to another Person, which properties and assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Company to another Person.
Section 11.02
. Successor Corporation to Be Substituted.
In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee, of all of the obligations of the Company under the Notes and this Indenture, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the Company’s properties and assets, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part, and may thereafter exercise every right and power of, the Company under this Indenture. Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Notes had been issued at the date of the execution hereof. In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the “Company” in the first paragraph of this Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under this Indenture and the Notes.
In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.
ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 12.01
. Indenture and Notes Solely Corporate Obligations.
No recourse for the payment of the principal of or accrued and unpaid interest on or the payment or delivery of consideration due upon conversion of any Note, or the payment or delivery of consideration due upon conversion, nor for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture or in any Note, nor because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, Officer or director or Subsidiary, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE 13
INTENTIONALLY OMITTED
ARTICLE 14
CONVERSION OF NOTES
Section 14.01
. Conversion Privilege.
(i) Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or a multiple thereof) of such Note (i) subject to satisfaction of the conditions described in Section 14.01(b), at any time prior to the close of business on the Business Day immediately preceding November 15, 2022 under the circumstances and during the periods set forth in Section 14.01(b), and (ii) regardless of the conditions described in Section 14.01(b), on or after November 15, 2022 and prior to the close of business on the second Scheduled Trading Day immediately preceding the Maturity Date, in each case, based on an initial conversion rate of 4.0244 shares of Common Stock (subject to adjustment as provided in this Article 14, the “
Conversion Rate
”) per $1,000 principal amount of Notes (subject to, and in accordance with, the settlement provisions of Section 14.02, the “
Conversion Obligation
”).
(a)
(i) Prior to the close of business on the Business Day immediately preceding November 15, 2022, a Holder may surrender all or any portion of its Notes for conversion at any time during the five Business Day period immediately after any ten consecutive Trading Day period (the “
Measurement Period
”) in which the Trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder of Notes in accordance with this Section 14.01(b)(i), for each Trading Day of the Measurement Period was less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each such Trading Day (the “
Trading Price Condition
”). The Trading Prices shall be determined by the Bid Solicitation Agent pursuant to this Section 14.01(b)(i) and the definition of Trading Price set forth in this Indenture. The Bid Solicitation Agent (if other than the Company) shall have no obligation to determine the Trading Price per $1,000 principal amount of Notes unless the Company has requested such determination in writing and has provided the Bid Solicitation Agent with the names and contact information of the securities dealers the Company has selected for such purpose; and the Company shall have no obligation to make such request (or, if the Company is acting as Bid Solicitation Agent, the Company shall have no obligation to determine the Trading Price) unless a Holder of Notes provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of Notes would be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate, at which time the Company shall instruct the Bid Solicitation Agent (if other than the Company) to determine, or if the Company is acting as Bid Solicitation Agent, the Company shall determine, the Trading Price per $1,000 principal amount of Notes beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate. If (x) the Company is not acting as Bid Solicitation Agent, and the Company does not, when the Company is required to, instruct the Bid Solicitation Agent to obtain bids, or if the Company so instructs the Bid Solicitation Agent to obtain bids and the Bid Solicitation Agent fails to make such determination, or (y) the Company is acting as Bid Solicitation Agent and the Company fails to make such determination, then, in either case, the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each Trading Day of such failure. If the Trading Price Condition has been met, the Company shall so notify, in writing, the Holders, the Trustee and the Conversion Agent (if other than the Trustee). If, at any time after the Trading Price Condition has been met, the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate for such date, the Company shall so notify, in writing, the Holders, the Trustee and the Conversion Agent (if other than the Trustee).
(i)
If, prior to the close of business on the Business Day immediately preceding November 15, 2022, the Company elects to:
(A)
issue to all or substantially all holders of the Common Stock any rights, options or warrants (other than rights pursuant to a stockholder rights plan) entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance; or
(B)
distribute to all or substantially all holders of the Common Stock the Company’s assets, securities or rights to purchase securities of the Company (other than rights pursuant to a stockholder rights plan), which distribution has a per share value, as reasonably determined in good faith by the Company, exceeding 15% of the Last Reported Sale Price of the Common Stock on the Trading Day preceding the date of announcement for such distribution,
then, in either case, the Company shall notify, in writing, the Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee) at least 65 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution. However, if the Company is then otherwise permitted to settle conversions of Notes through Physical Settlement, then the Company may instead elect to provide such notice at least 10 Scheduled Trading Days before such Ex-Dividend Date. In that event, the Company shall be required to settle all conversions of Notes with a Conversion Date occurring during the period (the “
Distributions Trigger Irrevocable Physical Settlement Period
”) on or after the date the Company provides such notice and on or before such Ex-Dividend Date through Physical Settlement, and the Company shall describe the same in such notice. Once the Company has given such notice, Holders may surrender all or any portion of their Notes for conversion at any time until the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Date for such issuance or distribution and the Company’s announcement that such issuance or distribution will not take place, even if the Notes are not otherwise convertible at such time. However, Holders may not convert their Notes under this provision if they participate at the same time and upon the same terms as holders of Common Stock and solely as a result of holding the Notes, in any of the transactions described above without having to convert their Notes as if they held a number of shares of Common Stock equal to the applicable Conversion Rate,
multiplied by
the principal amount (expressed in thousands) of Notes held by such Holder.
(ii)
If a transaction or event that constitutes a (x) Fundamental Change or (y) Make-Whole Fundamental Change (in each case, without giving effect to the exception regarding Publicly Traded Securities in the proviso to the definition of Fundamental Change) occurs, regardless of whether a Holder has the right to require the Company to repurchase the Notes pursuant to Section 15.02, the Company shall notify, in writing, Holders, the Trustee and the Conversion Agent (if other than the Trustee) no later than one Business Day following the effective date of such transaction or event. Upon delivery of such notice, a Holder may surrender all or a portion of its Notes for conversion until the earlier of (i) the Business Day immediately preceding the related Fundamental Change Repurchase Date (or, if such transaction is an Exempted Fundamental Change or does not constitute a Fundamental Change, the 35th Trading Day immediately following the effective date of such transaction or event) and (ii) the second Scheduled Trading Day immediately preceding the Maturity Date.
(iii)
Prior to the close of business on the Business Day immediately preceding November 15, 2022, a Holder may surrender all or any portion of its Notes for conversion at any time during any calendar quarter commencing after the calendar quarter ending on September 30, 2018 (and only during such calendar quarter), if the Last Reported Sale Price of the Common Stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter is greater than or equal to 130% of the Conversion Price on each applicable Trading Day.
Section 14.02
. Conversion Procedure; Settlement Upon Conversion.
(a)
Subject to this Section 14.02, Section 14.03(b) and Section 14.07(a), upon conversion of any Note, the Company shall satisfy its Conversion Obligation by paying or delivering, as the case may be, to the converting Holder, in respect of each $1,000 principal amount of Notes being converted, cash (“
Cash Settlement
”), shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“
Physical Settlement
”) or a combination of cash and shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“
Combination Settlement
”), at its election, as set forth in this Section 14.02 Notwithstanding anything to the contrary in this Indenture, the Company shall be deemed to have elected Cash Settlement in respect of any conversion of Notes for which the relevant Conversion Date occurs prior to the Share Reservation Date.
(i)
All conversions for which the relevant Conversion Date occurs on or after November 15, 2022 shall be settled using the same Settlement Method.
(ii)
Except for any conversions for which the relevant Conversion Date occurs on or after November 15, 2022, the Company shall use the same Settlement Method for all conversions occurring on the same Conversion Date, but, except as set forth under Section 14.01(b)(ii), the Company shall not have any obligation to use the same Settlement Method with respect to conversions with different Conversion Dates.
(iii)
Notwithstanding anything to the contrary in this Indenture or the Notes, the Company shall be deemed to have elected Cash Settlement in respect of any conversion of Notes for which the relevant Conversion Date occurs prior to the first date (the “
Share Reservation Date
”) on which (x) either (1) the Company’s stockholders have approved an increase in the number of authorized but unissued shares of the Common Stock that are not reserved for other purposes or (2) the Company otherwise has (whether through unreserving shares of Common Stock reserved for other purposes or otherwise) a number of authorized but unissued shares of Common Stock that are not reserved for other purposes, in each case sufficient for the Company to issue and deliver upon conversion of all outstanding Notes the full number of shares of Common Stock underlying such Notes, assuming for such purposes that a single Holder converted all outstanding Notes and the Company elected Physical Settlement in respect of such conversion, and including the maximum number of Additional Shares that may be added to the Conversion Rate upon conversion in connection with a Make-Whole Fundamental Change, as described in Section 14.03 (the “
Maximum Number of Underlying Shares
”) and (y) the Company has reserved for issuance upon conversion of all outstanding Notes a number of shares of Common Stock equal to the Maximum Number of Underlying Shares. For any conversions for which the relevant Conversion Date occurs on or after the Share Reservation Date, the Company may elect Cash Settlement, Physical Settlement or Combination Settlement as otherwise described in this Section 14.02.
(iv)
If, in respect of any Conversion Date (or one of the periods described in the third immediately succeeding set of parentheses, as the case may be), the Company elects a Settlement Method, the Company shall deliver a written notice (the “
Settlement Notice
”) of the Settlement Method so elected in respect of such Conversion Date (or such period, as the case may be) to converting Holders no later than the close of business on the VWAP Trading Day immediately following the relevant Conversion Date (or in the case of any conversions occurring (x) during a Distributions Trigger Irrevocable Physical Settlement Period for which the Company has irrevocably elected that Physical Settlement apply, in the related notice specified in Section 14.01(b)(ii), or (y) on or after November 15, 2022, no later than the close of business on the Business Day immediately preceding November 15, 2022). Such Settlement Notice shall specify the relevant Settlement Method and in the case of an election of Combination Settlement, the relevant Settlement Notice shall indicate the Specified Dollar Amount per $1,000 principal amount of Notes. If in respect of any conversion of Notes for which the relevant Conversion Date occurs on or after the Share Reservation Date, the Company fails to timely elect a Settlement Method prior to the deadline set forth in the second immediately preceding sentence, the Company shall be deemed to have elected the Default Settlement Method. If the Company is permitted to elect, and timely elects, Combination Settlement, but does not timely notify, in writing, converting Holders of the Specified Dollar Amount per $1,000 principal amount of Notes, such Specified Dollar Amount shall be deemed to be $1,000. For the avoidance of doubt, the Company’s failure to so select a Settlement Method or Specified Dollar Amount when so permitted shall not constitute a Default or Event of Default under this Indenture or the Notes. The Default Settlement Method shall apply on and after the Share Reservation Date, and the Company may, from time to time, change the Default Settlement Method by sending notice of the new Default Settlement Method to the Holders.
(v)
The cash, shares of Common Stock or combination of cash and shares of Common Stock in respect of any conversion of Notes (the “
Settlement Amount
”) shall be computed as follows:
(A)
if Physical Settlement applies with respect to the Company’s obligation to satisfy its Conversion Obligation in respect of such conversion, the Company shall deliver to the converting Holder in respect of each $1,000 principal amount of Notes being converted a number of shares of Common Stock equal to the Conversion Rate in effect on the Conversion Date;
(B)
if Cash Settlement applies with respect to the Company’s obligation to satisfy its Conversion Obligation in respect of such conversion, the Company shall pay to the converting Holder in respect of each $1,000 principal amount of Notes being converted cash in an amount equal to the sum of the Daily Conversion Values for each of the 60 consecutive VWAP Trading Days during the related Observation Period; and
(C)
if Combination Settlement applies with respect to the Company’s obligation to satisfy its Conversion Obligation in respect of such conversion, the Company shall pay or deliver, as the case may be, in respect of each $1,000 principal amount of Notes being converted, a Settlement Amount equal to the sum of the Daily Settlement Amounts for each of the 60 consecutive VWAP Trading Days during the related Observation Period.
(vi)
The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if applicable) shall be determined by the Company promptly following the last day of the Observation Period. Promptly after such determination of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of delivering any fractional share of Common Stock, the Company shall notify the Trustee and the Conversion Agent (if other than the Trustee) of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of delivering fractional shares of Common Stock. The Trustee and the Conversion Agent (if other than the Trustee) shall have no responsibility for any such determination.
(b)
Subject to Section 14.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time for converting an interest in a Global Note and, if required, pay funds equal to interest payable on the next Interest Payment Date as set forth in Section 14.02(h) and, if required, pay all transfer or similar taxes, if any, as set forth in Section 14.02(d) and Section 14.02(e) and (i) in the case of a Physical Note (1) complete, manually sign and deliver an irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (a “
Notice of Conversion
”) at the office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if required, furnish appropriate endorsements and transfer documents and (4) if required, pay funds equal to interest payable on the next Interest Payment Date as set forth in Section 14.02(h). The Trustee (and, if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion. No Notes may be surrendered for conversion by a Holder thereof if such Holder has also delivered a Fundamental Change Repurchase Notice to the Company in respect of such Notes and has not withdrawn such Fundamental Change Repurchase Notice in accordance with Section 15.03.
If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.
(c)
A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “
Conversion Date
”) that the Holder has complied with the requirements set forth in subsection (b) above. Except as set forth in Section 14.03(b) and Section 14.07(a), the Company shall pay or deliver, as the case may be, the consideration due in respect of the Conversion Obligation on the second Business Day immediately following the relevant Conversion Date (except with respect to a Conversion Date occurring on or after November 15, 2022, in which case the Company shall settle any such conversion on the Maturity Date), if Physical Settlement applies, or on the second Business Day immediately following the last VWAP Trading Day of the relevant Observation Period, in the case of any other Settlement Method. If any shares of Common Stock are due to converting Holders, the Company shall issue or cause to be issued, and deliver to such Holder, or such Holder’s nominee or nominees, certificates or a book-entry transfer through the Depositary for the full number of shares of Common Stock to which such Holder shall be entitled in satisfaction of the Company’s Conversion Obligation.
(d)
If, in respect of certificated Notes, any Note shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.
(e)
If a Holder submits a Note for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax or other similar governmental charge due on any issuance of any shares of Common Stock upon conversion, unless the tax is due because the Holder requests any such shares to be issued in a name other than the Holder’s name, in which case the Holder shall pay that tax. The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder’s name until the Trustee receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence.
(f)
Except as provided in Section 14.04, no adjustment shall be made for dividends on any shares of Common Stock issued upon the conversion of any Note as provided in this Article 14.
(g)
Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.
(h)
Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below, and the Company shall not adjust the Conversion Rate for any accrued and unpaid interest on any converted Notes. The Company’s settlement of the full Conversion Obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but excluding, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but excluding, the relevant Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited. Upon a conversion of Notes into a combination of cash and shares of Common Stock, accrued and unpaid interest will be deemed to be paid first out of the cash paid upon such conversion. Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. However, Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date must be accompanied by funds equal to the amount of interest payable on the Notes so converted;
provided
that no such payment need be made (1) for conversions following the Regular Record Date immediately preceding the Maturity Date; (2) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the Business Day immediately succeeding the corresponding Interest Payment Date; or (3) to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to such Note. Therefore, for the avoidance of doubt, all Holders of record as of the close of business on the Regular Record Date immediately preceding the Maturity Date shall receive the full interest payment due on the Maturity Date in cash regardless of whether their Notes have been converted following such Regular Record Date.
(i)
The Person in whose name the certificate for any shares of Common Stock delivered upon conversion is registered shall become the stockholder of record as of the close of business on the relevant Conversion Date (in the case of Physical Settlement) or the last VWAP Trading Day of the relevant Observation Period (in the case of Combination Settlement), as the case may be. Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.
(j)
The Company shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of delivering any fractional share of Common Stock issuable upon conversion based on the Daily VWAP on the relevant Conversion Date (or, if such Conversion Date is not a VWAP Trading Day, the immediately preceding VWAP Trading Day), in the case of Physical Settlement, or based on the Daily VWAP on the last VWAP Trading Day of the relevant Observation Period, in the case of Combination Settlement. For each Note surrendered for conversion, if Combination Settlement applies, the full number of shares that shall be issued upon conversion thereof shall be computed on the basis of the aggregate Daily Settlement Amounts for the relevant Observation Period and any fractional shares remaining after such computation shall be paid in cash.
Section 14.03
.
Increase in Conversion Rate upon Conversion upon a Make-Whole Fundamental Change
. (i) If the Effective Date of a Make-Whole Fundamental Change occurs prior to the Maturity Date and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Company shall, in the circumstances described below, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional shares of Common Stock (the “
Additional Shares
”), as described below. A conversion of Notes shall be deemed for these purposes to be “in connection with” a Make-Whole Fundamental Change if the relevant Conversion Date occurs at any time from, and including, the Effective Date of the Make-Whole Fundamental Change up to, and including, the Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of an Exempted Fundamental Change or a Make-Whole Fundamental Change that would have been a Fundamental Change but for the proviso in clause (b) of the definition thereof, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change) (such period, the “
Make-Whole Fundamental Change Period
”).
(a)
The increase to the Conversion Rate described in this Section 14.03 shall not affect the settlement provisions set forth in Section 14.02. However, if the Reference Property in any Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change is composed entirely of cash, then, for any conversion of Notes with a Conversion Date occurring on or after the Effective Date of such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on the Stock Price for the transaction and shall be deemed to be an amount of cash per $1,000 principal amount of converted Notes equal to the Conversion Rate on such Conversion Date (including any increase to reflect the Additional Shares),
multiplied by
such Stock Price. In such event, the Conversion Obligation shall be determined and paid to Holders in cash on the second Business Day following the Conversion Date. The Company shall notify the Holders of the Effective Date of any Make-Whole Fundamental Change no later than five Business Days after such Effective Date.
(b)
The number of Additional Shares, if any, by which the Conversion Rate shall be increased for conversions during the Make-Whole Fundamental Change Period shall be determined by reference to the table below, based on the date (the “
Effective Date
”) on which the Make-Whole Fundamental Change occurs or becomes effective and the price (the “
Stock Price
”) paid (or deemed to be paid) per share of Common Stock in the Make-Whole Fundamental Change. If the holders of the Common Stock receive in exchange for their Common Stock only cash in a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Stock Price shall be the cash amount paid per share. In all other cases, the Stock Price shall be the average of the Last Reported Sale Prices of the Common Stock over the five consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make-Whole Fundamental Change.
(c)
The Stock Prices set forth in the column headings of the table below shall be adjusted as of any date on which the Conversion Rate for the Notes is otherwise adjusted. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment,
multiplied by
a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of Additional Shares set forth in the table below shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section 14.04.
(d)
The following table sets forth the number of Additional Shares by which the Conversion Rate shall be increased per $1,000 principal amount of Notes pursuant to this Section 14.03 for each Stock Price and Effective Date set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Price
|
|
Effective Date
|
$191.14
|
$200.00
|
$210.00
|
$230.00
|
$248.48
|
$280.00
|
$320.00
|
$380.00
|
$450.00
|
$550.00
|
$700.00
|
|
May [22], 2018
|
1.2073
|
1.0949
|
0.9833
|
0.7995
|
0.6661
|
0.4961
|
0.3502
|
0.2169
|
0.1303
|
0.0668
|
0.0253
|
|
May 15, 2019
|
1.2073
|
1.0866
|
0.9674
|
0.7727
|
0.6332
|
0.4583
|
0.3122
|
0.1838
|
0.1046
|
0.0500
|
0.0173
|
|
May 15, 2020
|
1.2073
|
1.0766
|
0.9472
|
0.7381
|
0.5906
|
0.4101
|
0.2650
|
0.1446
|
0.0760
|
0.0330
|
0.0100
|
|
May 15, 2021
|
1.2073
|
1.0525
|
0.9090
|
0.6805
|
0.5233
|
0.3385
|
0.1996
|
0.0958
|
0.0444
|
0.0169
|
0.0042
|
|
May 15, 2022
|
1.2073
|
1.0026
|
0.8351
|
0.5747
|
0.4042
|
0.2214
|
0.1056
|
0.0388
|
0.0148
|
0.0051
|
0.0011
|
|
May 15, 2023
|
1.2073
|
0.9756
|
0.7375
|
0.3234
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
The exact Stock Prices and Effective Dates may not be set forth in the table above, in which case:
(i)
if the Stock Price is between two Stock Prices in the table above or the Effective Date is between two Effective Dates in the table above, the number of Additional Shares by which the Conversion Rate shall be increased shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Prices and the earlier and later Effective Dates, as applicable, based on a 365- or 366-day year, as applicable;
(ii)
if the Stock Price is greater than $700.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate; and
(iii)
if the Stock Price is less than $191.14 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate.
Notwithstanding the foregoing, in no event shall the Conversion Rate per $1,000 principal amount of Notes exceed 5.2317 shares of Common Stock, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.04.
(e)
Nothing in this Section 14.03 shall prevent an adjustment to the Conversion Rate that would otherwise be required pursuant to Section 14.04.
Section 14.04
. Adjustment of Conversion Rate.
The Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this Section 14.04, without having to convert their Notes, as if they held a number of shares of Common Stock equal to the Conversion Rate,
multiplied by
the principal amount (expressed in thousands) of Notes held by such Holder.
(a)
If the Company exclusively issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or if the Company effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date or Effective Date, as applicable;
|
|
|
|
|
OS
0
|
= the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date, as applicable (before giving effect to any such dividend, distribution, share split or share combination); and
|
|
|
|
|
OS'
|
= the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination, as applicable.
|
Any adjustment made under this Section 14.04(a) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 14.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Company determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.
(b)
If the Company issues to all or substantially all holders of Common Stock any rights, options or warrants (other than pursuant to a stockholder rights plan) entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such issuance;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;
|
|
|
|
|
OS
0
|
= the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date;
|
|
|
|
|
X
|
= the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
|
|
|
|
|
Y
|
= the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants,
divided by
the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.
|
Any increase made under this Section 14.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance. To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, or if no such rights, options or warrants are exercised prior to their expiration, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not occurred.
For purposes of this Section 14.04(b) and Section 14.01(b)(ii)(A), in determining whether any rights, options or warrants entitle holders of the Common Stock to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined in good faith by the Company.
(c)
If the Company distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Company or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding (i) dividends, distributions or issuances as to which an adjustment was effected (or would be effected, disregarding the 1% Provision) pursuant to Section 14.04(a) or Section 14.04(b); (i) rights issued under a stockholder rights plan prior to separation thereof from the Common Stock in the circumstances described below in this Section 14.04; (iii) dividends or distributions paid exclusively in cash as to which an adjustment was effected (or would be effected, disregarding the 1% Provision) pursuant to Section 14.04(d); (iv) distributions of Reference Property in a Common Stock Change Event; and (iv) Spin-Offs, as to which the provisions set forth below in this Section 14.04(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities, the “
Distributed Property
”), then the Conversion Rate shall be increased based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;
|
|
|
|
|
SP
0
|
= the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and
|
|
|
|
|
FMV
|
= the fair market value (as determined by the Company in good faith) of the Distributed Property with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.
|
Any increase made under the portion of this Section 14.04(c) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such distribution had not been declared. Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP
0
” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of the Common Stock receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution.
With respect to an adjustment pursuant to this Section 14.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “
Spin-Off
”), the Conversion Rate shall be increased based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the close of business on the last Trading Day of the Valuation Period;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the close of business on the last Trading Day of the Valuation Period;
|
|
|
|
|
FMV
0
|
= the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.01 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “
Valuation Period
”); and
|
|
|
|
|
MP
0
|
= the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.
|
The adjustment to the Conversion Rate under the preceding paragraph shall occur immediately after the close of business on the last Trading Day of the Valuation Period;
provided
that (x) in respect of any conversion of Notes for which Physical Settlement is applicable, if the relevant Conversion Date occurs during the Valuation Period, references to “10” in the portion of this Section 14.04(c) related to Spin-Offs shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, and including, such Conversion Date in determining the Conversion Rate and (y) in respect of any conversion of Notes for which Cash Settlement or Combination Settlement is applicable, for any VWAP Trading Day that falls within the relevant Observation Period for such conversion and within the Valuation Period, references to “10” in the portion of this Section 14.04(c) related to Spin-Offs shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date of such Spin-Off to, and including, such VWAP Trading Day in determining the Conversion Rate as of such VWAP Trading Day.
For purposes of this Section 14.04(c) (and subject in all respect to Section 14.10), rights, options or warrants distributed by the Company to all holders of the Common Stock entitling them to subscribe for or purchase shares of the Company’s Capital Stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“
Trigger Event
”): (i) are deemed to be transferred with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this Section 14.04(c) (and no adjustment to the Conversion Rate under this Section 14.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.04(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Ex-Dividend Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.04(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.
If this Section 14.04 requires adjustments to the Conversion Rate under more than one of Sections 14.04(a), (b), (c) or (d), and the Ex-Dividend Dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made, without duplication, by applying, first, the provisions of Section 14.04(a); second, the provisions of Section 14.04(c); third, the provisions of Section 14.04(d); and, fourth, the provisions of Section 14.04(b). After an adjustment to the Conversion Rate under this Section 14.04, any subsequent event requiring an adjustment under this Section 14.04 shall cause an adjustment to the Conversion Rate as so adjusted, without duplication.
(d)
If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate shall be adjusted based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution;
|
|
|
|
|
SP
0
|
= the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
|
|
|
|
|
C
|
= the amount in cash per share the Company distributes to all or substantially all holders of the Common Stock.
|
Any increase pursuant to this Section 14.04(d) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP
0
” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1,000 principal amount of Notes it holds, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution.
(e)
If the Company or any of its Subsidiaries make a payment in respect of a tender or exchange offer for the Common Stock (other than an odd-lot tender offer), to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula:
where,
|
|
|
|
CR
0
|
= the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
|
|
|
|
|
CR'
|
= the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
|
|
|
|
|
AC
|
= the aggregate value of all cash and any other consideration (as determined by the Company in good faith) paid or payable for shares of Common Stock purchased in such tender or exchange offer;
|
|
|
|
|
OS
0
|
= the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);
|
|
|
|
|
OS'
|
= the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and
|
|
|
|
|
SP'
|
= the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.
|
The increase to the Conversion Rate under this Section 14.04(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;
provided
that (x) in respect of any conversion of Notes for which Physical Settlement is applicable, if the relevant Conversion Date occurs during the 10 Trading Days immediately following, and including, the Trading Day next succeeding date such tender or exchange offer expires of any tender or exchange offer, references to “10” or “10th” in this Section 14.04(e) shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, such Conversion Date in determining the Conversion Rate and (y) in respect of any conversion of Notes for which Cash Settlement or Combination Settlement is applicable, for any VWAP Trading Day that falls within the relevant Observation Period for such conversion and within the 10 Trading Days immediately following, and including, the Trading Day next succeeding the expiration date of any tender or exchange offer, references to “10” or “10th” in this Section 14.04(e) shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day next succeeding the expiration date of such tender or exchange offer to, and including, such VWAP Trading Day in determining the Conversion Rate applicable to such conversion as of such VWAP Trading Day.
Notwithstanding this Section 14.04 or any other provision of this Indenture or the Notes, if: (1) a Conversion Rate adjustment for any dividend or distribution becomes effective on any Ex-Dividend Date as described in this Section 14.04; (2) a Note is to be converted for which Physical Settlement or Combination Settlement applies; (3) the Conversion Date for such conversion (in the case of Physical Settlement) or any VWAP Trading Day in the Observation Period for such conversion (in the case of Combination Settlement) occurs on or after such Ex-Dividend Date and on or before the related Record Date; (4) the consideration due upon such conversion (in the case of Physical Settlement) or due with respect to such VWAP Trading Day (in the case of Combination Settlement) includes any whole shares of Common Stock based on a Conversion Rate that is adjusted for such dividend or distribution; and (5) such shares would be entitled to participate in such dividend or distribution, then, notwithstanding anything to the contrary, (x) in the case of Physical Settlement, the Conversion Rate adjustment relating to such Ex-Dividend Date shall not be made for such conversion, and, instead, the shares of Common Stock issuable upon such conversion based on such unadjusted Conversion Rate shall be entitled to participate in such dividend or distribution; and (y) in the case of Combination Settlement, the Conversion Rate adjustment relating to such Ex-Dividend Date shall be made for such conversion in respect of such VWAP Trading Day, but the shares of Common Stock issuable with respect to such VWAP Trading Day based on such adjusted Conversion Rate shall not be entitled to participate in such dividend or distribution.
(f)
Except as stated herein, the Company shall not adjust the Conversion Rate for the issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or the right to purchase shares of Common Stock or such convertible or exchangeable securities.
(g)
In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 14.04, and subject to the applicable listing standards of The Nasdaq Global Market, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Company’s best interest. In addition, subject to the applicable listing standards of The Nasdaq Global Market, the Company may (but is not required to) increase the applicable Conversion Rate to avoid or diminish income tax to holders of Common Stock or rights to purchase shares of Common Stock in connection with a dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event.
(h)
Notwithstanding this Section 14.04, the Conversion Rate shall not be adjusted:
(i)
upon the sale of Common Stock for cash at a price below the Conversion Price or otherwise;
(ii)
upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;
(iii)
upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit or incentive plan or program of or assumed by the Company or any of the Company’s Subsidiaries;
(iv)
upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (iii) of this subsection and outstanding as of the date the Notes were first issued;
(v)
upon the repurchase of shares of Common Stock pursuant to an open-market share repurchase program or other buy-back transaction that is not a tender offer or exchange offer of the kind described in Section 14.04(e);
(vi)
for a change in the par value of the Common Stock;
(vii)
for accrued and unpaid interest (including Additional Interest, if any); or
(viii)
for an event otherwise requiring an adjustment as described herein if such event is not consummated.
(i)
The Company shall not adjust the applicable Conversion Rate pursuant to this Section 14.04 unless the adjustment would result in a change of at least 1% in the then effective Conversion Rate. However, the Company shall carry forward any adjustment to such Conversion Rate that the Company would otherwise have to make and take that adjustment into account in any subsequent adjustment. Notwithstanding the foregoing, all such carried-forward adjustments shall be made (i) where the aggregate of all such carried-forward adjustments equals or exceeds 1% of the Conversion Rate; and (ii) regardless of whether the aggregate adjustment is less than 1% of the applicable Conversion Rate, (x) on the Conversion Date for any Notes (in the case of Physical Settlement) or (y) on each VWAP Trading Day of any Observation Period with respect to any Notes (in the case of Cash Settlement or Combination Settlement). The provisions described in the two immediately preceding sentences of this Section 14.04(i) are referred to herein as the “
1% Provision
.” All the calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one ten thousandth (1/10,000th) of a share.
(j)
Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officer’s Certificate setting forth (i) the adjusted Conversion Rate, (ii) the subsection of this Section 14.04 pursuant to which such adjustment has been made, showing in reasonable detail the facts upon which such adjustment is based and (iii) the date as of which such adjustment is effective (which certificates shall be conclusive evidence of the accuracy of such adjustment absent manifest error). Unless and until a Responsible Officer of the Trustee shall have received such Officer’s Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall deliver such notice of such adjustment of the Conversion Rate to each Holder. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.
(k)
For purposes of this Section 14.04, the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares of Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.
Section 14.05
. Adjustments of Prices.
Whenever any provision of this Indenture requires the Company to calculate the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts over a span of multiple days (including, without limitation, an Observation Period and the period, if any, for determining the Stock Price for purposes of a Make-Whole Fundamental Change), the Company shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date or expiration date of the event occurs, at any time during the period when the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts are to be calculated.
Section 14.06
. Shares to Be Fully Paid.
The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming delivery of the maximum number of Additional Shares pursuant to Section 14.03 and that at the time of computation of such number of shares, all such Notes would be converted by a single Holder and that Physical Settlement is applicable).
Section 14.07
. Effect of Recapitalizations, Reclassifications and Changes of the Common Stock.
(a)
In the case of:
(i)
any recapitalization, reclassification or change of the Common Stock (other than changes in par value or from no par value or resulting from a subdivision or combination),
(ii)
any consolidation, merger or combination involving the Company,
(iii)
any sale, lease or other transfer to a third party of the consolidated assets of the Company and the Company’s Subsidiaries substantially as an entirety or
(iv)
any statutory share exchange,
in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (such an event, a “
Common Stock Change Event
”, and such stock, other securities, other property, assets or cash, the “
Reference Property
”, and the amount and kind of Reference Property that a holder of one share of the Common Stock would be entitled to receive in such Common Stock Change Event (without giving effect to any arrangement not to issue or deliver a fractional portion of any security or other property), a “
Reference Property Unit
”), then, at and after the effective time of the Common Stock Change Event, the Company or the Successor Company, as the case may be, will execute with the Trustee a supplemental indenture, without the consent of Holders, providing that (x) the consideration due upon conversion of any Note, and the conditions to any such conversion, shall be determined in the same manner as if each reference to any number of shares of Common Stock in the provisions set forth in this Article 14 (or in any related definitions) were instead a reference to the same number of Reference Property Units; and (y) for purposes of the definition of “Fundamental Change” and “Make-Whole Fundamental Change,” the terms “Common Stock” and “Common Equity” shall be deemed to mean the Common Equity (including depositary receipts representing common equity), if any, forming part of such Reference Property.
For these purposes, the Daily VWAP or Last Reported Sale Price of any Reference Property Unit or portion thereof that does not consist of a class of securities shall be the fair value of such Reference Property Unit or portion thereof, as applicable, determined in good faith by the Company (or, in the case of cash denominated in U.S. dollars, the face amount thereof). If the Common Stock Change Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the composition of the Reference Property Unit shall be deemed to be the weighted average of the types and amounts of consideration actually received by the holders of Common Stock. If the holders of the Common Stock receive only cash in such Common Stock Change Event, then for all conversions with a Conversion Date that occurs on or after the effective date of such Common Stock Change Event (A) the consideration due upon conversion of each $1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion Rate in effect on the Conversion Date (as may be increased by any Additional Shares pursuant to Section 14.03),
multiplied by
the price paid per share of Common Stock in such Common Stock Change Event and (B) the Company shall satisfy the Conversion Obligation by paying cash to converting Holders on the second Business Day immediately following the relevant Conversion Date. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) in writing of such weighted average as soon as practicable after such determination is made.
The supplemental indenture described in the second immediately preceding paragraph shall, if applicable, provide for anti-dilution and other adjustments that are as nearly equivalent as possible to the adjustments provided for in this Article 14. If the Reference Property in respect of any Common Stock Change Event includes shares of stock, securities or other property or assets of a Person other than the Company or the Successor Company, as the case may be, in such Common Stock Change Event, such supplemental indenture shall also be executed by such other Person, and such supplemental indenture shall contain such additional provisions to protect the interests of the Holders as the Company reasonably considers necessary by reason of the foregoing, including the provisions providing for the purchase rights set forth in Article 15.
(b)
When the Company executes a supplemental indenture pursuant to subsection (a) of this Section 14.07, the Company shall promptly file with the Trustee an Officer’s Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a Reference Property Unit after any such Common Stock Change Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly deliver or cause to be delivered notice thereof to all Holders. The Company shall cause notice of the execution of such supplemental indenture to be delivered to each Holder within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.
(c)
The Company shall not become a party to any Common Stock Change Event unless its terms are consistent with this Section 14.07. None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, as set forth in Section 14.01 and Section 14.02 prior to the effective date of such Common Stock Change Event.
(d)
The above provisions of this Section shall similarly apply to successive Common Stock Change Events.
(e)
Upon the consummation of any Common Stock Change Event, references to “Common Stock” shall be deemed to refer to any Reference Property that constitutes capital stock after giving effect to such Common Stock Change Event.
Section 14.08
. Certain Covenants.
(i) The Company covenants that all shares of Common Stock issued upon conversion of Notes will be fully paid and non-assessable by the Company and free from all taxes, liens and charges with respect to the issue thereof.
(a)
The Company covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any governmental authority under any federal or state law before such shares of Common Stock may be validly issued upon conversion, the Company will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be.
(b)
The Company further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system the Company will list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes.
Section 14.09
. Responsibility of Trustee.
The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.07 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in conclusively relying upon, the Officer’s Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. Neither the Trustee nor the Conversion Agent shall be responsible for determining whether any event contemplated by Section 14.01(b) has occurred that makes the Notes eligible for conversion or no longer eligible therefor until the Company has delivered to the Trustee and the Conversion Agent the notices referred to in Section 14.01(b) with respect to the commencement or termination of such conversion rights, on which notices the Trustee and the Conversion Agent may conclusively rely, and the Company agrees to deliver such notices to the Trustee and the Conversion Agent immediately after the occurrence of any such event or at such other times as shall be provided for in Section 14.01(b). Neither the Trustee nor any other agent acting under this Indenture (other than the Company, if acting in such capacity) shall have any obligation to make any calculation or to determine whether the Notes may be surrendered for conversion pursuant to this Indenture, or to notify the Company or the Depositary or any of the Holders if the Notes have become convertible pursuant to the terms of this Indenture.
Section 14.10
. Stockholder Rights Plans.
If the Company has a stockholder rights plan in effect upon conversion of the Notes into Common Stock, the converting Holder shall receive, in addition to any Common Stock delivered in connection with such conversion, the appropriate number of rights under the rights plan, unless the rights have separated from the Common Stock before the such Holder converts its Notes, in which case, the Conversion Rate shall be adjusted at the time of separation as if the Company had distributed to all of the holders of the Common Stock Distributed Property as provided in Section 14.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.
Section 14.11
.
Exchange In Lieu Of Conversion.
(a) When a Holder surrenders its Notes for conversion, the Company may, at its election (an “
Exchange Election
”), direct the Conversion Agent to surrender, at or prior to 11:00 a.m. (New York City time) on the first Business Day immediately following the relevant Conversion Date, such Notes to a financial institution designated by the Company (the “
Designated Institution
”) for exchange in lieu of conversion. In order to accept any Notes surrendered for conversion for exchange in lieu of conversion, the Designated Institution must agree to timely pay or deliver, as the case may be, in exchange for such Notes, cash, shares of Common Stock or a combination of cash and shares of Common Stock, at the Company’s election, that would otherwise be due upon conversion as described in Section 14.02 above or such other consideration agreed to by the converting Holder and the Designated Institution (the “
Conversion Consideration
”). If the Company makes the election described above, the Company shall, at or prior to 11:00 a.m. (New York City time) on the first Business Day following the relevant Conversion Date, notify, in writing, the Holder surrendering Notes for conversion, the Trustee and the Conversion Agent (if other than the Trustee), that it has made such Exchange Election, and the Company shall notify the Designated Institution of the relevant deadline for delivery of the Conversion Consideration and the type of Conversion Consideration to be paid and/or delivered (unless the form of Conversion Consideration has been otherwise agreed by the Holder and the Designated Financial Institution as set forth in this Section 14.11). Any Notes exchanged by any Designated Institution will remain outstanding, subject to applicable procedures of the Depositary.
(a)
If any Designated Institution agrees to accept any Notes for exchange but does not timely pay and/or deliver, as the case may be, the related Conversion Consideration to the Conversion Agent, or if such Designated Institution does not accept such Notes for exchange, the Company shall, within the time period specified in Section 14.02(c), notify the Conversion Agent and the Holders surrendering their Notes and shall pay or deliver, as the case may be, the Conversion Consideration in accordance with the provisions of Section 14.02 as if the Company had not made the Exchange Election.
(b)
For the avoidance of doubt, in no event will the Company’s designation of a Designated Institution pursuant to this Section 14.11 require such Designated Institution to accept any Notes for exchange. The Company may, but will not be obligated to, enter into a separate agreement with any Designated Institution that would compensate it for any such transaction.
ARTICLE 15
REPURCHASE OF NOTES AT OPTION OF HOLDERS
Section 15.01
. Intentionally Omitted.
Section 15.02
. Repurchase
at Option of Holders Upon a Fundamental Change.
(a) If a Fundamental Change occurs at any time prior to the Maturity Date, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion of the principal amount thereof properly surrendered and not withdrawn pursuant to Section 15.03 that is equal to $1,000 or an integral multiple of $1,000. The date of such repurchase (the “
Fundamental Change Repurchase Date
”) shall be specified by the Company that is not less than 20 or more than 35 calendar days following the date of the Fundamental Change Company Notice at a repurchase price equal to 100% of the principal amount thereof,
plus
accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “
Fundamental Change Repurchase Price
”) (unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to the Holder of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this Article 15). Any Notes so repurchased by the Company shall be paid for in cash. The Fundamental Change Repurchase Date shall be subject to postponement solely in order to allow the Company to comply with applicable law as a result of changes to such applicable law occurring after the date of the Indenture.
(a)
Repurchases of Notes under this Section 15.02 shall be made, at the option of the Holder thereof, upon:
(i)
delivery to the Paying Agent by a Holder of a duly completed written notice (the “
Fundamental Change Repurchase Notice
”) in the form set forth in Attachment 2 to the Form of Note attached hereto as Exhibit A, if the Notes are Physical Notes, or in compliance with the Depositary’s procedures for surrendering interests in Global Notes, if the Notes are Global Notes, in each case on or before the Business Day immediately preceding the Fundamental Change Repurchase Date; and
(ii)
delivery of the Notes, if the Notes are Physical Notes, to the Paying Agent at any time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements for transfer) at the Corporate Trust Office of the Paying Agent, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.
The Fundamental Change Repurchase Notice in respect of any Notes to be repurchased shall state:
(i)
in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;
(ii)
the portion of the principal amount of Notes to be repurchased, which must be $1,000 or an integral multiple thereof; and
(iii)
that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and this Indenture;
provided
,
however
, that if the Notes are Global Notes, the Fundamental Change Repurchase Notice must comply with appropriate Depositary procedures.
Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Repurchase Notice contemplated by this Section 15.02 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 15.03.
The Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Repurchase Notice or written notice of withdrawal thereof.
(b)
On or before the 20th calendar day after the occurrence of the effective date of a Fundamental Change, the Company shall provide to all Holders and the Trustee and Paying Agent (if other than the Company) a notice (the “
Fundamental Change Company Notice
”) of the occurrence of the effective date of the Fundamental Change and of the resulting repurchase right at the option of the Holders arising as a result thereof. In the case of Physical Notes, such notice shall be by first class mail or, in the case of Global Notes, such notice shall be delivered in accordance with the applicable procedures of the Depositary. Each Fundamental Change Company Notice shall specify:
(i)
the events causing the Fundamental Change;
(ii)
the effective date of the Fundamental Change;
(iii)
the last date on which a Holder may exercise the repurchase right pursuant to this Article 15;
(iv)
the Fundamental Change Repurchase Price;
(v)
the Fundamental Change Repurchase Date;
(vi)
the name and address of the Paying Agent and the Conversion Agent, if applicable;
(vii)
if applicable, the Conversion Rate and any adjustments to the Conversion Rate as a result of such Fundamental Change;
(viii)
that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder first withdraws the Fundamental Change Repurchase Notice in accordance with the terms of this Indenture; and
(ix)
the procedures that Holders must follow to require the Company to repurchase their Notes.
No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.02.
At the Company’s request, given at least five days prior to the date the Fundamental Change Company Notice is to be sent (or such shorter period of time as may be acceptable to the Trustee), the Paying Agent shall give such notice in the Company’s name and at the Company’s expense;
provided
,
however
, that, in all cases, the text of such Fundamental Change Company Notice shall be prepared by the Company.
(c)
Notwithstanding the foregoing, no Notes may be repurchased by the Company on any date at the option of the Holders upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Physical Notes held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Fundamental Change Repurchase Notice with respect thereto shall be deemed to have been withdrawn.
(d)
The Company shall not be required to repurchase or make an offer to repurchase Notes upon the occurrence of a Fundamental Change otherwise required under this Section 15.02 if a third party makes such an offer to purchase Notes in the same manner, at the same time and otherwise in compliance with the requirements for an offer made by the Company as set forth in this Indenture and such third party purchases all Notes properly surrendered and not validly withdrawn under such offer to purchase in the same manner, at the same time and otherwise in compliance with the requirements for an offer made by Company as set forth in this Article 15.
(e)
Notwithstanding anything to the contrary, the Company shall not be required to send a Fundamental Change Company Notice, or offer to repurchase any Notes, as set forth in this Article 15, in connection with a Fundamental Change occurring pursuant to clause (b)(A) or (B) of the definition thereof, if: (1) such Fundamental Change constitutes a Common Stock Change Event whose Reference Property consists entirely of cash in U.S. dollars; (2) immediately after such Fundamental Change, the Notes become convertible (pursuant to the provisions described in Section 14.07 and, if applicable, Section 14.03) into consideration that consists solely of U.S. dollars in an amount per $1,000 principal amount of Notes that equals or exceeds the Fundamental Change Repurchase Price per $1,000 principal amount of Notes (calculated assuming that the same includes accrued interest to, but excluding, the latest possible Fundamental Change Repurchase Date for such Fundamental Change); and (3) the Company timely sends the notice relating to such Fundamental Change required pursuant to Section 14.01(b)(iii). Any Fundamental Change with respect to which, in accordance with the provisions described in this Section 15.02(f), the Company is not required to offer to repurchase any Notes is referred to as herein as an “
Exempted Fundamental Change
.”
Section 15.03
. Withdrawal of Fundamental Change Repurchase Notice.
(a) A Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Paying Agent in accordance with this Section 15.03 at any time prior to the close of business on the Business Day immediately preceding the relevant Fundamental Change Repurchase Date, specifying:
(i)
the principal amount of the Notes with respect to which such notice of withdrawal is being submitted, which must be $1,000 or an integral multiple thereof,
(ii)
in the case of Physical Notes, the certificate numbers of the Notes in respect of which such notice of withdrawal is being submitted, and
(iii)
the principal amount, if any, of such Notes that remains subject to the original Fundamental Change Repurchase Notice, which must be $1,000 or an integral multiple thereof;
provided
,
however
, that if the Notes are Global Notes, the notice must comply with appropriate procedures of the Depositary.
Section 15.04
. Deposit of Fundamental Change Repurchase Price.
(a) The Company will deposit with the Paying Agent appointed by the Company, or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 4.04 on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change Repurchase Price. Subject to receipt of funds and/or Notes by the Paying Agent appointed by the Company, payment for Notes surrendered for repurchase (and not withdrawn prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date) will be made on the later of (i) the Fundamental Change Repurchase Date (
provided
the Holder has satisfied the conditions in Section 15.02) and (ii) the time of book-entry transfer or the delivery of such Note to the Paying Agent appointed by the Company by the Holder thereof in the manner required by Section 15.02 by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Note Register;
provided
,
however
, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. The Paying Agent shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Fundamental Change Repurchase Price.
(a)
If by 11:00 a.m. New York City time, on the Fundamental Change Repurchase Date, the Paying Agent appointed by the Company holds money sufficient to pay the Fundamental Change Repurchase Price of the Notes to be repurchased on the Fundamental Change Repurchase Date, then, with respect to the Notes that have been properly surrendered for repurchase and have not been validly withdrawn in accordance with the provisions of this Indenture, (b) such Notes will cease to be outstanding, (c) interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Paying Agent) and (d) all other rights of the Holders of such Notes will terminate (other than the right to receive the Fundamental Change Repurchase Price).
(e)
Upon surrender of a certificated Note that is to be repurchased in part pursuant to Section 15.02, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new certificated Note in an authorized denomination equal in principal amount to the unrepurchased portion of the certificated Note surrendered.
Section 15.05
.
Covenant to Comply with Applicable Laws Upon Repurchase of Notes
. In connection with any repurchase offer pursuant to this Article 15, the Company will, if required:
(a)
comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable;
(b)
file a Schedule TO or any other required schedule under the Exchange Act; and
(c)
otherwise comply with all federal and state securities laws in connection with any offer by the Company to repurchase the Notes;
in each case, so as to permit the rights and obligations under this Article 15 to be exercised in the time and in the manner specified in this Article 15.
For purposes of this Article 15, the Paying Agent may be any agent, depositary, tender agent, paying agent or other agent appointed by the Company to accomplish the purposes set forth herein.
ARTICLE 16
NO REDEMPTION
Section 16.01
.
No Redemption
. The Notes shall not be redeemable by the Company prior to the Maturity Date, and no sinking fund is provided for the Notes.
ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.01
. Provisions Binding on Company’s Successors.
All the covenants, stipulations, promises and agreements of the Company contained in this Indenture shall bind its successors and assigns whether so expressed or not.
Section 17.02
. Official Acts by Successor Corporation.
Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or Officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation or other entity that shall at the time be the lawful sole successor of the Company.
Section 17.03
. Addresses for Notices, Etc.
Any notice that by any provision of this Indenture is required or permitted to be given by the Trustee or by the Holders to the Company shall be deemed to have been sufficiently given or made, for all purposes if given by being deposited postage prepaid by registered or certified mail in a post office letter box addressed to Ligand Pharmaceuticals Incorporated, 3911 Sorrento Valley Blvd, Suite 110, San Diego, CA 92121, Attention: General Counsel. Any notice, direction, request or demand hereunder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given by being deposited postage prepaid by registered or certified mail in a post office letter box addressed to the Corporate Trust Office or sent electronically in PDF format.
The Trustee, by notice to the Company, may designate additional or different addresses for subsequent notices or communications.
Any notice or communication delivered or to be delivered to a Holder of Physical Notes shall be mailed to it by first class mail, postage prepaid, at its address as it appears on the Note Register and shall be sufficiently given to it if so mailed within the time prescribed. Any notice or communication delivered or to be delivered to a Holder of Global Notes shall be delivered in accordance with the applicable procedures of the Depositary and shall be sufficiently given to it if so delivered within the time prescribed.
Failure to mail or deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed or delivered, as the case may be, in the manner provided above, it is duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 17.04
. Governing Law; Jurisdiction.
THIS INDENTURE AND EACH NOTE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS INDENTURE AND EACH NOTE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with this Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court
in personam
, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.
The Company irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
Section 17.05
. Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee.
Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officer’s Certificate and, if requested by the Trustee, an Opinion of Counsel stating that such action is permitted by the terms of this Indenture and that all conditions precedent, if any, to such action have been compiled with;
provided
that no Opinion of Counsel shall be required to be delivered in connection with the removal of the restricted CUSIP of the Restricted Securities to an unrestricted CUSIP pursuant to the applicable procedures of the Depositary upon the Notes becoming freely tradable by non-Affiliates of the Company under Rule 144, unless either a new Note is to be issued and authenticated (in which case the Opinion of Counsel required by Section 2.04 shall be delivered) or the Note is deemed to be represented by the unrestricted CUSIP pursuant to the procedures set forth in footnote 1 of the Note (in which case an Opinion of Counsel with respect to those procedures shall be delivered);
provided further
that no Opinion of Counsel shall be required to be delivered in connection with a request by the Company that the Trustee deliver a notice to Holders under the Indenture where the Trustee receives an Officer’s Certificate with respect to such notice. With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.
Each Officer’s Certificate and Opinion of Counsel provided for, by or on behalf of the Company in this Indenture and delivered to the Trustee with respect to compliance with this Indenture (other than the Officer’s Certificates provided for in Section 4.08) shall include (a) a statement that the person signing such certificate is familiar with the requested action and this Indenture; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statement contained in such certificate is based; (c) a statement that, in the judgment of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed judgment as to whether or not such action is permitted by this Indenture and whether all conditions precedent to such action have been complied with; and (d) a statement as to whether or not, in the judgment of such person, such action is permitted by this Indenture and that all conditions precedent thereto have been complied with.
Notwithstanding anything to the contrary in this Section 17.05, if any provision in this Indenture specifically provides that the Trustee shall or may receive an Opinion of Counsel in connection with any action to be taken by the Trustee or the Company hereunder, the Trustee shall be entitled to such Opinion of Counsel.
Section 17.06
. Legal Holidays.
In any case where any Interest Payment Date, Fundamental Change Repurchase Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day and no interest shall accrue in respect of the delay.
Section 17.07
. No Security Interest Created.
Nothing in this Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.
Section 17.08
. Benefits of Indenture.
Nothing in this Indenture or in the Notes, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Note Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 17.09
. Table of Contents, Headings, Etc.
The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 17.10
. Authenticating Agent.
The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf and subject to its direction in the authentication and delivery of Notes in connection with the original issuance thereof and transfers and exchanges of Notes hereunder, including under Section 2.04, Section 2.05, Section 2.06, Section 2.07, Section 10.04 and Section 15.04 as fully to all intents and purposes as though the authenticating agent had been expressly authorized by this Indenture and those Sections to authenticate and deliver Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the authenticating agent shall be deemed to be authentication and delivery of such Notes “by the Trustee” and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Notes for the Trustee’s certificate of authentication. Such authenticating agent shall at all times be a Person eligible to serve as trustee hereunder pursuant to Section 7.08.
Any corporation or other entity into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation or other entity succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor corporation or other entity is otherwise eligible under this Section 17.10, without the execution or filing of any paper or any further act on the part of the parties hereto or the authenticating agent or such successor corporation or other entity.
Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee may appoint a successor authenticating agent (which may be the Trustee), shall give written notice of such appointment to the Company.
The Company agrees to pay to the authenticating agent from time to time reasonable compensation for its services although the Company may terminate the authenticating agent, if it determines such agent’s fees to be unreasonable.
The provisions of Section 7.02, Section 7.03, Section 7.04, Section 8.03 and this Section 17.10 shall be applicable to any authenticating agent.
If an authenticating agent is appointed pursuant to this Section 17.10, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
__________________________,
as Authenticating Agent, certifies that this is one of the Notes described
in the within-named Indenture.
By: ____________________
Authorized Signatory
Section 17.11
. Execution in Counterparts.
This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 17.12
. Severability.
In the event any provision of this Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.
Section 17.13
. Waiver of Jury Trial.
EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 17.14
. Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.
Section 17.15
. Calculations
. Except as otherwise provided in this Indenture, the Company shall be responsible for making all calculations called for under this Indenture and the Notes. These calculations include, but are not limited to, determinations of the Stock Price, the Last Reported Sale Prices of the Common Stock, the Daily VWAPs, the Daily Conversion Values, the Daily Settlement Amounts, accrued interest payable on the Notes (including, for the avoidance of doubt, any Additional Interest payable under this Indenture), the Conversion Rate and the Conversion Price of the Notes. The Company shall make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on Holders. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification and the Trustee (acting in any capacity under this Indenture) shall have no liability or responsibility for any calculation or any data, quotation, bid or information used in connection with any such calculation. The Trustee will forward the Company’s calculations to any Holder upon the written request of that Holder at the sole cost and expense of the Company.
Section 17.16
.
U.S.A. PATRIOT Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
Section 17.17
.
Tax Withholding
. The Company or the Trustee, as the case may be, shall be entitled to make a deduction or withholding from any payment which it makes under this Indenture for or on account of any present or future taxes, duties or charges if and to the extent so required by any applicable law and any current or future regulations or agreements thereunder or official interpretations thereof or any law implementing an intergovernmental approach thereto or by virtue of the relevant Holder failing to satisfy any certification or other requirements in respect of the Notes, in which event the Company or the Trustee, as the case may be, shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amount so withheld or deducted and shall have no obligation to gross up any payment hereunder or pay any additional amount as a result of such withholding tax.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.
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LIGAND PHARMACEUTICALS INCORPORATED
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By:
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/s/ Charles Berkman
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Name: Charles Berkman
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Title: Senior Vice President, General
Counsel and Secretary
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WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee
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By:
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/s/ Lynn M. Steiner
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Name: Lynn M. Steiner
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Title: Vice President
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EXHIBIT A
[FORM OF FACE OF NOTE]
[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREUNDER IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[INCLUDE FOLLOWING LEGEND IF A RESTRICTED SECURITY]
[THIS SECURITY AND THE COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES FOR THE BENEFIT OF LIGAND PHARMACEUTICALS INCORPORATED (THE “COMPANY”) THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THERETO AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER FOR THE COMPANY TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.]
Ligand Pharmaceuticals Incorporated
0.75% Convertible Senior Note due 2023
No. [__] Initially $[_____]
CUSIP No.
[_______]
Ligand Pharmaceuticals Incorporated, a corporation duly organized and validly existing under the laws of the State of Delaware (the “
Company
,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum as set forth in the “Schedule of Exchanges of Notes” attached hereto, which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed $750,000,000, in aggregate at any time, in accordance with the rules and procedures of the Depositary, on May 15, 2023, and interest thereon as set forth below.
This Note shall bear interest at the rate of 0.75% per year from and including May 22, 2018, or from and including the most recent date to which interest has been paid or provided for to, but excluding, the next scheduled Interest Payment Date until May 15, 2023. Accrued interest on this Note shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of the number of days actually elapsed in a 30-day month. Interest is payable semi-annually in arrears on each May 15 and November 15, commencing on November 15, 2018, to Holders of record at the close of business on the preceding May 1 and November 1 (whether or not such day is a Business Day), respectively. Additional Interest will be payable as set forth in Section 4.06(d), Section 4.06(e) and Section 6.03 of the within-mentioned Indenture, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to any of such Section 4.06(d), Section 4.06(e) or Section 6.03, and any express mention of the payment of Additional Interest in any provision therein shall not be construed as excluding Additional Interest in those provisions thereof where such express mention is not made.
Any Defaulted Amounts shall accrue interest per annum at the rate borne by the Notes, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company, at its election, in accordance with Section 2.03(c) of the Indenture.
The Company shall pay the principal of and interest on this Note, if and so long as such Note is a Global Note, in immediately available funds in lawful money of the United States at the time to the Depositary or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose. The Company has initially designated the Trustee as its Paying Agent and Note Registrar in respect of the Notes and its Corporate Trust Office in the contiguous United States of America, as a place where Notes may be presented for payment or for registration of transfer and exchange.
Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, on the terms and subject to the limitations set forth in the Indenture. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York.
In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.
This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually by the Trustee or a duly authorized authenticating agent under the Indenture.
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
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LIGAND PHARMACEUTICALS INCORPORATED
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By:
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Name:
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Title:
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Dated:
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST, NATIONAL ASSOCIATION
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
By:_______________________________
Authorized Signatory
[FORM OF REVERSE OF NOTE]
Ligand Pharmaceuticals Incorporated
0.75% Convertible Senior Note due 2023
This Note is one of a duly authorized issue of Notes of the Company, designated as its 0.75% Convertible Senior Notes due 2023 (the “
Notes
”), initially limited to the aggregate principal amount of $750,000,000 all issued or to be issued under and pursuant to an Indenture dated as of May 22, 2018 (the “
Indenture
”), between the Company and Wilmington Trust, National Association (the “
Trustee
”), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture. Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Indenture.
In case certain Events of Default, as defined in the Indenture, shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture.
Subject to the terms and conditions of the Indenture, the Company will make all payments and deliveries in respect of the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the Note. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.
The Indenture contains provisions permitting the Company and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein. It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.
Notwithstanding any other provision of the Indenture or any provision of this Note, each Holder shall have the right to institute suit for the enforcement of the right to receive payment or delivery, as the case may be, of (x) the principal (including the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest, if any, on, and (z) the consideration due upon conversion of, this Note, on or after the respective due dates expressed or provided for in this Note or in the Indenture, and the right to institute suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates, shall not be impaired or affected without the consent of each Holder.
The Notes are issuable in registered form without coupons in minimum denominations of $1,000 principal amount and integral multiples of $1,000 in excess thereof. At the office or agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange.
The Notes may not be redeemed prior to maturity. No sinking fund is provided for the Notes.
Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price.
Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, during certain periods and upon the occurrence of certain conditions specified in the Indenture, prior to the close of business on the second Scheduled Trading Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is $1,000 or a multiple thereof, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.
Terms used in this Note and defined in the Indenture are used herein as therein defined.
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM = as tenants in common
UNIF GIFT MIN ACT = Uniform Gifts to Minors Act
CUST = Custodian
TEN ENT = as tenants by the entireties
JT TEN = joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
SCHEDULE A
SCHEDULE OF EXCHANGES OF NOTES
Ligand Pharmaceuticals Incorporated
0.75% Convertible Senior Notes due 2023
The initial principal amount of this Global Note is [_______] DOLLARS ($[______]. The following increases or decreases in this Global Note have been made:
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Date of exchange
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Amount of decrease in principal amount of this Global Note
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Amount of increase in principal amount of this Global Note
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Principal amount of this Global Note following such decrease or increase
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Signature of authorized signatory of Trustee or Custodian
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ATTACHMENT 1
[FORM OF NOTICE OF CONVERSION]
To: Ligand Pharmaceuticals Incorporated
To: Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attn: Ligand Pharmaceuticals Incorporated Account Manager
The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount or a multiple thereof) below designated, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, in accordance with the terms of the Indenture referred to in this Note, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon such conversion, together with any cash for any fractional share, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp or similar issue or transfer taxes, if any in accordance with Section 14.02(d) and Section 14.02(e) of the Indenture. Any amount required to be paid to the undersigned on account of interest accompanies this Note. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.
Dated: _____________________ ________________________________
________________________________
Signature(s)
___________________________
Signature Guarantee
Signature(s) must be guaranteed
by an eligible Guarantor Institution
(banks, stock brokers, savings and
loan associations and credit unions)
with membership in an approved
signature guarantee medallion program
pursuant to Securities and Exchange
Commission Rule 17Ad-15 if shares
of Common Stock are to be issued, or
Notes are to be delivered, other than
to and in the name of the registered holder.
Fill in for registration of shares if
to be issued, and Notes if to
be delivered, other than to and in the
name of the registered holder:
_________________________
(Name)
_________________________
(Street Address)
_________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all): $______,000
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
_________________________
Social Security or Other Taxpayer
Identification Number
ATTACHMENT 2
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]
To: Ligand Pharmaceuticals Incorporated
To: Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attn: Ligand Pharmaceuticals Incorporated Account Manager
The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Ligand Pharmaceuticals Incorporated (the “
Company
”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.02 of the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount or a multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Repurchase Date. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.
In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below:
Dated: _____________________
________________________________
Signature(s)
_________________________
Social Security or Other Taxpayer
Identification Number
Principal amount to be repurchased (if less than all): $______,000
NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
ATTACHMENT 3
[FORM OF ASSIGNMENT AND TRANSFER]
Wilmington Trust, National Association
50 South Sixth Street, Suite 1290
Minneapolis, MN 55402
Attn: Ligand Pharmaceuticals Incorporated Account Manager
For value received ____________________________ hereby sell(s), assign(s) and transfer(s) unto _________________ (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints _____________________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Indenture governing such Note, the undersigned confirms that such Note is being transferred:
□ To Ligand Pharmaceuticals Incorporated or a subsidiary thereof; or
□ Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or
□ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or
□ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended, or any other available exemption from the registration requirements of the Securities Act of 1933, as amended.
Dated: ________________________
_____________________________________
_____________________________________
Signature(s)
_____________________________________
Signature Guarantee
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission
Rule 17Ad-15 if Notes are to be delivered, other
than to and in the name of the registered holder.
NOTICE: The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.
SECOND SUPPLEMENTAL INDENTURE
(this “Second
Supplemental Indenture
”), dated as of May 22, 2018, between Ligand Pharmaceuticals Incorporated, a Delaware corporation (the “
Company
”), and Wilmington Trust, National Association, as trustee under the Indenture referred to below (the “
Trustee
”).
W I T N E S S E T H
WHEREAS, pursuant to Section 9.01 of the Indenture, dated as of August 18, 2014 (as supplemented by the Supplemental Indenture, dated February 20, 2018, the “
Indenture
”), between the Company and the Trustee (the “
Parties
”), and numbered Paragraph 8 of the Notes issued thereunder, the Parties may amend or supplement the Indenture or the Notes without the consent of any Holder of a Note to, among other things, surrender any right or power conferred upon the Company or make any change that does not adversely affect the rights of any Holder;
WHEREAS, Section 10.03 of the Indenture provides the Company with the right to elect to settle conversions of the Notes in a combination of shares of Common Stock and cash or entirely in cash;
WHEREAS, the Company (i) desires to surrender its right to settle conversions of the Notes in a combination of shares of Common Stock and cash and (ii) elects to settle all conversions going forward solely in cash; and
WHEREAS, all things necessary to make this Second Supplemental Indenture a valid Supplemental Indenture and agreement according to its terms have been done.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties mutually covenant and agree for the equal and ratable benefit of the holders of the Notes as follows:
1.
Capitalized Terms
. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
2.
Amendment to the Indenture
. Section 10.03(b) of the Indenture is hereby amended by adding the following subsection:
“(iv) Notwithstanding the foregoing, the Company will be deemed to have made a Cash Election with a Cash Percentage of 100% with respect to all conversions of Notes for which the applicable Conversion Date is on or after May 22, 2018.”
3.
Ratification of Indenture; Supplemental Indenture Part of Indenture; Trustee’s Rights
. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Every reference in the Indenture to the Indenture shall hereby be deemed to mean the Indenture as supplemented by this Second Supplemental Indenture. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Second Supplemental Indenture. The rights, protections and indemnities afforded the Trustee under the Indenture shall apply to any action or inaction taken hereunder or in connection herewith.
4.
Governing Law
. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5.
Counterparts
. The parties may sign any number of copies of this Second Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed counterpart of a signature page to this Second Supplemental Indenture by facsimile, email or other electronic means shall be effective as delivery of a manually executed counterpart of this Second Supplemental Indenture.
6.
Effect of Headings
. The Section headings herein have been inserted for the convenience of reference only, are not to be considered a part of this Second Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
7.
The Trustee
. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Second Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company.
8.
Successors
. All agreements of the Company in this Second Supplemental Indenture shall bind its successors, except as otherwise provided in the Indenture. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors.
9.
Severability
. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed and attested, all as of the date first above written.
LIGAND PHARMACEUTICALS INCORPORATED,
as the Issuer
By:
/s/ Charles Berkman
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Title:
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Senior Vice President, General Counsel and Secretary
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WILMINGTON TRUST, NATIONAL ASSOCIATION
, as Trustee
By:
/s/ Lynn M. Steiner
Exhibit 10.1
EXECUTION VERSION
May 17, 2018
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: +44(20) 77736461
Telephone: +44 (20) 777 36810
c/o Barclays Capital Inc.
as Agent for Barclays Bank PLC
745 Seventh Ave
New York, NY 10019
Telephone: +1 212 412 4000
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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Re:
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Base Convertible Bond Hedge Transaction
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Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Barclays Bank PLC (“
Dealer
”) through its agent Barclays Capital Inc. and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 that may be issued pursuant to the Initial Purchasers’ (as defined in the Purchase Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined
below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount” of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of Dealer, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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The closing date of the initial issuance of the Convertible Securities.
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Option Style:
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“Modified American”, as described under “Procedures for Exercise” below
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Shares:
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The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Options:
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The number of Base Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty.
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Applicable Percentage:
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40%
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Number of Shares:
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As of any date, the product of the Number of Options and the Conversion Rate.
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Conversion Rate:
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As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant to Sections 14.04(g) and 14.03 of the Indenture (the “
Excluded Provisions
”).
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
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Exercise Dates:
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Each Conversion Date.
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Conversion Date:
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Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date).
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Excluded Convertible Securities:
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Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election
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of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
Required Exercise on
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Conversion Dates:
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On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
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Expiration Date:
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The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
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Automatic Exercise:
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As provided above under “Required Exercise on Conversion Dates”.
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Exercise Notice Deadline:
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In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
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Notice of Exercise:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”)). Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
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Notice of Convertible Security
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Settlement Method:
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Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
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Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Dealer.
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Settlement Terms:
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Settlement Date:
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In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
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Delivery Obligation:
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In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that
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Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
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Convertible Security Settlement Method
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For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
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Notice of Delivery Obligation:
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No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
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Other Applicable Provisions:
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To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Restricted Certificated Shares:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
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Share Adjustments:
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Method of Adjustment:
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Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the
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Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event, Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
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Extraordinary Events:
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Merger Events:
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Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
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Consequences of Merger Events:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United
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States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Notice of Merger Consideration:
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Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the details of the adjustment made under the Indenture in respect of such Merger Event.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
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For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
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For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Barclays Bank plc NY
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ABA# 026 00 2574
BIC: BARCUS33
Acct: 50038524
Beneficiary: BARCGB33
Ref: Barclays Bank plc London Equity Derivatives
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: Inapplicable, Dealer is not a Multibranch Party
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attention: Legal Department – Equity Derivatives
Telephone: (+1) 212-412-4000
Facsimile: (+1) 212-412-7519
with a copy to:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attn: Paul Robinson
Telephone: (+1) 212-526-0111
Facsimile: (+1) 917-522-0458
and
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: 44(20) 777 36461
Phone: 44(20) 777 36810
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited
investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the
case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty
shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts
of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Base Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Regulatory Provisions
.
The time of dealing for the Transaction will be confirmed by Dealer upon written request by Counterparty. The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction.
(s)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through the Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through the Agent.
(t)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 ("Protocol") apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "such party's Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into
this Agreement", (iii) references to "Protocol Covered Agreement" shall be deemed to be references to the Agreement (and each "Protocol Covered Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. For the purposes of this section:
1. Dealer is a Portfolio Data Sending Entity and Counterparty is a Portfolio Data Receiving Entity;
2. Dealer and Counterparty may use a Third Party Service Provider, and each of Dealer and Counterparty consents to such use including the communication of the relevant data in relation to Dealer and Counterparty to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
3. The Local Business Days for such purposes in relation to Dealer and Counterparty is New York, New York, USA.
4. The following are the applicable email addresses.
Portfolio Data: Dealer: MarginServicesPortRec@barclays.com
Counterparty: eberkman@ligand.com
Notice of discrepancy: Dealer: PortRecDiscrepancy@barclays.com
Counterparty: eberkman@ligand.com
Dispute Notice: Dealer: EMIRdisputenotices@barclays.com
Counterparty: eberkman@ligand.com
(v)
NFC Representation Protocol
. The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the "NFC Representation Protocol") shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "the relevant Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Covered Master Agreement" shall be deemed to be references to the Agreement (and each "Covered Master Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. Counterparty confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Counterparty shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Bail-In Protocol
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of the ISDA 2016 Bail-In Article 55 BRRD Protocol published by the International Swaps and Derivatives Association, Inc. on 14 July 2016 (the "Bail-In Protocol") shall be deemed to be incorporated into and apply to the Agreement with effect from the date of this Confirmation as if references in those provisions to "Protocol Covered Agreement" as defined in the Bail-in Protocol were references to the Agreement, and on the basis that references to the "Implementation Date" in the Bail-in Protocol shall be deemed to be references to the date of this Confirmation.
(x)
Contractual Recognition of UK Stay in Resolution
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of paragraphs 1 to 4 (inclusive) of the UK (PRA Rule) Jurisdictional Module (the "UK Module") published by the International Swaps and Derivatives Association, Inc. on 3 May 2016, as amended from time to time, shall be deemed to be incorporated into the Agreement as if references in those provisions to "Covered Agreement" were references to the Agreement, and on the basis that: (i) Dealer shall be treated as a "Regulated Entity" and as a "Regulated Entity Counterparty" with respect to Counterparty, (ii) Counterparty shall be treated as a "Module Adhering Party", and (iii) references to the "Implementation Date" in the UK Module shall be deemed to be references to the date of this Confirmation.
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
BARCLAYS BANK PLC
By:
/s/ Steven R. Halperin
Name: Steven R. Halperin
Title: Managing Director
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 48,620,000.
Exhibit 10.2
EXECUTION VERSION
May 17, 2018
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: +44(20) 77736461
Telephone: +44 (20) 777 36810
c/o Barclays Capital Inc.
as Agent for Barclays Bank PLC
745 Seventh Ave
New York, NY 10019
Telephone: +1 212 412 4000
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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Re:
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Base Issuer Warrant Transaction
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Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Barclays Bank PLC (“
Dealer
”) through its agent Barclays Capital Inc. and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. Barclays is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Barclays is not a member of the Securities Investor Protection Corporation.
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of Dealer, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were
available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
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Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
:
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations,
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limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
Adjustments:
In respect of any Component
:
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary
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or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to
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explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Barclays Bank plc NY
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ABA# 026 00 2574
BIC: BARCUS33
Acct: 50038524
Beneficiary: BARCGB33
Ref: Barclays Bank plc London Equity Derivatives
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: Inapplicable, Dealer is not a Multibranch Party
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attention: Legal Department – Equity Derivatives
Telephone: (+1) 212-412-4000
Facsimile: (+1) 212-412-7519
with a copy to:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attn: Paul Robinson
Telephone: (+1) 212-526-0111
Facsimile: (+1) 917-522-0458
and
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: 44(20) 777 36461
Phone: 44(20) 777 36810
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled
Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other
transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
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(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered
Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not
become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer
or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to
the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the
holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Initial Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer
to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Issuer acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Issuer is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Issuer acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Regulatory Provisions
.
The time of dealing for the Transaction will be confirmed by Dealer upon written request by Issuer. The Agent will furnish to Issuer upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction.
(s)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Issuer, such delivery shall be effected through the Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Issuer shall be transmitted exclusively through the Agent.
(t)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 ("Protocol") apply to the Agreement as if the parties had adhered to the Protocol without amendment. In
respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "such party's Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Protocol Covered Agreement" shall be deemed to be references to the Agreement (and each "Protocol Covered Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. For the purposes of this section:
1. Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
2. Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
3. The Local Business Days for such purposes in relation to Dealer and Issuer is New York, New York, USA.
4. The following are the applicable email addresses.
Portfolio Data: Dealer: MarginServicesPortRec@barclays.com
Issuer: eberkman@ligand.com
Notice of discrepancy: Dealer: PortRecDiscrepancy@barclays.com
Issuer: eberkman@ligand.com
Dispute Notice: Dealer: EMIRdisputenotices@barclays.com
Issuer: eberkman@ligand.com
(v)
NFC Representation Protocol
. The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the "NFC Representation Protocol") shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "the relevant Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Covered Master Agreement" shall be deemed to be references to the Agreement (and each "Covered Master Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. Issuer confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Bail-In Protocol
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of the ISDA 2016 Bail-In Article 55 BRRD Protocol published by the International Swaps and Derivatives Association, Inc. on 14 July 2016 (the "Bail-In Protocol") shall be deemed to be incorporated into and apply to the Agreement with effect from the date of this Confirmation as if references in those provisions to "Protocol Covered Agreement" as defined in the Bail-in Protocol were references to the Agreement, and on the basis that references to the "Implementation Date" in the Bail-in Protocol shall be deemed to be references to the date of this Confirmation.
(x)
Contractual Recognition of UK Stay in Resolution
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of paragraphs 1 to 4 (inclusive) of the UK (PRA Rule) Jurisdictional Module (the "UK Module") published by the International Swaps and Derivatives Association, Inc. on 3 May 2016, as amended from time to time, shall be deemed to be incorporated into the Agreement as if references in those provisions to "Covered Agreement" were references to the Agreement, and on the basis that: (i) Dealer shall be treated as a "Regulated Entity" and as a "Regulated Entity Counterparty" with respect to Issuer, (ii) Issuer shall be treated as a "Module Adhering Party", and (iii) references to the "Implementation Date" in the UK Module shall be deemed to be references to the date of this Confirmation.
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
BARCLAYS BANK PLC
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By:
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/s/ Steven R. Halperin
|
Name: Steven R. Halperin
Title: Managing Director
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
|
|
|
|
|
|
|
Component Number
|
Number of Warrants
|
Expiration Date
|
|
1
|
8,719
|
Tue 15 Aug 2023
|
|
2
|
8,719
|
Wed 16 Aug 2023
|
|
3
|
8,719
|
Thu 17 Aug 2023
|
|
4
|
8,719
|
Fri 18 Aug 2023
|
|
5
|
8,719
|
Mon 21 Aug 2023
|
|
6
|
8,719
|
Tue 22 Aug 2023
|
|
7
|
8,719
|
Wed 23 Aug 2023
|
|
8
|
8,719
|
Thu 24 Aug 2023
|
|
9
|
8,719
|
Fri 25 Aug 2023
|
|
10
|
8,719
|
Mon 28 Aug 2023
|
|
11
|
8,719
|
Tue 29 Aug 2023
|
|
12
|
8,719
|
Wed 30 Aug 2023
|
|
13
|
8,719
|
Thu 31 Aug 2023
|
|
14
|
8,719
|
Fri 1 Sep 2023
|
|
15
|
8,719
|
Tue 5 Sep 2023
|
|
16
|
8,719
|
Wed 6 Sep 2023
|
|
17
|
8,719
|
Thu 7 Sep 2023
|
|
18
|
8,719
|
Fri 8 Sep 2023
|
|
19
|
8,719
|
Mon 11 Sep 2023
|
|
20
|
8,719
|
Tue 12 Sep 2023
|
|
21
|
8,719
|
Wed 13 Sep 2023
|
|
22
|
8,719
|
Thu 14 Sep 2023
|
|
23
|
8,719
|
Fri 15 Sep 2023
|
|
24
|
8,719
|
Mon 18 Sep 2023
|
|
25
|
8,719
|
Tue 19 Sep 2023
|
|
26
|
8,719
|
Wed 20 Sep 2023
|
|
27
|
8,719
|
Thu 21 Sep 2023
|
|
28
|
8,719
|
Fri 22 Sep 2023
|
|
29
|
8,719
|
Mon 25 Sep 2023
|
|
30
|
8,719
|
Tue 26 Sep 2023
|
|
31
|
8,719
|
Wed 27 Sep 2023
|
|
32
|
8,719
|
Thu 28 Sep 2023
|
|
33
|
8,719
|
Fri 29 Sep 2023
|
|
34
|
8,719
|
Mon 2 Oct 2023
|
|
35
|
8,719
|
Tue 3 Oct 2023
|
|
36
|
8,719
|
Wed 4 Oct 2023
|
|
37
|
8,719
|
Thu 5 Oct 2023
|
|
38
|
8,719
|
Fri 6 Oct 2023
|
|
39
|
8,719
|
Mon 9 Oct 2023
|
|
40
|
8,719
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
8,719
|
Wed 11 Oct 2023
|
|
42
|
8,719
|
Thu 12 Oct 2023
|
|
43
|
8,719
|
Fri 13 Oct 2023
|
|
44
|
8,719
|
Mon 16 Oct 2023
|
|
45
|
8,719
|
Tue 17 Oct 2023
|
|
46
|
8,719
|
Wed 18 Oct 2023
|
|
47
|
8,719
|
Thu 19 Oct 2023
|
|
48
|
8,719
|
Fri 20 Oct 2023
|
|
49
|
8,719
|
Mon 23 Oct 2023
|
|
50
|
8,719
|
Tue 24 Oct 2023
|
|
51
|
8,719
|
Wed 25 Oct 2023
|
|
52
|
8,719
|
Thu 26 Oct 2023
|
|
53
|
8,719
|
Fri 27 Oct 2023
|
|
54
|
8,719
|
Mon 30 Oct 2023
|
|
55
|
8,719
|
Tue 31 Oct 2023
|
|
56
|
8,719
|
Wed 1 Nov 2023
|
|
57
|
8,720
|
Thu 2 Nov 2023
|
|
58
|
8,720
|
Fri 3 Nov 2023
|
|
59
|
8,720
|
Mon 6 Nov 2023
|
|
60
|
8,720
|
Tue 7 Nov 2023
|
|
61
|
8,720
|
Wed 8 Nov 2023
|
|
62
|
8,720
|
Thu 9 Nov 2023
|
|
63
|
8,720
|
Fri 10 Nov 2023
|
|
64
|
8,720
|
Mon 13 Nov 2023
|
|
65
|
8,720
|
Tue 14 Nov 2023
|
|
66
|
8,720
|
Wed 15 Nov 2023
|
|
67
|
8,720
|
Thu 16 Nov 2023
|
|
68
|
8,720
|
Fri 17 Nov 2023
|
|
69
|
8,720
|
Mon 20 Nov 2023
|
|
70
|
8,720
|
Tue 21 Nov 2023
|
|
71
|
8,720
|
Wed 22 Nov 2023
|
|
72
|
8,720
|
Mon 27 Nov 2023
|
|
73
|
8,720
|
Tue 28 Nov 2023
|
|
74
|
8,720
|
Wed 29 Nov 2023
|
|
75
|
8,720
|
Thu 30 Nov 2023
|
|
76
|
8,720
|
Fri 1 Dec 2023
|
|
77
|
8,720
|
Mon 4 Dec 2023
|
|
78
|
8,720
|
Tue 5 Dec 2023
|
|
79
|
8,720
|
Wed 6 Dec 2023
|
|
80
|
8,720
|
Thu 7 Dec 2023
|
|
81
|
8,720
|
Fri 8 Dec 2023
|
|
82
|
8,720
|
Mon 11 Dec 2023
|
|
83
|
8,720
|
Tue 12 Dec 2023
|
|
84
|
8,720
|
Wed 13 Dec 2023
|
|
85
|
8,720
|
Thu 14 Dec 2023
|
|
86
|
8,720
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
8,720
|
Mon 18 Dec 2023
|
|
88
|
8,720
|
Tue 19 Dec 2023
|
|
89
|
8,720
|
Wed 20 Dec 2023
|
|
90
|
8,720
|
Thu 21 Dec 2023
|
|
91
|
8,720
|
Fri 22 Dec 2023
|
|
92
|
8,720
|
Tue 26 Dec 2023
|
|
93
|
8,720
|
Wed 27 Dec 2023
|
|
94
|
8,720
|
Thu 28 Dec 2023
|
|
95
|
8,720
|
Fri 29 Dec 2023
|
|
96
|
8,720
|
Tue 2 Jan 2024
|
|
97
|
8,720
|
Wed 3 Jan 2024
|
|
98
|
8,720
|
Thu 4 Jan 2024
|
|
99
|
8,720
|
Fri 5 Jan 2024
|
|
100
|
8,720
|
Mon 8 Jan 2024
|
|
101
|
8,720
|
Tue 9 Jan 2024
|
|
102
|
8,720
|
Wed 10 Jan 2024
|
|
103
|
8,720
|
Thu 11 Jan 2024
|
|
104
|
8,720
|
Fri 12 Jan 2024
|
|
105
|
8,720
|
Tue 16 Jan 2024
|
|
106
|
8,720
|
Wed 17 Jan 2024
|
|
107
|
8,720
|
Thu 18 Jan 2024
|
|
108
|
8,720
|
Fri 19 Jan 2024
|
|
109
|
8,720
|
Mon 22 Jan 2024
|
|
110
|
8,720
|
Tue 23 Jan 2024
|
|
111
|
8,720
|
Wed 24 Jan 2024
|
|
112
|
8,720
|
Thu 25 Jan 2024
|
|
113
|
8,720
|
Fri 26 Jan 2024
|
|
114
|
8,720
|
Mon 29 Jan 2024
|
|
115
|
8,720
|
Tue 30 Jan 2024
|
|
116
|
8,720
|
Wed 31 Jan 2024
|
|
117
|
8,720
|
Thu 1 Feb 2024
|
|
118
|
8,720
|
Fri 2 Feb 2024
|
|
119
|
8,720
|
Mon 5 Feb 2024
|
|
120
|
8,720
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
1,569,516
|
Exhibit 10.3
EXECUTION VERSION
May 17, 2018
Deutsche Bank
Deutsche Bank AG, London Branch
Winchester house
1 Great Winchester St,
London EC2N 2DB
Telephone: 44 20 7545 8000
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Telephone: 212-250-2500
|
|
|
|
To:
|
Ligand Pharmaceuticals Incorporated
|
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
|
|
|
|
Re:
|
Base Convertible Bond Hedge Transaction
|
(Transaction Reference Number: 786785)
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Deutsche Bank AG, London Branch (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THE TRANSACTION BETWEEN DEALER AND COUNTERPARTY SHALL BE TRANSMITTED EXCLUSIVELY THROUGH AGENT. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 that may be issued pursuant to the Initial Purchasers’ (as defined in the
Purchase Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount” of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of Deutsche Bank AG, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
|
|
|
|
Effective Date:
|
The closing date of the initial issuance of the Convertible Securities.
|
|
|
|
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
|
|
|
|
|
Shares:
|
The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
|
|
|
|
|
Number of Options:
|
The number of Base Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty.
|
|
|
|
|
Applicable Percentage:
|
20%
|
|
|
|
|
Number of Shares:
|
As of any date, the product of the Number of Options and the Conversion Rate.
|
|
|
|
|
Conversion Rate:
|
As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant to Sections 14.04(g) and 14.03 of the Indenture (the “
Excluded Provisions
”).
|
|
|
|
|
Premium:
|
As provided in
Annex A
to this Confirmation.
|
|
|
|
|
Premium Payment Date:
|
The Effective Date
|
|
|
|
|
Exchange:
|
NASDAQ Global Market
|
|
|
|
|
Related Exchange:
|
All Exchanges
|
Procedures for Exercise:
|
|
|
|
Exercise Dates:
|
Each Conversion Date.
|
|
|
|
|
Conversion Date:
|
Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date).
|
|
|
|
|
Excluded Convertible Securities:
|
Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if
|
applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
Required Exercise on
|
|
|
|
Conversion Dates:
|
On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
|
|
|
|
|
Expiration Date:
|
The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
|
|
|
|
|
Automatic Exercise:
|
As provided above under “Required Exercise on Conversion Dates”.
|
|
|
|
|
Exercise Notice Deadline:
|
In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
|
|
|
|
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”)). Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion
|
of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
Notice of Convertible Security
|
|
|
|
Settlement Method:
|
Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
|
Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
|
|
|
|
Giving Notice:
|
To be provided by Dealer.
|
Settlement Terms:
|
|
|
|
Settlement Date:
|
In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
|
|
|
|
|
Delivery Obligation:
|
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party
|
(determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
|
|
|
|
Convertible Security Settlement Method
|
For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
|
|
|
|
|
Notice of Delivery Obligation:
|
No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
|
|
|
|
|
Other Applicable Provisions:
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To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Restricted Certificated Shares:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered
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to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
Share Adjustments:
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Method of Adjustment:
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Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event, Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
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In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has
publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
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Extraordinary Events:
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Merger Events:
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Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
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Consequences of Merger Events:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an
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adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Notice of Merger Consideration:
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Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the details of the adjustment made under the Indenture in respect of such Merger Event.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing
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of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
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For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
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For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Bank of New York
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SWIFT: IRVTUS3N
ABA#: 021-000-018
Acct Name: Deutsche Bank Securities Inc.
Acct No.: 8900327634
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: London
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
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To:
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Deutsche Bank AG, London Branch
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c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Faiz Khan
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Telephone:
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(212) 250-2717
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(212) 250-0668
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Email:
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Andrew.Yaeger@db.com
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Faiz.Khan@db.com
equity-linked.notifications@list.db.com
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by
means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition
of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with
respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled
Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
|
If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
|
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
|
The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer
and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to
any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a
number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may
designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Base Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) [
Reserved
].
(r)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(s)
Transaction Reporting - Consent for Disclosure of Information
.
Notwithstanding anything to the contrary herein or in the Agreement or any non-disclosure, confidentiality or other agreements entered into between the parties from time to time, each party hereby consents to the Disclosure of information (the “
Reporting Consent
”):
(i) to the extent required by, or necessary in order to comply with, any applicable law, rule or regulation which mandates Disclosure of transaction and similar information or to the extent required by, or necessary in order to comply with, any order, request or directive regarding Disclosure of transaction and similar information issued by any relevant authority or body or agency (“
Reporting Requirements
”); or
(ii) to and between the other party’s head office, branches or affiliates; to any person, agent, third party or entity who provides services to such other party or its head office, branches or affiliates; to a Market; or to any trade data repository or any systems or services operated by any trade repository or Market, in each case, in connection with such Reporting Requirements.
“
Disclosure
” means disclosure, reporting, retention, or any action similar or analogous to any of the aforementioned.
“
Market
” means any exchange, regulated market, clearing house, central clearing counterparty or multilateral trading facility.
Disclosures made pursuant to this Reporting Consent may include, without limitation, Disclosure of information relating to disputes over transactions between the parties, a party’s identity, and certain transaction and pricing data and may result in such information becoming available to the public or recipients in a jurisdiction which may have a different level of protection for personal data from that of the relevant party’s home jurisdiction.
This Reporting Consent shall be deemed to constitute an agreement between the parties with respect to Disclosure in general and shall survive the termination of this Confirmation. No amendment to or termination of this Reporting Consent shall be effective unless such amendment or termination is made in writing between the parties and specifically refers to this Reporting Consent.
(t)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through Agent.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
.
The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“
Protocol
”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to this Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement. For the purposes of this section:
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(i)
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Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
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(ii)
Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
(iii)
The Local Business Days for such purposes in relation to Dealer are New York, London, Frankfurt, Tokyo and Singapore and in relation to Company is New York;
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(iv)
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The provisions in this paragraph shall survive the termination of this Transaction.
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(v)
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The following are the applicable email addresses.
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Portfolio Data:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
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Notice of discrepancy:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
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Dispute Notice:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
(v)
NFC Representation Protocol
.
a.
The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to this Agreement (and
each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement.
b.
Issuer confirms that it enters into this Agreement as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Resolution Stay Protocol
. Subject to the below, the provisions set out in the Attachment to the ISDA 2015 Universal Resolution Stay Protocol as published by the International Swaps and Derivatives Association on 4 November 2015 (“
Protocol
”), and any additional Country Annex that has been published from time to time and to which Issuer has adhered are,
mutadis mutandis
, incorporated by reference, into this Agreement as though such provisions and definitions were set out in full herein, with any such conforming changes as are necessary to deal with what would otherwise be inappropriate or incorrect cross-references. References in the Protocol:
a.
the “Adhering Party” shall be deemed to be references to the parties to this Agreement;
b.
the “Adherence Letter” shall be deemed to be references to this Agreement;
c.
the “Implementation Date” shall be deemed to be references to the date of this Agreement; and
d.
this Agreement shall be deemed a “Covered Agreement.”
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
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Exhibit 10.3
EXECUTION VERSION
Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter or telex substantially similar to this facsimile, which letter or telex sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms. Deutsche will make the time of execution of the Transaction available upon request.
Deutsche is authorised for the conduct of certain activities by the Prudential Regulation Authority. It is subject to limited regulation by the Financial Conduct Authority and by the Prudential Regulation Authority.
DEUTSCHE BANK AG, LONDON BRANCH
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with the Transaction
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
Confirmed and Acknowledged as of the date first above written:
LIGAND PHARMACEUTICALS INCORPORATED
By:
/s/ Charles Berkman
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 24,310,000.
Exhibit 10.4
EXECUTION VERSION
May 17, 2018
Deutsche Bank
Deutsche Bank AG, London Branch
Winchester house
1 Great Winchester St,
London EC2N 2DB
Telephone: 44 20 7545 8000
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Telephone: 212-250-2500
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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From:
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Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
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Re:
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Base Issuer Warrant Transaction
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(Transaction Reference Number: 786786)
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Deutsche Bank AG, London Branch (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THE TRANSACTION BETWEEN DEALER AND ISSUER SHALL BE TRANSMITTED EXCLUSIVELY THROUGH AGENT. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of Deutsche Bank AG, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any
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adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of
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the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
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Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Adjustments:
In respect of any Component
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
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Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the
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effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing
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of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
Dealer Payment Instructions: Bank of New York
ABA#: 021-000-018
Account Name: Deutsche Bank Securities Inc.
Account No.: 8900327634
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: London
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
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To:
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Deutsche Bank AG, London Branch
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c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Faiz Khan
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Telephone:
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(212) 250-2717
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(212) 250-0668
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Email:
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Andrew.Yaeger@db.com
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Faiz.Khan@db.com
equity-linked.notifications@list.db.com
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or
any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement,
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as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
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(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private
placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in
its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether
or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging
Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Initial Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) [
Reserved
].
(r)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(s)
Transaction Reporting - Consent for Disclosure of Information
.
Notwithstanding anything to the contrary herein or in the Agreement or any non-disclosure, confidentiality or other agreements entered into between the parties from time to time, each party hereby consents to the Disclosure of information (the “
Reporting Consent
”):
(i)
to the extent required by, or necessary in order to comply with, any applicable law, rule or regulation which mandates Disclosure of transaction and similar information or to the extent required by,
or necessary in order to comply with, any order, request or directive regarding Disclosure of transaction and similar information issued by any relevant authority or body or agency (“
Reporting Requirements
”); or
(ii) to and between the other party’s head office, branches or affiliates; to any person, agent, third party or entity who provides services to such other party or its head office, branches or affiliates; to a Market; or to any trade data repository or any systems or services operated by any trade repository or Market, in each case, in connection with such Reporting Requirements.
“
Disclosure
” means disclosure, reporting, retention, or any action similar or analogous to any of the aforementioned.
“
Market
” means any exchange, regulated market, clearing house, central clearing counterparty or multilateral trading facility.
Disclosures made pursuant to this Reporting Consent may include, without limitation, Disclosure of information relating to disputes over transactions between the parties, a party’s identity, and certain transaction and pricing data and may result in such information becoming available to the public or recipients in a jurisdiction which may have a different level of protection for personal data from that of the relevant party’s home jurisdiction.
This Reporting Consent shall be deemed to constitute an agreement between the parties with respect to Disclosure in general and shall survive the termination of this Confirmation. No amendment to or termination of this Reporting Consent shall be effective unless such amendment or termination is made in writing between the parties and specifically refers to this Reporting Consent.
(t)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Issuer, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Issuer shall be transmitted exclusively through Agent.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
.
The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“
Protocol
”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to this Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement. For the purposes of this section:
|
|
|
|
(i)
|
Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
|
(ii)
Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
(iii)
The Local Business Days for such purposes in relation to Dealer are New York, London, Frankfurt, Tokyo and Singapore and in relation to Company is New York;
|
|
|
|
(iv)
|
The provisions in this paragraph shall survive the termination of this Transaction.
|
|
|
|
|
(v)
|
The following are the applicable email addresses.
|
|
|
|
|
Portfolio Data:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
|
|
|
|
Notice of discrepancy:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
|
|
|
|
Dispute Notice:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
(v)
NFC Representation Protocol
.
a.
The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to this Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement.
b.
Issuer confirms that it enters into this Agreement as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Resolution Stay Protocol
. Subject to the below, the provisions set out in the Attachment to the ISDA 2015 Universal Resolution Stay Protocol as published by the International Swaps and Derivatives Association on 4 November 2015 (“
Protocol
”), and any additional Country Annex that has been published from time to time and to which Issuer has adhered are,
mutadis mutandis
, incorporated by reference, into this Agreement as though such provisions and definitions were set out in full herein, with any such conforming changes as are necessary to deal with what would otherwise be inappropriate or incorrect cross-references. References in the Protocol:
a.
the “Adhering Party” shall be deemed to be references to the parties to this Agreement;
b.
the “Adherence Letter” shall be deemed to be references to this Agreement;
c.
the “Implementation Date” shall be deemed to be references to the date of this Agreement; and
d.
this Agreement shall be deemed a “Covered Agreement.”
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Exhibit 10.4
EXECUTION VERSION
Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter or telex substantially similar to this facsimile, which letter or telex sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms. Deutsche will make the time of execution of the Transaction available upon request.
Deutsche is authorised for the conduct of certain activities by the Prudential Regulation Authority. It is subject to limited regulation by the Financial Conduct Authority and by the Prudential Regulation Authority.
DEUTSCHE BANK AG, LONDON BRANCH
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with the Transaction
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
Confirmed and Acknowledged as of the date first above written:
LIGAND PHARMACEUTICALS INCORPORATED
By:
/s/ Charles Berkman
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
|
|
|
|
|
|
|
Component Number
|
Number of Warrants
|
Expiration Date
|
|
1
|
4,359
|
Tue 15 Aug 2023
|
|
2
|
4,359
|
Wed 16 Aug 2023
|
|
3
|
4,359
|
Thu 17 Aug 2023
|
|
4
|
4,359
|
Fri 18 Aug 2023
|
|
5
|
4,359
|
Mon 21 Aug 2023
|
|
6
|
4,359
|
Tue 22 Aug 2023
|
|
7
|
4,359
|
Wed 23 Aug 2023
|
|
8
|
4,359
|
Thu 24 Aug 2023
|
|
9
|
4,359
|
Fri 25 Aug 2023
|
|
10
|
4,359
|
Mon 28 Aug 2023
|
|
11
|
4,359
|
Tue 29 Aug 2023
|
|
12
|
4,359
|
Wed 30 Aug 2023
|
|
13
|
4,359
|
Thu 31 Aug 2023
|
|
14
|
4,359
|
Fri 1 Sep 2023
|
|
15
|
4,359
|
Tue 5 Sep 2023
|
|
16
|
4,359
|
Wed 6 Sep 2023
|
|
17
|
4,359
|
Thu 7 Sep 2023
|
|
18
|
4,359
|
Fri 8 Sep 2023
|
|
19
|
4,359
|
Mon 11 Sep 2023
|
|
20
|
4,359
|
Tue 12 Sep 2023
|
|
21
|
4,359
|
Wed 13 Sep 2023
|
|
22
|
4,359
|
Thu 14 Sep 2023
|
|
23
|
4,359
|
Fri 15 Sep 2023
|
|
24
|
4,359
|
Mon 18 Sep 2023
|
|
25
|
4,359
|
Tue 19 Sep 2023
|
|
26
|
4,359
|
Wed 20 Sep 2023
|
|
27
|
4,359
|
Thu 21 Sep 2023
|
|
28
|
4,359
|
Fri 22 Sep 2023
|
|
29
|
4,360
|
Mon 25 Sep 2023
|
|
30
|
4,360
|
Tue 26 Sep 2023
|
|
31
|
4,360
|
Wed 27 Sep 2023
|
|
32
|
4,360
|
Thu 28 Sep 2023
|
|
33
|
4,360
|
Fri 29 Sep 2023
|
|
34
|
4,360
|
Mon 2 Oct 2023
|
|
35
|
4,360
|
Tue 3 Oct 2023
|
|
36
|
4,360
|
Wed 4 Oct 2023
|
|
37
|
4,360
|
Thu 5 Oct 2023
|
|
38
|
4,360
|
Fri 6 Oct 2023
|
|
39
|
4,360
|
Mon 9 Oct 2023
|
|
40
|
4,360
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
4,360
|
Wed 11 Oct 2023
|
|
42
|
4,360
|
Thu 12 Oct 2023
|
|
43
|
4,360
|
Fri 13 Oct 2023
|
|
44
|
4,360
|
Mon 16 Oct 2023
|
|
45
|
4,360
|
Tue 17 Oct 2023
|
|
46
|
4,360
|
Wed 18 Oct 2023
|
|
47
|
4,360
|
Thu 19 Oct 2023
|
|
48
|
4,360
|
Fri 20 Oct 2023
|
|
49
|
4,360
|
Mon 23 Oct 2023
|
|
50
|
4,360
|
Tue 24 Oct 2023
|
|
51
|
4,360
|
Wed 25 Oct 2023
|
|
52
|
4,360
|
Thu 26 Oct 2023
|
|
53
|
4,360
|
Fri 27 Oct 2023
|
|
54
|
4,360
|
Mon 30 Oct 2023
|
|
55
|
4,360
|
Tue 31 Oct 2023
|
|
56
|
4,360
|
Wed 1 Nov 2023
|
|
57
|
4,360
|
Thu 2 Nov 2023
|
|
58
|
4,360
|
Fri 3 Nov 2023
|
|
59
|
4,360
|
Mon 6 Nov 2023
|
|
60
|
4,360
|
Tue 7 Nov 2023
|
|
61
|
4,360
|
Wed 8 Nov 2023
|
|
62
|
4,360
|
Thu 9 Nov 2023
|
|
63
|
4,360
|
Fri 10 Nov 2023
|
|
64
|
4,360
|
Mon 13 Nov 2023
|
|
65
|
4,360
|
Tue 14 Nov 2023
|
|
66
|
4,360
|
Wed 15 Nov 2023
|
|
67
|
4,360
|
Thu 16 Nov 2023
|
|
68
|
4,360
|
Fri 17 Nov 2023
|
|
69
|
4,360
|
Mon 20 Nov 2023
|
|
70
|
4,360
|
Tue 21 Nov 2023
|
|
71
|
4,360
|
Wed 22 Nov 2023
|
|
72
|
4,360
|
Mon 27 Nov 2023
|
|
73
|
4,360
|
Tue 28 Nov 2023
|
|
74
|
4,360
|
Wed 29 Nov 2023
|
|
75
|
4,360
|
Thu 30 Nov 2023
|
|
76
|
4,360
|
Fri 1 Dec 2023
|
|
77
|
4,360
|
Mon 4 Dec 2023
|
|
78
|
4,360
|
Tue 5 Dec 2023
|
|
79
|
4,360
|
Wed 6 Dec 2023
|
|
80
|
4,360
|
Thu 7 Dec 2023
|
|
81
|
4,360
|
Fri 8 Dec 2023
|
|
82
|
4,360
|
Mon 11 Dec 2023
|
|
83
|
4,360
|
Tue 12 Dec 2023
|
|
84
|
4,360
|
Wed 13 Dec 2023
|
|
85
|
4,360
|
Thu 14 Dec 2023
|
|
86
|
4,360
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
4,360
|
Mon 18 Dec 2023
|
|
88
|
4,360
|
Tue 19 Dec 2023
|
|
89
|
4,360
|
Wed 20 Dec 2023
|
|
90
|
4,360
|
Thu 21 Dec 2023
|
|
91
|
4,360
|
Fri 22 Dec 2023
|
|
92
|
4,360
|
Tue 26 Dec 2023
|
|
93
|
4,360
|
Wed 27 Dec 2023
|
|
94
|
4,360
|
Thu 28 Dec 2023
|
|
95
|
4,360
|
Fri 29 Dec 2023
|
|
96
|
4,360
|
Tue 2 Jan 2024
|
|
97
|
4,360
|
Wed 3 Jan 2024
|
|
98
|
4,360
|
Thu 4 Jan 2024
|
|
99
|
4,360
|
Fri 5 Jan 2024
|
|
100
|
4,360
|
Mon 8 Jan 2024
|
|
101
|
4,360
|
Tue 9 Jan 2024
|
|
102
|
4,360
|
Wed 10 Jan 2024
|
|
103
|
4,360
|
Thu 11 Jan 2024
|
|
104
|
4,360
|
Fri 12 Jan 2024
|
|
105
|
4,360
|
Tue 16 Jan 2024
|
|
106
|
4,360
|
Wed 17 Jan 2024
|
|
107
|
4,360
|
Thu 18 Jan 2024
|
|
108
|
4,360
|
Fri 19 Jan 2024
|
|
109
|
4,360
|
Mon 22 Jan 2024
|
|
110
|
4,360
|
Tue 23 Jan 2024
|
|
111
|
4,360
|
Wed 24 Jan 2024
|
|
112
|
4,360
|
Thu 25 Jan 2024
|
|
113
|
4,360
|
Fri 26 Jan 2024
|
|
114
|
4,360
|
Mon 29 Jan 2024
|
|
115
|
4,360
|
Tue 30 Jan 2024
|
|
116
|
4,360
|
Wed 31 Jan 2024
|
|
117
|
4,360
|
Thu 1 Feb 2024
|
|
118
|
4,360
|
Fri 2 Feb 2024
|
|
119
|
4,360
|
Mon 5 Feb 2024
|
|
120
|
4,360
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
784,758
|
Exhibit 10.5
EXECUTION VERSION
GOLDMAN SACHS & CO. LLC | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL: 212-902-1000
May 17, 2018
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To:
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Ligand Pharmaceuticals Incorporated
|
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: (858) 550-7835
Facsimile No.: (858) 550-5658
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|
|
|
Re:
|
Base Convertible Bond Hedge Transaction
|
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Goldman Sachs & Co. LLC (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 that may be issued pursuant to the Initial Purchasers’ (as defined in the Purchase Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(n) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount”
of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of The Goldman Sachs Group, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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The closing date of the initial issuance of the Convertible Securities.
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Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
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Shares:
|
The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Options:
|
The number of Base Convertible Securities in denominations of USD 1,000 principal amount issued by Counterparty.
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Applicable Percentage:
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40%
|
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|
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|
Number of Shares:
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As of any date, the product of the Number of Options and the Conversion Rate.
|
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Conversion Rate:
|
As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant to Sections 14.05 and 14.03 of the Indenture (the “
Excluded Provisions
”).
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Premium:
|
As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
|
The Effective Date
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Exchange:
|
NASDAQ Global Market
|
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Related Exchange:
|
All Exchanges
|
Procedures for Exercise:
|
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Exercise Dates:
|
Each Conversion Date.
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Conversion Date:
|
Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date).
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Excluded Convertible Securities:
|
Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
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Required Exercise on
|
|
|
|
Conversion Dates:
|
On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
|
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Expiration Date:
|
The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
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Automatic Exercise:
|
As provided above under “Required Exercise on Conversion Dates”.
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Exercise Notice Deadline:
|
In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
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Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”)). Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
|
Notice of Convertible Security
|
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|
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Settlement Method:
|
Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a
|
Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
|
|
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|
Giving Notice:
|
To be provided by Dealer.
|
Settlement Terms:
|
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|
|
Settlement Date:
|
In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
|
|
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|
Delivery Obligation:
|
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion
|
obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
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Convertible Security Settlement Method
|
For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement
|
Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
|
|
|
|
Notice of Delivery Obligation:
|
No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
|
|
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Other Applicable Provisions:
|
To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
|
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Restricted Certificated Shares:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
|
Share Adjustments:
|
|
|
|
Method of Adjustment:
|
Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event,
|
Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential
Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
|
|
|
|
Discretionary Adjustments:
|
Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
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Extraordinary Events:
|
|
|
|
Merger Events:
|
Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
|
|
|
|
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Consequences of Merger Events:
|
Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
|
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Notice of Merger Consideration:
|
Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the details of the adjustment made under the Indenture in respect of such Merger Event.
|
Nationalization, Insolvency
|
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or Delisting:
|
Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
|
|
|
|
(a)
|
Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
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For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
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For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Chase Manhattan Bank New York
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For A/C Goldman Sachs & Co. LLC
A/C #930-1-011483
ABA: 021-000021
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: 200 West Street, New York, New York 10282-2198
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
[To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272]
(b) Address for notices or communications to Dealer:
To: Goldman Sachs & Co. LLC
200 West Street
New York, NY 10282-2198
Attn: Joshua Murray
Equity Capital Markets
Telephone: 212-902-3291
Facsimile: 646-835-3576
Email: joshua.murray@gs.com
And email notification to the following address:
Eq-derivs-notifications@am.ibd.gs.com
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section
7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and
continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Base Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Conduct Rules
. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.
(s) [
Reserved
].
(t)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(u)
Risk Disclosure Statement
. Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement provided by Dealer and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”
(v) [
Reserved
].
(w) [
Reserved
].
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
GOLDMAN SACHS & CO. LLC
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By:
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/s/ Gianfranco Bartellino
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Name: Gianfranco Bartellino
Title: Vice President
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 48,620,000.
Exhibit 10.6
EXECUTION VERSION
GOLDMAN SACHS & CO. LLC | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL: 212-902-1000
May 17, 2018
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: (858) 550-7835
Facsimile No.: (858) 550-5658
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Re:
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Base Issuer Warrant Transaction
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Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Goldman Sachs & Co. LLC (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of The Goldman Sachs Group, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially
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reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the
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Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
:
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Adjustments:
In respect of any Component
:
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result,
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then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Chase Manhattan Bank New York
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For A/C Goldman Sachs & Co. LLC
A/C #930-1-011483
ABA: 021-000021
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: 200 West Street, New York, New York 10282-2198
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
[To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272]
(b) Address for notices or communications to Dealer:
To: Goldman Sachs & Co. LLC
200 West Street
New York, NY 10282-2198
Attn: Joshua Murray
Equity Capital Markets
Telephone: 212-902-3291
Facsimile: 646-835-3576
Email: joshua.murray@gs.com
And email notification to the following address:
Eq-derivs-notifications@am.ibd.gs.com
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman
Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized
and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the
avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
|
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Share Termination Alternative:
|
If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
|
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Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
|
The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
|
In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
|
Applicable
|
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Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
|
(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered
Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this
Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved
or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt,
adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s
obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Initial Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by 9:00 A.M. (New York City time) on the second (third, if the pricing occurs after 4:30 P.M. (New York City time) on any given day) business day after the Trade Date (or such later date as agreed upon by the parties, which in no event shall be later than ten business days after such second or third business day) (such second or third business day or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party
from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Issuer acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such
party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Issuer is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Issuer acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Conduct Rules
. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.
(s) [
Reserved
].
(t)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(u)
Risk Disclosure Statement
. Issuer represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement provided by Dealer and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”
(v) [
Reserved
].
(w) [
Reserved
].
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
GOLDMAN SACHS & CO. LLC
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By:
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/s/ Gianfranco Bartellino
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Name: Gianfranco Bartellino
Title: Vice President
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
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Component Number
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Number of Warrants
|
Expiration Date
|
|
1
|
8,719
|
Tue 15 Aug 2023
|
|
2
|
8,719
|
Wed 16 Aug 2023
|
|
3
|
8,719
|
Thu 17 Aug 2023
|
|
4
|
8,719
|
Fri 18 Aug 2023
|
|
5
|
8,719
|
Mon 21 Aug 2023
|
|
6
|
8,719
|
Tue 22 Aug 2023
|
|
7
|
8,719
|
Wed 23 Aug 2023
|
|
8
|
8,719
|
Thu 24 Aug 2023
|
|
9
|
8,719
|
Fri 25 Aug 2023
|
|
10
|
8,719
|
Mon 28 Aug 2023
|
|
11
|
8,719
|
Tue 29 Aug 2023
|
|
12
|
8,719
|
Wed 30 Aug 2023
|
|
13
|
8,719
|
Thu 31 Aug 2023
|
|
14
|
8,719
|
Fri 1 Sep 2023
|
|
15
|
8,719
|
Tue 5 Sep 2023
|
|
16
|
8,719
|
Wed 6 Sep 2023
|
|
17
|
8,719
|
Thu 7 Sep 2023
|
|
18
|
8,719
|
Fri 8 Sep 2023
|
|
19
|
8,719
|
Mon 11 Sep 2023
|
|
20
|
8,719
|
Tue 12 Sep 2023
|
|
21
|
8,719
|
Wed 13 Sep 2023
|
|
22
|
8,719
|
Thu 14 Sep 2023
|
|
23
|
8,719
|
Fri 15 Sep 2023
|
|
24
|
8,719
|
Mon 18 Sep 2023
|
|
25
|
8,719
|
Tue 19 Sep 2023
|
|
26
|
8,719
|
Wed 20 Sep 2023
|
|
27
|
8,719
|
Thu 21 Sep 2023
|
|
28
|
8,719
|
Fri 22 Sep 2023
|
|
29
|
8,719
|
Mon 25 Sep 2023
|
|
30
|
8,719
|
Tue 26 Sep 2023
|
|
31
|
8,719
|
Wed 27 Sep 2023
|
|
32
|
8,719
|
Thu 28 Sep 2023
|
|
33
|
8,719
|
Fri 29 Sep 2023
|
|
34
|
8,719
|
Mon 2 Oct 2023
|
|
35
|
8,719
|
Tue 3 Oct 2023
|
|
36
|
8,719
|
Wed 4 Oct 2023
|
|
37
|
8,719
|
Thu 5 Oct 2023
|
|
38
|
8,719
|
Fri 6 Oct 2023
|
|
39
|
8,719
|
Mon 9 Oct 2023
|
|
40
|
8,719
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
8,719
|
Wed 11 Oct 2023
|
|
42
|
8,719
|
Thu 12 Oct 2023
|
|
43
|
8,719
|
Fri 13 Oct 2023
|
|
44
|
8,719
|
Mon 16 Oct 2023
|
|
45
|
8,719
|
Tue 17 Oct 2023
|
|
46
|
8,719
|
Wed 18 Oct 2023
|
|
47
|
8,719
|
Thu 19 Oct 2023
|
|
48
|
8,719
|
Fri 20 Oct 2023
|
|
49
|
8,719
|
Mon 23 Oct 2023
|
|
50
|
8,719
|
Tue 24 Oct 2023
|
|
51
|
8,719
|
Wed 25 Oct 2023
|
|
52
|
8,719
|
Thu 26 Oct 2023
|
|
53
|
8,719
|
Fri 27 Oct 2023
|
|
54
|
8,719
|
Mon 30 Oct 2023
|
|
55
|
8,719
|
Tue 31 Oct 2023
|
|
56
|
8,719
|
Wed 1 Nov 2023
|
|
57
|
8,720
|
Thu 2 Nov 2023
|
|
58
|
8,720
|
Fri 3 Nov 2023
|
|
59
|
8,720
|
Mon 6 Nov 2023
|
|
60
|
8,720
|
Tue 7 Nov 2023
|
|
61
|
8,720
|
Wed 8 Nov 2023
|
|
62
|
8,720
|
Thu 9 Nov 2023
|
|
63
|
8,720
|
Fri 10 Nov 2023
|
|
64
|
8,720
|
Mon 13 Nov 2023
|
|
65
|
8,720
|
Tue 14 Nov 2023
|
|
66
|
8,720
|
Wed 15 Nov 2023
|
|
67
|
8,720
|
Thu 16 Nov 2023
|
|
68
|
8,720
|
Fri 17 Nov 2023
|
|
69
|
8,720
|
Mon 20 Nov 2023
|
|
70
|
8,720
|
Tue 21 Nov 2023
|
|
71
|
8,720
|
Wed 22 Nov 2023
|
|
72
|
8,720
|
Mon 27 Nov 2023
|
|
73
|
8,720
|
Tue 28 Nov 2023
|
|
74
|
8,720
|
Wed 29 Nov 2023
|
|
75
|
8,720
|
Thu 30 Nov 2023
|
|
76
|
8,720
|
Fri 1 Dec 2023
|
|
77
|
8,720
|
Mon 4 Dec 2023
|
|
78
|
8,720
|
Tue 5 Dec 2023
|
|
79
|
8,720
|
Wed 6 Dec 2023
|
|
80
|
8,720
|
Thu 7 Dec 2023
|
|
81
|
8,720
|
Fri 8 Dec 2023
|
|
82
|
8,720
|
Mon 11 Dec 2023
|
|
83
|
8,720
|
Tue 12 Dec 2023
|
|
84
|
8,720
|
Wed 13 Dec 2023
|
|
85
|
8,720
|
Thu 14 Dec 2023
|
|
86
|
8,720
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
8,720
|
Mon 18 Dec 2023
|
|
88
|
8,720
|
Tue 19 Dec 2023
|
|
89
|
8,720
|
Wed 20 Dec 2023
|
|
90
|
8,720
|
Thu 21 Dec 2023
|
|
91
|
8,720
|
Fri 22 Dec 2023
|
|
92
|
8,720
|
Tue 26 Dec 2023
|
|
93
|
8,720
|
Wed 27 Dec 2023
|
|
94
|
8,720
|
Thu 28 Dec 2023
|
|
95
|
8,720
|
Fri 29 Dec 2023
|
|
96
|
8,720
|
Tue 2 Jan 2024
|
|
97
|
8,720
|
Wed 3 Jan 2024
|
|
98
|
8,720
|
Thu 4 Jan 2024
|
|
99
|
8,720
|
Fri 5 Jan 2024
|
|
100
|
8,720
|
Mon 8 Jan 2024
|
|
101
|
8,720
|
Tue 9 Jan 2024
|
|
102
|
8,720
|
Wed 10 Jan 2024
|
|
103
|
8,720
|
Thu 11 Jan 2024
|
|
104
|
8,720
|
Fri 12 Jan 2024
|
|
105
|
8,720
|
Tue 16 Jan 2024
|
|
106
|
8,720
|
Wed 17 Jan 2024
|
|
107
|
8,720
|
Thu 18 Jan 2024
|
|
108
|
8,720
|
Fri 19 Jan 2024
|
|
109
|
8,720
|
Mon 22 Jan 2024
|
|
110
|
8,720
|
Tue 23 Jan 2024
|
|
111
|
8,720
|
Wed 24 Jan 2024
|
|
112
|
8,720
|
Thu 25 Jan 2024
|
|
113
|
8,720
|
Fri 26 Jan 2024
|
|
114
|
8,720
|
Mon 29 Jan 2024
|
|
115
|
8,720
|
Tue 30 Jan 2024
|
|
116
|
8,720
|
Wed 31 Jan 2024
|
|
117
|
8,720
|
Thu 1 Feb 2024
|
|
118
|
8,720
|
Fri 2 Feb 2024
|
|
119
|
8,720
|
Mon 5 Feb 2024
|
|
120
|
8,720
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
1,569,516
|
Exhibit 10.7
EXECUTION VERSION
May 18, 2018
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: +44(20) 77736461
Telephone: +44 (20) 777 36810
c/o Barclays Capital Inc.
as Agent for Barclays Bank PLC
745 Seventh Ave
New York, NY 10019
Telephone: +1 212 412 4000
|
|
|
|
To:
|
Ligand Pharmaceuticals Incorporated
|
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
|
|
|
|
Re:
|
Additional Convertible Bond Hedge Transaction
|
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Barclays Bank PLC (“
Dealer
”) through its agent Barclays Capital Inc. and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 issued pursuant to the Initial Purchasers’ (as defined in the Purchase Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent,
conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount” of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of Dealer, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
|
|
|
|
Effective Date:
|
The closing date of the Convertible Securities issued pursuant to the Initial Purchasers’ option under the Purchase Agreement exercised on the date hereof.
|
|
|
|
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
|
|
|
|
|
Shares:
|
The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
|
|
|
|
|
Number of Options:
|
The number of Optional Convertible Securities in denominations of USD 1,000 principal amount purchased by the Initial Purchasers upon exercise of their option to purchase additional Convertible Securities pursuant to Section 2(b) of the Purchase Agreement.
|
|
|
|
|
Applicable Percentage:
|
40%
|
|
|
|
|
Number of Shares:
|
As of any date, the product of the Number of Options and the Conversion Rate.
|
|
|
|
|
Conversion Rate:
|
As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the
|
“Conversion Rate” pursuant to Sections 14.04(g) and 14.03 of the Indenture (the “
Excluded Provisions
”).
|
|
|
|
Premium:
|
As provided in
Annex A
to this Confirmation.
|
|
|
|
|
Premium Payment Date:
|
The Effective Date
|
|
|
|
|
Exchange:
|
NASDAQ Global Market
|
|
|
|
|
Related Exchange:
|
All Exchanges
|
Procedures for Exercise:
|
|
|
|
Exercise Dates:
|
Each Conversion Date.
|
|
|
|
|
Conversion Date:
|
Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture but are not “Relevant Convertible Securities” under, and as defined in, the confirmation between the parties hereto regarding the Base Convertible Bond Hedge Transaction dated May 17, 2018 (the “
Base Convertible Bond Hedge Transaction Confirmation
”), excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date). For the purposes of determining whether any Convertible Securities will be Relevant Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted pursuant to the Indenture shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated.
|
|
|
|
|
Excluded Convertible Securities:
|
Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture and that are not “Excluded Convertible Securities” under, and as defined in, the Base Convertible Bond Hedge Transaction Confirmation, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. For purposes of determining whether any Convertible Securities will be Excluded Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted prior to the Final Conversion Period Start Date (as defined below) shall be allocated first to the Base
|
Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities;
provided further
that any “Excluded Conversion Notice” delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be an Excluded Conversion Notice pursuant to this Confirmation, and the terms of such Excluded Conversion Notice shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
Required Exercise on
|
|
|
|
Conversion Dates:
|
On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
|
|
|
|
|
Expiration Date:
|
The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
|
|
|
|
|
Automatic Exercise:
|
As provided above under “Required Exercise on Conversion Dates”.
|
|
|
|
|
Exercise Notice Deadline:
|
In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
|
|
|
|
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty
|
notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”)) ;
provided
that any “Notice of Exercise” delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be a Notice of Exercise pursuant to this Confirmation, and the terms of such Notice of Exercise shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
Notice of Convertible Security
|
|
|
|
Settlement Method:
|
Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed
|
to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
|
|
|
|
Giving Notice:
|
To be provided by Dealer.
|
Settlement Terms:
|
|
|
|
Settlement Date:
|
In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
|
|
|
|
|
Delivery Obligation:
|
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty
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is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
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Convertible Security Settlement Method
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For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
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Notice of Delivery Obligation:
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No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number
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of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
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Other Applicable Provisions:
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To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Restricted Certificated Shares:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
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Share Adjustments:
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Method of Adjustment:
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Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event, Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
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In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing
paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any
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adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
Extraordinary Events:
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Merger Events:
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Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
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Consequences of Merger Events:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Notice of Merger Consideration:
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Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the
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details of the adjustment made under the Indenture in respect of such Merger Event.
Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
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For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
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For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Barclays Bank plc NY
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ABA# 026 00 2574
BIC: BARCUS33
Acct: 50038524
Beneficiary: BARCGB33
Ref: Barclays Bank plc London Equity Derivatives
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: Inapplicable, Dealer is not a Multibranch Party
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attention: Legal Department – Equity Derivatives
Telephone: (+1) 212-412-4000
Facsimile: (+1) 212-412-7519
with a copy to:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attn: Paul Robinson
Telephone: (+1) 212-526-0111
Facsimile: (+1) 917-522-0458
and
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: 44(20) 777 36461
Phone: 44(20) 777 36810
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder and under the Base Convertible Bond Hedge Transaction in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number
of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice (it being understood that, for purposes of determining whether any Options will be Repayment Options hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are subject to a Repayment Notice shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated),
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon
such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For
the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer
Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under
this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Optional Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement)(or such later date as agreed upon by the parties) (such ”Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section
1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Regulatory Provisions
.
The time of dealing for the Transaction will be confirmed by Dealer upon written request by Counterparty. The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction.
(s)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through the Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through the Agent.
(t)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 ("Protocol") apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "such party's Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Protocol Covered Agreement" shall be deemed to be references to the Agreement (and each "Protocol Covered Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. For the purposes of this section:
1. Dealer is a Portfolio Data Sending Entity and Counterparty is a Portfolio Data Receiving Entity;
2. Dealer and Counterparty may use a Third Party Service Provider, and each of Dealer and Counterparty consents to such use including the communication of the relevant data in relation to Dealer and Counterparty to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
3. The Local Business Days for such purposes in relation to Dealer and Counterparty is New York, New York, USA.
4. The following are the applicable email addresses.
Portfolio Data: Dealer: MarginServicesPortRec@barclays.com
Counterparty: CBerkman@ligand.com
Notice of discrepancy: Dealer: PortRecDiscrepancy@barclays.com
Counterparty: CBerkman@ligand.com
Dispute Notice: Dealer: EMIRdisputenotices@barclays.com
Counterparty: CBerkman@ligand.com
(v)
NFC Representation Protocol
. The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the "NFC Representation Protocol") shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "the relevant Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Covered Master Agreement" shall be deemed to be references to the Agreement (and each "Covered Master Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. Counterparty confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Counterparty shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Bail-In Protocol
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of the ISDA 2016 Bail-In Article 55 BRRD Protocol published by the International Swaps and Derivatives Association, Inc. on 14 July 2016 (the "Bail-In Protocol") shall be deemed to be incorporated into and apply to the Agreement with effect from the date of this Confirmation as if references in those provisions to "Protocol Covered Agreement" as defined in the Bail-in Protocol were references to the Agreement, and on the basis that references to the "Implementation Date" in the Bail-in Protocol shall be deemed to be references to the date of this Confirmation.
(x)
Contractual Recognition of UK Stay in Resolution
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of paragraphs 1 to 4 (inclusive) of the UK (PRA Rule) Jurisdictional Module (the "UK Module") published by the International Swaps and Derivatives Association, Inc. on 3 May 2016, as amended from time to time, shall be deemed to be incorporated into the Agreement as if references in those provisions to "Covered Agreement" were references to the Agreement, and on the basis that: (i) Dealer shall be treated as a "Regulated Entity" and as a "Regulated Entity Counterparty" with respect to Counterparty, (ii) Counterparty shall be treated as a "Module Adhering Party", and (iii) references to the "Implementation Date" in the UK Module shall be deemed to be references to the date of this Confirmation.
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
BARCLAYS BANK PLC
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By:
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/s/ Steven R. Halperin
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Name: Steven R. Halperin
Title: Managing Director
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkamn
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 7,480,000
Exhibit 10.8
EXECUTION VERSION
May 18, 2018
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: +44(20) 77736461
Telephone: +44 (20) 777 36810
c/o Barclays Capital Inc.
as Agent for Barclays Bank PLC
745 Seventh Ave
New York, NY 10019
Telephone: +1 212 412 4000
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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Re:
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Additional Issuer Warrant Transaction
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Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Barclays Bank PLC (“
Dealer
”) through its agent Barclays Capital Inc. and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. Barclays is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Barclays is not a member of the Securities Investor Protection Corporation.
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of Dealer, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event
of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
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Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
:
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Adjustments:
In respect of any Component
:
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger
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Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization
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of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Barclays Bank plc NY
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ABA# 026 00 2574
BIC: BARCUS33
Acct: 50038524
Beneficiary: BARCGB33
Ref: Barclays Bank plc London Equity Derivatives
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: Inapplicable, Dealer is not a Multibranch Party
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attention: Legal Department – Equity Derivatives
Telephone: (+1) 212-412-4000
Facsimile: (+1) 212-412-7519
with a copy to:
Barclays Capital Inc.
745 Seventh Ave.
New York, NY 10019
Attn: Paul Robinson
Telephone: (+1) 212-526-0111
Facsimile: (+1) 917-522-0458
and
Barclays Bank PLC
5 The North Colonnade
Canary Wharf, London E14 4BB
Facsimile: 44(20) 777 36461
Phone: 44(20) 777 36810
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any
untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end
of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of
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cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
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(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters”
to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s
Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common
stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Option Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement) (or such later date as agreed upon by the parties) (such “Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Issuer acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Issuer is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Issuer acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Regulatory Provisions
.
The time of dealing for the Transaction will be confirmed by Dealer upon written request by Issuer. The Agent will furnish to Issuer upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction.
(s)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Issuer, such delivery shall be effected through the Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Issuer shall be transmitted exclusively through the Agent.
(t)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market
activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 ("Protocol") apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "such party's Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Protocol Covered Agreement" shall be deemed to be references to the Agreement (and each "Protocol Covered Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. For the purposes of this section:
1. Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
2. Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
3. The Local Business Days for such purposes in relation to Dealer and Issuer is New York, New York, USA.
4. The following are the applicable email addresses.
Portfolio Data: Dealer: MarginServicesPortRec@barclays.com
Issuer: CBerkman@ligand.com
Notice of discrepancy: Dealer: PortRecDiscrepancy@barclays.com
Issuer: CBerkman@ligand.com
Dispute Notice: Dealer: EMIRdisputenotices@barclays.com
Issuer: CBerkman@ligand.com
(v)
NFC Representation Protocol
. The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the "NFC Representation Protocol") shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of "Adherence Letter" shall be deemed to be deleted and references to "Adherence Letter" shall be deemed to be to this section (and references to "the relevant Adherence Letter" and "its Adherence Letter" shall be read accordingly), (ii) references to "adheres to the Protocol" shall be deemed to be "enters into this Agreement", (iii) references to "Covered Master Agreement" shall be deemed to be references to the Agreement (and each "Covered Master Agreement" shall be read accordingly), and (iv) references to "Implementation Date" shall be deemed to be references to the date of this Confirmation. Issuer confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Bail-In Protocol
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of the ISDA 2016 Bail-In Article 55 BRRD Protocol published by the International Swaps and Derivatives Association, Inc. on 14 July 2016 (the "Bail-In Protocol") shall be deemed to be incorporated into and apply to the Agreement with effect from the date of this Confirmation as if references in those provisions to "Protocol Covered Agreement" as defined in the Bail-in Protocol were references to the Agreement, and on the basis that references to the "Implementation Date" in the Bail-in Protocol shall be deemed to be references to the date of this Confirmation.
(x)
Contractual Recognition of UK Stay in Resolution
. Notwithstanding anything contained in the Agreement, the parties agree that the provisions of paragraphs 1 to 4 (inclusive) of the UK (PRA Rule) Jurisdictional Module (the "UK Module") published by the International Swaps and Derivatives Association, Inc. on 3 May 2016, as amended from time to time, shall be deemed to be incorporated into the Agreement as if references in those provisions to "Covered Agreement" were references to the Agreement, and on the basis that: (i) Dealer shall be treated as a "Regulated Entity" and as a "Regulated Entity Counterparty" with respect to Issuer, (ii) Issuer shall be treated as a "Module Adhering Party", and (iii) references to the "Implementation Date" in the UK Module shall be deemed to be references to the date of this Confirmation.
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
BARCLAYS BANK PLC
|
|
|
|
By:
|
/s/ Steven R. Halpern
|
Name: Steven R. Halpern
Title: Managing Director
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkam
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
|
|
|
|
|
|
|
Component Number
|
Number of Warrants
|
Expiration Date
|
|
1
|
1,341
|
Tue 15 Aug 2023
|
|
2
|
1,341
|
Wed 16 Aug 2023
|
|
3
|
1,341
|
Thu 17 Aug 2023
|
|
4
|
1,341
|
Fri 18 Aug 2023
|
|
5
|
1,341
|
Mon 21 Aug 2023
|
|
6
|
1,341
|
Tue 22 Aug 2023
|
|
7
|
1,341
|
Wed 23 Aug 2023
|
|
8
|
1,341
|
Thu 24 Aug 2023
|
|
9
|
1,341
|
Fri 25 Aug 2023
|
|
10
|
1,341
|
Mon 28 Aug 2023
|
|
11
|
1,341
|
Tue 29 Aug 2023
|
|
12
|
1,341
|
Wed 30 Aug 2023
|
|
13
|
1,341
|
Thu 31 Aug 2023
|
|
14
|
1,341
|
Fri 1 Sep 2023
|
|
15
|
1,341
|
Tue 5 Sep 2023
|
|
16
|
1,341
|
Wed 6 Sep 2023
|
|
17
|
1,341
|
Thu 7 Sep 2023
|
|
18
|
1,341
|
Fri 8 Sep 2023
|
|
19
|
1,341
|
Mon 11 Sep 2023
|
|
20
|
1,341
|
Tue 12 Sep 2023
|
|
21
|
1,341
|
Wed 13 Sep 2023
|
|
22
|
1,341
|
Thu 14 Sep 2023
|
|
23
|
1,341
|
Fri 15 Sep 2023
|
|
24
|
1,341
|
Mon 18 Sep 2023
|
|
25
|
1,341
|
Tue 19 Sep 2023
|
|
26
|
1,341
|
Wed 20 Sep 2023
|
|
27
|
1,341
|
Thu 21 Sep 2023
|
|
28
|
1,341
|
Fri 22 Sep 2023
|
|
29
|
1,341
|
Mon 25 Sep 2023
|
|
30
|
1,341
|
Tue 26 Sep 2023
|
|
31
|
1,341
|
Wed 27 Sep 2023
|
|
32
|
1,341
|
Thu 28 Sep 2023
|
|
33
|
1,341
|
Fri 29 Sep 2023
|
|
34
|
1,341
|
Mon 2 Oct 2023
|
|
35
|
1,341
|
Tue 3 Oct 2023
|
|
36
|
1,341
|
Wed 4 Oct 2023
|
|
37
|
1,341
|
Thu 5 Oct 2023
|
|
38
|
1,341
|
Fri 6 Oct 2023
|
|
39
|
1,341
|
Mon 9 Oct 2023
|
|
40
|
1,341
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
1,341
|
Wed 11 Oct 2023
|
|
42
|
1,341
|
Thu 12 Oct 2023
|
|
43
|
1,341
|
Fri 13 Oct 2023
|
|
44
|
1,341
|
Mon 16 Oct 2023
|
|
45
|
1,341
|
Tue 17 Oct 2023
|
|
46
|
1,341
|
Wed 18 Oct 2023
|
|
47
|
1,341
|
Thu 19 Oct 2023
|
|
48
|
1,341
|
Fri 20 Oct 2023
|
|
49
|
1,341
|
Mon 23 Oct 2023
|
|
50
|
1,341
|
Tue 24 Oct 2023
|
|
51
|
1,341
|
Wed 25 Oct 2023
|
|
52
|
1,341
|
Thu 26 Oct 2023
|
|
53
|
1,341
|
Fri 27 Oct 2023
|
|
54
|
1,341
|
Mon 30 Oct 2023
|
|
55
|
1,341
|
Tue 31 Oct 2023
|
|
56
|
1,341
|
Wed 1 Nov 2023
|
|
57
|
1,341
|
Thu 2 Nov 2023
|
|
58
|
1,341
|
Fri 3 Nov 2023
|
|
59
|
1,341
|
Mon 6 Nov 2023
|
|
60
|
1,341
|
Tue 7 Nov 2023
|
|
61
|
1,341
|
Wed 8 Nov 2023
|
|
62
|
1,341
|
Thu 9 Nov 2023
|
|
63
|
1,341
|
Fri 10 Nov 2023
|
|
64
|
1,341
|
Mon 13 Nov 2023
|
|
65
|
1,342
|
Tue 14 Nov 2023
|
|
66
|
1,342
|
Wed 15 Nov 2023
|
|
67
|
1,342
|
Thu 16 Nov 2023
|
|
68
|
1,342
|
Fri 17 Nov 2023
|
|
69
|
1,342
|
Mon 20 Nov 2023
|
|
70
|
1,342
|
Tue 21 Nov 2023
|
|
71
|
1,342
|
Wed 22 Nov 2023
|
|
72
|
1,342
|
Mon 27 Nov 2023
|
|
73
|
1,342
|
Tue 28 Nov 2023
|
|
74
|
1,342
|
Wed 29 Nov 2023
|
|
75
|
1,342
|
Thu 30 Nov 2023
|
|
76
|
1,342
|
Fri 1 Dec 2023
|
|
77
|
1,342
|
Mon 4 Dec 2023
|
|
78
|
1,342
|
Tue 5 Dec 2023
|
|
79
|
1,342
|
Wed 6 Dec 2023
|
|
80
|
1,342
|
Thu 7 Dec 2023
|
|
81
|
1,342
|
Fri 8 Dec 2023
|
|
82
|
1,342
|
Mon 11 Dec 2023
|
|
83
|
1,342
|
Tue 12 Dec 2023
|
|
84
|
1,342
|
Wed 13 Dec 2023
|
|
85
|
1,342
|
Thu 14 Dec 2023
|
|
86
|
1,342
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
1,342
|
Mon 18 Dec 2023
|
|
88
|
1,342
|
Tue 19 Dec 2023
|
|
89
|
1,342
|
Wed 20 Dec 2023
|
|
90
|
1,342
|
Thu 21 Dec 2023
|
|
91
|
1,342
|
Fri 22 Dec 2023
|
|
92
|
1,342
|
Tue 26 Dec 2023
|
|
93
|
1,342
|
Wed 27 Dec 2023
|
|
94
|
1,342
|
Thu 28 Dec 2023
|
|
95
|
1,342
|
Fri 29 Dec 2023
|
|
96
|
1,342
|
Tue 2 Jan 2024
|
|
97
|
1,342
|
Wed 3 Jan 2024
|
|
98
|
1,342
|
Thu 4 Jan 2024
|
|
99
|
1,342
|
Fri 5 Jan 2024
|
|
100
|
1,342
|
Mon 8 Jan 2024
|
|
101
|
1,342
|
Tue 9 Jan 2024
|
|
102
|
1,342
|
Wed 10 Jan 2024
|
|
103
|
1,342
|
Thu 11 Jan 2024
|
|
104
|
1,342
|
Fri 12 Jan 2024
|
|
105
|
1,342
|
Tue 16 Jan 2024
|
|
106
|
1,342
|
Wed 17 Jan 2024
|
|
107
|
1,342
|
Thu 18 Jan 2024
|
|
108
|
1,342
|
Fri 19 Jan 2024
|
|
109
|
1,342
|
Mon 22 Jan 2024
|
|
110
|
1,342
|
Tue 23 Jan 2024
|
|
111
|
1,342
|
Wed 24 Jan 2024
|
|
112
|
1,342
|
Thu 25 Jan 2024
|
|
113
|
1,342
|
Fri 26 Jan 2024
|
|
114
|
1,342
|
Mon 29 Jan 2024
|
|
115
|
1,342
|
Tue 30 Jan 2024
|
|
116
|
1,342
|
Wed 31 Jan 2024
|
|
117
|
1,342
|
Thu 1 Feb 2024
|
|
118
|
1,342
|
Fri 2 Feb 2024
|
|
119
|
1,342
|
Mon 5 Feb 2024
|
|
120
|
1,342
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
241,464
|
Exhibit 10.9
EXECUTION VERSION
May 18, 2018
Deutsche Bank
Deutsche Bank AG, London Branch
Winchester house
1 Great Winchester St,
London EC2N 2DB
Telephone: 44 20 7545 8000
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Telephone: 212-250-2500
|
|
|
|
To:
|
Ligand Pharmaceuticals Incorporated
|
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
|
|
|
|
Re:
|
Additional Convertible Bond Hedge Transaction
|
(Transaction Reference Number: 786946)
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Deutsche Bank AG, London Branch (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THE TRANSACTION BETWEEN DEALER AND COUNTERPARTY SHALL BE TRANSMITTED EXCLUSIVELY THROUGH AGENT. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 issued pursuant to the Initial Purchasers’ (as defined in the Purchase
Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount” of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of Deutsche Bank AG, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
|
|
|
|
Effective Date:
|
The closing date of the Convertible Securities issued pursuant to the Initial Purchasers’ option under the Purchase Agreement exercised on the date hereof.
|
|
|
|
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
|
|
|
|
|
Shares:
|
The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
|
|
|
|
|
Number of Options:
|
The number of Optional Convertible Securities in denominations of USD 1,000 principal amount purchased by the Initial Purchasers upon exercise of their option to purchase additional Convertible Securities pursuant to Section 2(b) of the Purchase Agreement.
|
|
|
|
|
Applicable Percentage:
|
20%
|
|
|
|
|
Number of Shares:
|
As of any date, the product of the Number of Options and the Conversion Rate.
|
|
|
|
|
Conversion Rate:
|
As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant to Sections 14.04(g) and 14.03 of the Indenture (the “
Excluded Provisions
”).
|
|
|
|
|
Premium:
|
As provided in
Annex A
to this Confirmation.
|
|
|
|
|
Premium Payment Date:
|
The Effective Date
|
|
|
|
|
Exchange:
|
NASDAQ Global Market
|
|
|
|
|
Related Exchange:
|
All Exchanges
|
Procedures for Exercise:
|
|
|
|
Exercise Dates:
|
Each Conversion Date.
|
|
|
|
|
Conversion Date:
|
Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture but are not “Relevant Convertible Securities” under, and as defined in, the confirmation between the parties hereto regarding the Base Convertible Bond Hedge Transaction dated May 17, 2018 (the “
Base Convertible Bond Hedge Transaction Confirmation
”), excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date). For the purposes of determining whether any Convertible Securities will be Relevant Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted pursuant to the Indenture shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated.
|
|
|
|
|
Excluded Convertible Securities:
|
Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that
|
are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture and that are not “Excluded Convertible Securities” under, and as defined in, the Base Convertible Bond Hedge Transaction Confirmation, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. For purposes of determining whether any Convertible Securities will be Excluded Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted prior to the Final Conversion Period Start Date (as defined below) shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities;
provided further
that any “Excluded Conversion Notice” delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be an Excluded Conversion Notice pursuant to this Confirmation, and the terms of such Excluded Conversion Notice shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
Required Exercise on
|
|
|
|
Conversion Dates:
|
On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
|
|
|
|
|
Expiration Date:
|
The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
|
|
|
|
|
Automatic Exercise:
|
As provided above under “Required Exercise on Conversion Dates”.
|
|
|
|
|
Exercise Notice Deadline:
|
In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
|
|
|
|
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”));
provided
that any “Notice of Exercise delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be a Notice of Exercise pursuant to this Confirmation, and the terms of such Notice of Exercise shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
|
Notice of Convertible Security
|
|
|
|
Settlement Method:
|
Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a
|
Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
|
|
|
|
Giving Notice:
|
To be provided by Dealer.
|
Settlement Terms:
|
|
|
|
Settlement Date:
|
In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
|
|
|
|
|
Delivery Obligation:
|
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion
|
obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
|
|
|
|
Convertible Security Settlement Method
|
For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement
|
Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
|
|
|
|
Notice of Delivery Obligation:
|
No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
|
|
|
|
|
Other Applicable Provisions:
|
To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
|
|
|
|
|
Restricted Certificated Shares:
|
Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
|
Share Adjustments:
|
|
|
|
Method of Adjustment:
|
Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event,
|
Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential
Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
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Extraordinary Events:
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Merger Events:
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Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
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Consequences of Merger Events:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Notice of Merger Consideration:
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Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the details of the adjustment made under the Indenture in respect of such Merger Event.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
|
For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
|
For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
|
Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Bank: Bank of New York
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SWIFT: IRVTUS3N
ABA#: 021-000-018
Acct Name: Deutsche Bank Securities Inc.
Acct No.: 8900327634
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: London
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
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To:
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Deutsche Bank AG, London Branch
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c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Faiz Khan
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Telephone:
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(212) 250-2717
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(212) 250-0668
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Email:
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Andrew.Yaeger@db.com
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Faiz.Khan@db.com
equity-linked.notifications@list.db.com
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of
Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder and under the Base Convertible Bond Hedge Transaction in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such
opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any
successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice (it being understood that, for purposes of determining whether any Options will be Repayment Options hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are subject to a Repayment Notice shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated),
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
|
If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
|
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Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
|
The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
|
In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
|
Applicable
|
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|
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Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and
continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Optional Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement)(or such later date as agreed upon by the parties) (such ”Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) [
Reserved
].
(r)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(s)
Transaction Reporting - Consent for Disclosure of Information
.
Notwithstanding anything to the contrary herein or in the Agreement or any non-disclosure, confidentiality or other agreements entered into between the parties from time to time, each party hereby consents to the Disclosure of information (the “
Reporting Consent
”):
(i) to the extent required by, or necessary in order to comply with, any applicable law, rule or regulation which mandates Disclosure of transaction and similar information or to the extent required by, or necessary in order to comply with, any order, request or directive regarding Disclosure of transaction and similar information issued by any relevant authority or body or agency (“
Reporting Requirements
”); or
(ii) to and between the other party’s head office, branches or affiliates; to any person, agent, third party or entity who provides services to such other party or its head office, branches or affiliates; to a Market; or to any trade data repository or any systems or services operated by any trade repository or Market, in each case, in connection with such Reporting Requirements.
“
Disclosure
” means disclosure, reporting, retention, or any action similar or analogous to any of the aforementioned.
“
Market
” means any exchange, regulated market, clearing house, central clearing counterparty or multilateral trading facility.
Disclosures made pursuant to this Reporting Consent may include, without limitation, Disclosure of information relating to disputes over transactions between the parties, a party’s identity, and certain transaction and pricing data and may result in such information becoming available to the public or recipients in a jurisdiction which may have a different level of protection for personal data from that of the relevant party’s home jurisdiction.
This Reporting Consent shall be deemed to constitute an agreement between the parties with respect to Disclosure in general and shall survive the termination of this Confirmation. No amendment to or termination of this Reporting Consent shall be effective unless such amendment or termination is made in writing between the parties and specifically refers to this Reporting Consent.
(t)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Counterparty, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Counterparty shall be transmitted exclusively through Agent.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
.
The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“
Protocol
”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to this Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement. For the purposes of this section:
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(i)
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Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
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(ii)
Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
(iii)
The Local Business Days for such purposes in relation to Dealer are New York, London, Frankfurt, Tokyo and Singapore and in relation to Company is New York;
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(iv)
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The provisions in this paragraph shall survive the termination of this Transaction.
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(v)
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The following are the applicable email addresses.
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Portfolio Data:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
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Notice of discrepancy:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
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Dispute Notice:
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Dealer: collateral.disputes@db.com
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Issuer: cberkman@ligand.com
(v)
NFC Representation Protocol
.
a.
The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to this Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement.
b.
Issuer confirms that it enters into this Agreement as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Resolution Stay Protocol
. Subject to the below, the provisions set out in the Attachment to the ISDA 2015 Universal Resolution Stay Protocol as published by the International Swaps and Derivatives Association on 4 November 2015 (“
Protocol
”), and any additional Country Annex that has been published from time to time and to which Issuer has adhered are,
mutadis mutandis
, incorporated by reference, into this Agreement as though such provisions and definitions were set out in full herein, with any such conforming changes as are necessary to deal with what would otherwise be inappropriate or incorrect cross-references. References in the Protocol:
a.
the “Adhering Party” shall be deemed to be references to the parties to this Agreement;
b.
the “Adherence Letter” shall be deemed to be references to this Agreement;
c.
the “Implementation Date” shall be deemed to be references to the date of this Agreement; and
d.
this Agreement shall be deemed a “Covered Agreement.”
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Exhibit 10.9
EXECUTION VERSION
Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter or telex substantially similar to this facsimile, which letter or telex sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms. Deutsche will make the time of execution of the Transaction available upon request.
Deutsche is authorised for the conduct of certain activities by the Prudential Regulation Authority. It is subject to limited regulation by the Financial Conduct Authority and by the Prudential Regulation Authority.
DEUTSCHE BANK AG, LONDON BRANCH
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with the Transaction
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
Confirmed and Acknowledged as of the date first above written:
LIGAND PHARMACEUTICALS INCORPORATED
By:
/s/ Charles Berkman
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 3,740,000.
Exhibit 10.10
EXECUTION VERSION
May 18, 2018
Deutsche Bank
Deutsche Bank AG, London Branch
Winchester house
1 Great Winchester St,
London EC2N 2DB
Telephone: 44 20 7545 8000
c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Telephone: 212-250-2500
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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From:
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Deutsche Bank AG, London Branch
c/o Deutsche Bank Securities Inc.
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Re:
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Additional Issuer Warrant Transaction
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(Transaction Reference Number: 786947)
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Deutsche Bank AG, London Branch (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
DEUTSCHE BANK AG, LONDON BRANCH IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S. SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. DEUTSCHE BANK SECURITIES INC. (“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION. AS SUCH, ALL DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND RELATING TO THE TRANSACTION BETWEEN DEALER AND ISSUER SHALL BE TRANSMITTED EXCLUSIVELY THROUGH AGENT. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of Deutsche Bank AG, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any
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adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of
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the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
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Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
:
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Adjustments:
In respect of any Component
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
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Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the
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effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing
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of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
Dealer Payment Instructions: Bank of New York
ABA#: 021-000-018
Account Name: Deutsche Bank Securities Inc.
Account No.: 8900327634
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: London
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
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To:
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Deutsche Bank AG, London Branch
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c/o Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
Faiz Khan
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Telephone:
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(212) 250-2717
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(212) 250-0668
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Email:
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Andrew.Yaeger@db.com
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Faiz.Khan@db.com
equity-linked.notifications@list.db.com
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or
any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement,
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as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
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(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private
placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in
its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether
or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging
Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Option Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement) (or such later date as agreed upon by the parties) (such “Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement,
shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) [
Reserved
].
(r)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(s)
Transaction Reporting - Consent for Disclosure of Information
.
Notwithstanding anything to the contrary herein or in the Agreement or any non-disclosure, confidentiality or other agreements entered into between the parties from time to time, each party hereby consents to the Disclosure of information (the “
Reporting Consent
”):
(i)
to the extent required by, or necessary in order to comply with, any applicable law, rule or regulation which mandates Disclosure of transaction and similar information or to the extent required by, or necessary in order to comply with, any order, request or directive regarding Disclosure of transaction
and similar information issued by any relevant authority or body or agency (“
Reporting Requirements
”); or
(ii) to and between the other party’s head office, branches or affiliates; to any person, agent, third party or entity who provides services to such other party or its head office, branches or affiliates; to a Market; or to any trade data repository or any systems or services operated by any trade repository or Market, in each case, in connection with such Reporting Requirements.
“
Disclosure
” means disclosure, reporting, retention, or any action similar or analogous to any of the aforementioned.
“
Market
” means any exchange, regulated market, clearing house, central clearing counterparty or multilateral trading facility.
Disclosures made pursuant to this Reporting Consent may include, without limitation, Disclosure of information relating to disputes over transactions between the parties, a party’s identity, and certain transaction and pricing data and may result in such information becoming available to the public or recipients in a jurisdiction which may have a different level of protection for personal data from that of the relevant party’s home jurisdiction.
This Reporting Consent shall be deemed to constitute an agreement between the parties with respect to Disclosure in general and shall survive the termination of this Confirmation. No amendment to or termination of this Reporting Consent shall be effective unless such amendment or termination is made in writing between the parties and specifically refers to this Reporting Consent.
(t)
Method of Delivery
. Whenever delivery of funds or other assets is required hereunder by or to Issuer, such delivery shall be effected through Agent. In addition, all notices, demands and communications of any kind relating to the Transaction between Dealer and Issuer shall be transmitted exclusively through Agent.
(u)
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
.
The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“
Protocol
”) apply to the Agreement as if the parties had adhered to the Protocol without amendment. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to this Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement. For the purposes of this section:
|
|
|
|
(i)
|
Dealer is a Portfolio Data Sending Entity and Issuer is a Portfolio Data Receiving Entity;
|
(ii)
Dealer and Issuer may use a Third Party Service Provider, and each of Dealer and Issuer consents to such use including the communication of the relevant data in relation to Dealer and Issuer to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.
(iii)
The Local Business Days for such purposes in relation to Dealer are New York, London, Frankfurt, Tokyo and Singapore and in relation to Company is New York;
|
|
|
|
(iv)
|
The provisions in this paragraph shall survive the termination of this Transaction.
|
|
|
|
|
(v)
|
The following are the applicable email addresses.
|
|
|
|
|
Portfolio Data:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
|
|
|
|
Notice of discrepancy:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
|
|
|
|
Dispute Notice:
|
Dealer: collateral.disputes@db.com
|
Issuer: cberkman@ligand.com
(v)
NFC Representation Protocol
.
a.
The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol. In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into this Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to this Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Agreement.
b.
Issuer confirms that it enters into this Agreement as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol). Issuer shall promptly notify Dealer of any change to its status as a party making the NFC Representation.
(w)
Resolution Stay Protocol
. Subject to the below, the provisions set out in the Attachment to the ISDA 2015 Universal Resolution Stay Protocol as published by the International Swaps and Derivatives Association on 4 November 2015 (“
Protocol
”), and any additional Country Annex that has been published from time to time and to which Issuer has adhered are,
mutadis mutandis
, incorporated by reference, into this Agreement as though such provisions and definitions were set out in full herein, with any such conforming changes as are necessary to deal with what would otherwise be inappropriate or incorrect cross-references. References in the Protocol:
a.
the “Adhering Party” shall be deemed to be references to the parties to this Agreement;
b.
the “Adherence Letter” shall be deemed to be references to this Agreement;
c.
the “Implementation Date” shall be deemed to be references to the date of this Agreement; and
d.
this Agreement shall be deemed a “Covered Agreement.”
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Exhibit 10.10
EXECUTION VERSION
Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter or telex substantially similar to this facsimile, which letter or telex sets forth the material terms of the Transaction to which this Confirmation relates and indicates your agreement to those terms. Deutsche will make the time of execution of the Transaction available upon request.
Deutsche is authorised for the conduct of certain activities by the Prudential Regulation Authority. It is subject to limited regulation by the Financial Conduct Authority and by the Prudential Regulation Authority.
DEUTSCHE BANK AG, LONDON BRANCH
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
DEUTSCHE BANK SECURITIES INC.,
acting solely as Agent in connection with the Transaction
By:
/s/ Andrew Yaeger
Name: Andrew Yaeger
Title: Attorney in Fact
By:
/s/ Paul Stowell
Name: Paul Stowell
Title: Attorney in Fact
Confirmed and Acknowledged as of the date first above written:
LIGAND PHARMACEUTICALS INCORPORATED
By:
/s/ Charles Berkman
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
|
|
|
|
|
|
|
Component Number
|
Number of Warrants
|
Expiration Date
|
|
1
|
670
|
Tue 15 Aug 2023
|
|
2
|
670
|
Wed 16 Aug 2023
|
|
3
|
670
|
Thu 17 Aug 2023
|
|
4
|
670
|
Fri 18 Aug 2023
|
|
5
|
670
|
Mon 21 Aug 2023
|
|
6
|
670
|
Tue 22 Aug 2023
|
|
7
|
670
|
Wed 23 Aug 2023
|
|
8
|
670
|
Thu 24 Aug 2023
|
|
9
|
670
|
Fri 25 Aug 2023
|
|
10
|
670
|
Mon 28 Aug 2023
|
|
11
|
670
|
Tue 29 Aug 2023
|
|
12
|
670
|
Wed 30 Aug 2023
|
|
13
|
670
|
Thu 31 Aug 2023
|
|
14
|
670
|
Fri 1 Sep 2023
|
|
15
|
670
|
Tue 5 Sep 2023
|
|
16
|
670
|
Wed 6 Sep 2023
|
|
17
|
670
|
Thu 7 Sep 2023
|
|
18
|
670
|
Fri 8 Sep 2023
|
|
19
|
670
|
Mon 11 Sep 2023
|
|
20
|
670
|
Tue 12 Sep 2023
|
|
21
|
670
|
Wed 13 Sep 2023
|
|
22
|
670
|
Thu 14 Sep 2023
|
|
23
|
670
|
Fri 15 Sep 2023
|
|
24
|
670
|
Mon 18 Sep 2023
|
|
25
|
670
|
Tue 19 Sep 2023
|
|
26
|
670
|
Wed 20 Sep 2023
|
|
27
|
670
|
Thu 21 Sep 2023
|
|
28
|
670
|
Fri 22 Sep 2023
|
|
29
|
670
|
Mon 25 Sep 2023
|
|
30
|
670
|
Tue 26 Sep 2023
|
|
31
|
670
|
Wed 27 Sep 2023
|
|
32
|
670
|
Thu 28 Sep 2023
|
|
33
|
671
|
Fri 29 Sep 2023
|
|
34
|
671
|
Mon 2 Oct 2023
|
|
35
|
671
|
Tue 3 Oct 2023
|
|
36
|
671
|
Wed 4 Oct 2023
|
|
37
|
671
|
Thu 5 Oct 2023
|
|
38
|
671
|
Fri 6 Oct 2023
|
|
39
|
671
|
Mon 9 Oct 2023
|
|
40
|
671
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
671
|
Wed 11 Oct 2023
|
|
42
|
671
|
Thu 12 Oct 2023
|
|
43
|
671
|
Fri 13 Oct 2023
|
|
44
|
671
|
Mon 16 Oct 2023
|
|
45
|
671
|
Tue 17 Oct 2023
|
|
46
|
671
|
Wed 18 Oct 2023
|
|
47
|
671
|
Thu 19 Oct 2023
|
|
48
|
671
|
Fri 20 Oct 2023
|
|
49
|
671
|
Mon 23 Oct 2023
|
|
50
|
671
|
Tue 24 Oct 2023
|
|
51
|
671
|
Wed 25 Oct 2023
|
|
52
|
671
|
Thu 26 Oct 2023
|
|
53
|
671
|
Fri 27 Oct 2023
|
|
54
|
671
|
Mon 30 Oct 2023
|
|
55
|
671
|
Tue 31 Oct 2023
|
|
56
|
671
|
Wed 1 Nov 2023
|
|
57
|
671
|
Thu 2 Nov 2023
|
|
58
|
671
|
Fri 3 Nov 2023
|
|
59
|
671
|
Mon 6 Nov 2023
|
|
60
|
671
|
Tue 7 Nov 2023
|
|
61
|
671
|
Wed 8 Nov 2023
|
|
62
|
671
|
Thu 9 Nov 2023
|
|
63
|
671
|
Fri 10 Nov 2023
|
|
64
|
671
|
Mon 13 Nov 2023
|
|
65
|
671
|
Tue 14 Nov 2023
|
|
66
|
671
|
Wed 15 Nov 2023
|
|
67
|
671
|
Thu 16 Nov 2023
|
|
68
|
671
|
Fri 17 Nov 2023
|
|
69
|
671
|
Mon 20 Nov 2023
|
|
70
|
671
|
Tue 21 Nov 2023
|
|
71
|
671
|
Wed 22 Nov 2023
|
|
72
|
671
|
Mon 27 Nov 2023
|
|
73
|
671
|
Tue 28 Nov 2023
|
|
74
|
671
|
Wed 29 Nov 2023
|
|
75
|
671
|
Thu 30 Nov 2023
|
|
76
|
671
|
Fri 1 Dec 2023
|
|
77
|
671
|
Mon 4 Dec 2023
|
|
78
|
671
|
Tue 5 Dec 2023
|
|
79
|
671
|
Wed 6 Dec 2023
|
|
80
|
671
|
Thu 7 Dec 2023
|
|
81
|
671
|
Fri 8 Dec 2023
|
|
82
|
671
|
Mon 11 Dec 2023
|
|
83
|
671
|
Tue 12 Dec 2023
|
|
84
|
671
|
Wed 13 Dec 2023
|
|
85
|
671
|
Thu 14 Dec 2023
|
|
86
|
671
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
671
|
Mon 18 Dec 2023
|
|
88
|
671
|
Tue 19 Dec 2023
|
|
89
|
671
|
Wed 20 Dec 2023
|
|
90
|
671
|
Thu 21 Dec 2023
|
|
91
|
671
|
Fri 22 Dec 2023
|
|
92
|
671
|
Tue 26 Dec 2023
|
|
93
|
671
|
Wed 27 Dec 2023
|
|
94
|
671
|
Thu 28 Dec 2023
|
|
95
|
671
|
Fri 29 Dec 2023
|
|
96
|
671
|
Tue 2 Jan 2024
|
|
97
|
671
|
Wed 3 Jan 2024
|
|
98
|
671
|
Thu 4 Jan 2024
|
|
99
|
671
|
Fri 5 Jan 2024
|
|
100
|
671
|
Mon 8 Jan 2024
|
|
101
|
671
|
Tue 9 Jan 2024
|
|
102
|
671
|
Wed 10 Jan 2024
|
|
103
|
671
|
Thu 11 Jan 2024
|
|
104
|
671
|
Fri 12 Jan 2024
|
|
105
|
671
|
Tue 16 Jan 2024
|
|
106
|
671
|
Wed 17 Jan 2024
|
|
107
|
671
|
Thu 18 Jan 2024
|
|
108
|
671
|
Fri 19 Jan 2024
|
|
109
|
671
|
Mon 22 Jan 2024
|
|
110
|
671
|
Tue 23 Jan 2024
|
|
111
|
671
|
Wed 24 Jan 2024
|
|
112
|
671
|
Thu 25 Jan 2024
|
|
113
|
671
|
Fri 26 Jan 2024
|
|
114
|
671
|
Mon 29 Jan 2024
|
|
115
|
671
|
Tue 30 Jan 2024
|
|
116
|
671
|
Wed 31 Jan 2024
|
|
117
|
671
|
Thu 1 Feb 2024
|
|
118
|
671
|
Fri 2 Feb 2024
|
|
119
|
671
|
Mon 5 Feb 2024
|
|
120
|
671
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
120,732
|
Exhibit 10.11
EXECUTION VERSION
GOLDMAN SACHS & CO. LLC | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL: 212-902-1000
May 18, 2018
|
|
|
|
To:
|
Ligand Pharmaceuticals Incorporated
|
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
|
|
|
|
Re:
|
Additional Convertible Bond Hedge Transaction
|
Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Goldman Sachs & Co. LLC (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Counterparty
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and Wilmington Trust, National Association as trustee (the “
Indenture
”) relating to the USD 650,000,000 principal amount of 0.75% convertible senior notes due 2023 (the “
Base Convertible Securities
”) together with any 0.75% convertible senior notes due 2023 issued pursuant to the Initial Purchasers’ (as defined in the Purchase Agreement (as defined below)) option under the Purchase Agreement (the “
Optional Convertible Securities
” and, together with the Base Convertible Securities, the “
Convertible Securities
”). In the event of any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is, or the Convertible Securities are, amended, supplemented or modified following their execution, any such amendment, supplement or modification
(other than a Merger Supplemental Indenture (as defined below))
will be disregarded for purposes of this Confirmation (other than (i) as provided in Section 8(a) below and (ii) any amendment, supplement or modification pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of the Convertible Securities in the preliminary offering memorandum, as supplemented by the pricing term sheet related to the Convertible Securities) unless the parties agree otherwise in writing.
This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement (the “
ISDA Form
”) as if Dealer and Counterparty had executed an agreement in such form (without any Schedule except for the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Counterparty with a “Threshold Amount” of USD 35 million and to Dealer with a “Threshold Amount” of 3% of the stockholders’ equity of The Goldman Sachs Group, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section
5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2.
The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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The closing date of the Convertible Securities issued pursuant to the Initial Purchasers’ option under the Purchase Agreement exercised on the date hereof.
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Option Style:
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“Modified American”, as described under “Procedures for Exercise” below
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Shares:
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The common stock of Counterparty, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Options:
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The number of Optional Convertible Securities in denominations of USD 1,000 principal amount purchased by the Initial Purchasers upon exercise of their option to purchase additional Convertible Securities pursuant to Section 2(b) of the Purchase Agreement.
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Applicable Percentage:
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40%
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Number of Shares:
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As of any date, the product of the Number of Options and the Conversion Rate.
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Conversion Rate:
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As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant to Sections 14.04(g) and 14.03 of the Indenture (the “
Excluded Provisions
”).
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
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Exercise Dates:
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Each Conversion Date.
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Conversion Date:
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Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible Securities, each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture but are not “Relevant Convertible Securities” under, and as defined in, the confirmation between the parties hereto regarding the Base Convertible Bond Hedge Transaction dated May 17, 2018 (the “
Base Convertible Bond Hedge Transaction Confirmation
”), excluding Conversion Dates (as defined in the Indenture) with respect to any surrender of Convertible Securities for conversion (i) with respect to which Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture (such Convertible Securities, other than those excluded as set forth above and Excluded Convertible Securities (as defined below), the “
Relevant Convertible Securities
” for such Conversion Date). For the purposes of determining whether any Convertible Securities will be Relevant Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted pursuant to the Indenture shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated.
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Excluded Convertible Securities:
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Convertible Securities with a “Conversion Date” (as defined in the Indenture) prior to the Final Conversion Period Start Date (as defined below), each in denominations of USD 1,000 principal amount, that are submitted for conversion on such Conversion Date in accordance with the terms of the Indenture and that are not “Excluded Convertible Securities” under, and as defined in, the Base Convertible Bond Hedge Transaction Confirmation, other than any Convertible Securities with respect to which (i) Counterparty has elected the “Exchange in Lieu of Conversion” option pursuant to Section 14.11 of the Indenture and (ii) that have been accepted by the designated financial institution pursuant to Section 14.11 of the Indenture. For purposes of determining whether any Convertible Securities will be Excluded Convertible Securities hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are converted prior to the Final Conversion Period Start Date (as defined below) shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated. Counterparty shall, within one Scheduled Trading Day of the “Conversion Date” (as defined in the Indenture) relating to any Excluded Convertible Securities, provide written notice (an “
Excluded Conversion Notice
”) to Dealer specifying (i) the number of Excluded Convertible Securities converted on such “Conversion Date” (including, if applicable, whether all or any portion of the Excluded Convertible Securities are Make-Whole Convertible Securities (as defined below), (ii) the scheduled settlement date under the Indenture for such Excluded
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Convertible Securities and (iii) the “Settlement Method” (as defined in the Indenture) for such Excluded Convertible Securities and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture);
provided
that, notwithstanding the foregoing, such notice in connection with any conversion of Excluded Convertible Securities shall be effective if given prior to 5:00 P.M., New York City time, on the sixth Exchange Business Day following the “Conversion Date” (as defined in the Indenture) relating to such Excluded Convertible Securities;
provided further
that any “Excluded Conversion Notice” delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be an Excluded Conversion Notice pursuant to this Confirmation, and the terms of such Excluded Conversion Notice shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Excluded Convertible Securities and the delivery of such Excluded Conversion Notice.
Required Exercise on
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Conversion Dates:
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On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD 1,000 principal amount shall be automatically exercised.
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Expiration Date:
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The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
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Automatic Exercise:
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As provided above under “Required Exercise on Conversion Dates”.
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Exercise Notice Deadline:
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In the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 15, 2022 (the “
Final Conversion Period Start Date
”) and ending on and including the second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “
Final Conversion Period
”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” immediately preceding such “Maturity Date”.
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Notice of Exercise:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options hereunder unless Counterparty notifies Dealer in writing prior to 5:00 P.M., New York City time, on the Exercise Notice Deadline in respect of such exercise of the number of Options being exercised on the relevant Exercise Date (including, if applicable, whether all or any portion of the Relevant Convertible Securities are Convertible Securities as to which additional Shares would be added to the “Conversion Rate” (as defined in the Indenture) pursuant to Section 14.03 of the Indenture (the “
Make-Whole Convertible Securities
”));
provided
that any “Notice of Exercise” delivered to Dealer pursuant to the Base Convertible Bond Hedge Transaction Confirmation shall be deemed to be a Notice of Exercise
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pursuant to this Confirmation, and the terms of such Notice of Exercise shall apply,
mutatis mutandis
, to this Confirmation. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently extinguished, and late notice shall not cure such failure;
provided
that notwithstanding the foregoing, such notice (and the related exercise of Options) in connection with any conversion of Relevant Convertible Securities shall be effective if given after the Exercise Notice Deadline, but prior to 5:00 P.M., New York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
Notice of Convertible Security
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Settlement Method:
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Counterparty shall notify Dealer in writing before 5:00 P.M., New York City time, on the Scheduled Trading Day immediately preceding the Final Conversion Period Start Date of the irrevocable election by Counterparty, in accordance with Section 14.02(a)(iv) of the Indenture, of the “Settlement Method” (as defined in the Indenture) and, if applicable, the “Specified Dollar Amount” (as defined in the Indenture) applicable to Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of (x) “Combination Settlement” as defined in the Indenture) with a “Specified Dollar Amount (as defined in the Indenture) of USD 1,000 for all conversions occurring during the Final Conversion Period, if the Final Conversion Period Start Date occurs after the “Share Reservation Date” (as defined in the Indenture), and (y) otherwise, “Cash Settlement” (as defined in the Indenture). Counterparty agrees that it shall settle any Relevant Convertible Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder. Counterparty shall notify Dealer in writing that the “Share Reservation Date” (as defined in the Indenture) has occurred by 5:00 P.M. New York City time on the Scheduled Trading Day immediately thereafter.
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Dealer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Dealer.
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Settlement Terms:
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Settlement Date:
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In respect of an Exercise Date occurring in respect of a Conversion Date, the settlement date for the cash and/or Shares (if any) to be delivered in respect of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(c) of the Indenture;
provided
that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant “Observation Period”, as defined in the Indenture, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 5:00 P.M., New York City time, and (iii) the Exchange Business Day immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 5:00 P.M., New York City time.
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Delivery Obligation:
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In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to “Notice of Exercise” above, in respect of an Exercise Date occurring in respect of a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, a number of Shares and/or amount of cash in USD equal to the Applicable Percentage of the aggregate number of Shares, if any, that Counterparty would be obligated to deliver to the holder(s) of the Relevant Convertible Securities converted on such Conversion Date pursuant to Section 14.02(a) of the Indenture and/or the Applicable Percentage of the aggregate amount of cash, if any, in excess of USD 1,000 per Convertible Security (in denominations of USD 1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 14.02(a) of the Indenture, as determined by the Calculation Agent by reference to such Section of the Indenture (except that such aggregate number of Shares shall be determined without taking into consideration any rounding pursuant to Section 14.02(j) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, eliminated by such rounding, as if Counterparty had elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible Securities (the “
Convertible Obligation
”);
provided
that such obligation shall be determined (i) excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a result of any adjustments to the Conversion Rate pursuant to any of the Excluded Provisions and (ii) without regard to the election, if any, by Counterparty to adjust the Conversion Rate (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and
provided further
that if such exercise relates to the conversion of Relevant Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the Conversion Rate set forth in Section 14.03 of the Indenture, then, notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash (as determined by the Calculation Agent by reference to such Section of the Indenture), except that the Delivery
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Obligation shall be capped so that the value of the Delivery Obligation (with the value of any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last day of the relevant “Observation Period”) does not exceed the amount as determined by the Calculation Agent that would be payable by Dealer pursuant to Section 6 of the Agreement if such Conversion Date were an Early Termination Date resulting from an Additional Termination Event with respect to which the Transaction (except that, for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if 14.03 of the Indenture were deleted) was the sole Affected Transaction and Counterparty was the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the value of any Shares included in either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date).
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Convertible Security Settlement Method
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For any Relevant Convertible Securities, if Counterparty has notified Dealer in the Notice of Convertible Security Settlement Method that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 14.02(a)(v)(C) (a “
Cash Election
”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD 1,000, the Convertible Security Settlement Method shall be the settlement method actually so elected by Counterparty in respect of such Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall assume (x) Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000 per Relevant Convertible Security, if the “Share Reservation Date” (as defined in the Indenture) has occurred, and (y) otherwise, elected “Cash Settlement” (as defined in the Indenture).
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Notice of Delivery Obligation:
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No later than the Scheduled Trading Day immediately following the last day of the relevant “Observation Period”, as defined in the Indenture, Counterparty shall give Dealer notice of the final number of Shares and/or cash comprising the Convertible Obligation;
provided
that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of an aggregate number of Shares and/or cash comprising the Convertible Obligations for all Exercise Dates occurring in such period (it being understood, for the avoidance of doubt, that the requirement of Counterparty to deliver such notice shall not limit Counterparty’s obligations with respect to Notice of Exercise or Notice of Convertible Security Settlement Method or
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Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any way).
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Other Applicable Provisions:
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To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the Issuer of the Shares) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Restricted Certificated Shares:
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Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of the provision after the word “encumbrance” in the fourth line thereof.
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Share Adjustments:
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Method of Adjustment:
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Notwithstanding Section 11.2 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of any event or condition set forth in Sections 14.04(a)-(e) of the Indenture that the Calculation Agent determines would result in an adjustment under the Indenture by reference to such Sections thereof (any such event or condition, an “
Adjustment Event
”), the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” below. Promptly following the occurrence of any Adjustment Event, Counterparty shall notify the Calculation Agent of such Adjustment Event; and once the adjustments to be made to the terms of the Indenture and the Convertible Securities in respect of such Adjustment Event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
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In addition, the Calculation Agent shall, to the extent the Calculation Agent determines practicable in good faith and in its commercially reasonable discretion to preserve the economic intent of the parties, make an adjustment to the terms relevant to the exercise, settlement or payment of the Transaction (to the extent not already covered by, and without duplication of any adjustment pursuant to the foregoing paragraph) corresponding to any adjustment made pursuant to Section 14.05 of the Indenture;
provided
that the Calculation Agent may limit or alter any such adjustment referenced in this sentence so that the fair value of the Transaction to Dealer is not reduced as a result of such adjustment.
For the avoidance of doubt, Dealer shall not have any payment or delivery obligation hereunder in respect of, and no adjustment shall be made to the terms of the Transaction on account of, (x) any distribution of cash, property or securities by Counterparty to the
holders of Convertible Securities (upon conversion or otherwise) or (y) any other transaction in which holders of Convertible Securities are entitled to participate, in each case, in lieu of an adjustment under Section 14.04 of the Indenture in respect of an Adjustment Event (including, without limitation, pursuant to the fourth sentence of the first paragraph of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture).
In connection with any Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining “Y” (as such term is used in Section 14.04(b) of the Indenture) or “SP
0
” (as such term is used in Section 14.04(c) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses that would be incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such event or condition not having been publicly announced prior to the beginning of such period.
If any Adjustment Event is declared and (a) the event or condition giving rise to such Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), an “
Adjustment Event Change
”) then, in each case, the Calculation Agent shall have the right to adjust, in good faith and in a commercially reasonable manner, any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its commercially reasonable hedging activities as a result of such Adjustment Event Change
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Discretionary Adjustments:
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Notwithstanding anything to the contrary herein or in the Equity Definitions, if the Calculation Agent in good faith disagrees with any adjustment under the Indenture that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 or pursuant to Section 14.07(a) of the Indenture or any supplemental indenture entered into thereunder (a “
Merger Supplemental Indenture
”) or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option
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Entitlement and any other variable relevant to the exercise, settlement, payment or other terms of or under the Transaction in a commercially reasonable manner.
Extraordinary Events:
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Merger Events:
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Notwithstanding Section 12.1(b) of the Equity Definitions (which shall not apply with respect to the Transaction), a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section 14.07(a) of the Indenture.
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Consequences of Merger Events:
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Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions (which shall not apply with respect to the Transaction), upon the occurrence of a Merger Event that the Calculation Agent determines by reference to Section 14.07(a) of the Indenture would result in an adjustment under the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction, subject to “Discretionary Adjustments” above;
provided
that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to the Excluded Provisions and the election, if any, by Counterparty to adjust the Conversion Rate; and
provided further
that if, with respect to a Merger Event, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares (or depositary receipts evidencing interests in shares) of an entity or person that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, Dealer may elect in its reasonable discretion that Cancellation and Payment (Calculation Agent Determination) shall apply.
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Notice of Merger Consideration:
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Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election or, if no holders of Shares affirmatively make such an election, the types and amounts of consideration actually received by holders of Shares and (ii) the details of the adjustment made under the Indenture in respect of such Merger Event.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York
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Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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Hedging Party:
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For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
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Determining Party:
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For all applicable Extraordinary Events, Dealer
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent shall promptly (but in any event within five Scheduled Trading
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Days) provide to Counterparty by email to the email address provided by Counterparty in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
4.
Account Details
:
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Dealer Payment Instructions:
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Chase Manhattan Bank New York
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For A/C Goldman Sachs & Co. LLC
A/C #930-1-011483
ABA: 021-000021
Counterparty Payment Instructions: To be provided by Counterparty.
5.
Offices:
The Office of Dealer for the Transaction is: 200 West Street, New York, New York 10282-2198
The Office of Counterparty for the Transaction is: Not applicable
6.
Notices:
For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
To: Goldman Sachs & Co. LLC
200 West Street
New York, NY 10282-2198
Attn: Joshua Murray
Equity Capital Markets
Telephone: 212-902-3291
Facsimile: 646-835-3576
Email: joshua.murray@gs.com
And email notification to the following address:
Eq-derivs-notifications@am.ibd.gs.com
7.
Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Counterparty makes an election hereunder, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all
reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) (A) On the Trade Date, the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“
Regulation M
”) and (B) Counterparty shall not engage in any “distribution,” as such term is defined in Regulation M, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business Day immediately following the Trade Date.
(iii) On the Trade Date, neither Counterparty nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except (i) through Dealer or (ii) up to $50.0 million of purchases from purchasers of the Convertible Securities, as described under “Use of Proceeds” in the preliminary offering memorandum relating to the Convertible Securities.
(iv) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(v) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(vi) On or reasonably promptly following the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors or any committee thereof (together with a resolution of Counterparty’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(vii) Counterparty is not entering into this Confirmation nor making any election hereunder or under the Convertible Securities to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(viii) Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(ix) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”)) and Counterparty would be able to purchase the Number of Shares hereunder and under the Base Convertible Bond Hedge Transaction in compliance with the laws of the jurisdiction of its incorporation.
(x) To Counterparty’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(xi) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Counterparty and Goldman Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(xii) Counterparty understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any affiliate of Dealer or any governmental agency.
(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(viii) hereof and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Additional Termination Events
.
The occurrence of (i) an “Event of Default” with respect to Counterparty under the terms of the Convertible Securities as set forth in Section 6.01 of the Indenture that results in the Convertible Securities becoming or being declared due and payable pursuant to the terms of the Indenture or (ii) an Amendment Event shall be an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
“
Amendment Event
” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Securities governing the principal amount, maturity, repurchase obligation of Counterparty, lack of a redemption right of Counterparty, any term relating to conversion of the Convertible Securities (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend (other than pursuant to Sections 10.02(b) or (g) of the Indenture), in each case without the consent of Dealer, such consent not to be unreasonably
withheld, conditioned or delayed. For the avoidance of doubt, the application of the conversion rate adjustment provisions of the Indenture shall not constitute an Amendment Event.
(ii) The receipt by Dealer from Counterparty of any Excluded Conversion Notice shall constitute an Additional Termination Event as provided in this paragraph;
provided
that the Transaction shall be subject to termination only in respect of a number of Options equal to the number of Relevant Conversion Options (as defined below). For the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement in connection with an Excluded Conversion Notice, the Calculation Agent shall assume that the relevant Excluded Convertible Securities shall not have been converted and remain outstanding and that any adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred. Upon receipt of any such Notice of Excluded Conversion, Dealer shall designate a Scheduled Trading Day following such Additional Termination Event as an Early Termination Date (and Dealer shall use commercially reasonable efforts (taking into account any commercially reasonable unwind activity by Dealer or its affiliates in respect of the Transaction and the “Settlement Method” (as defined in the Indenture), including, if applicable, the “Specified Dollar Amount” (as defined in the Indenture), with respect to such Excluded Convertible Securities) to designate such Early Termination Date so that the related payment or delivery, as the case may be, hereunder in respect of the Relevant Conversion Options will occur on (or as promptly as reasonably practicable after) the related settlement for the conversion of the relevant Excluded Convertible Securities) with respect to the portion of the Transaction corresponding to a number of Options (the “
Relevant Conversion Options
”) equal to the lesser of (A) the aggregate principal amount of Excluded Convertible Securities specified in such Notice of Excluded Conversion,
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Relevant Conversion Options. Any payment hereunder with respect to such termination (the “
Conversion Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction (except that, for purposes of this Section 8(a)(ii), the last sentence of the provisions opposite the caption “Delivery Obligation” above shall be deemed to be deleted from this Confirmation) and a Number of Options equal to the number of Relevant Conversion Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the “Conversion Rate” (as defined in the Indenture) pursuant to the Excluded Provisions);
provided
that the Conversion Unwind Payment shall not be greater than the product of (x) the number of Relevant Conversion Options, (y) the Applicable Percentage, and (z) the excess of (I) the “Conversion Rate” (as defined in the Indenture after taking into account any adjustments thereto pursuant to the Excluded Provisions),
multiplied by
the opening price as displayed under the heading “Op” on Bloomberg page LGND <equity> (or any successor thereto) on the applicable Settlement Date, as commercially reasonably determined by the Calculation Agent in good faith, over (II) the principal amount per Convertible Security of the relevant Excluded Convertible Securities.
(iii) By the fifth Scheduled Trading Day following any Repayment Event (as defined below), Counterparty shall notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (any such notice, a “
Repayment Notice
”). The receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repayment Notice, Dealer shall designate a Scheduled Trading Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “
Repayment Options
”) equal to the lesser of (A) the aggregate principal amount of Convertible Securities specified in such Repayment Notice (it being understood that, for purposes of determining whether any Options will be Repayment Options hereunder or under the Base Convertible Bond Hedge Transaction Confirmation, Convertible Securities that are subject to a Repayment Notice shall be allocated first to the Base Convertible Bond Hedge Transaction Confirmation until all Options thereunder are exercised or terminated),
divided by
USD 1,000, and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options. Any payment hereunder with respect to such termination (the “
Repayment Unwind Payment
”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a
Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of any action taken by Counterparty in respect of a Repayment Event, including, without limitation, the delivery of a Repayment Notice. “
Repayment Event
” means the occurrence of (i) any repurchase by Counterparty or any of its subsidiaries of Convertible Securities (whether in connection with or as a result of a “fundamental change”, howsoever defined, or for any other reason), (ii) any Convertible Securities are delivered to Counterparty or any of its subsidiaries in exchange for delivery of any property or assets of such party (howsoever described), (iii) the repayment of any principal of any of the Convertible Securities prior to the final maturity date of the Convertible Securities (for any reason other than as a result of an acceleration of the Convertible Securities that results in an Additional Termination Event pursuant to the preceding Section 8(a)(i)), or (iv) any Convertible Securities are exchanged by or for the benefit of the holders thereof for any other securities of Counterparty or any of its subsidiaries (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction. For the avoidance of doubt, any conversion of Convertible Securities pursuant to the terms of the Indenture shall not constitute a Repayment Event.
(b)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further
that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Counterparty’s control or (iii) that Counterparty fails to remake the representation set forth in Section 7(a)(i) as of the date of such election. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
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If applicable, means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to “Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
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Property:
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A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
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The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer.
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Share Termination Delivery Unit:
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In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization or Merger Event, as applicable. If such Insolvency, Nationalization or Merger Event involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
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Applicable
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Other applicable provisions:
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If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units.”
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(c)
Disposition of Hedge Shares
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on advice of counsel, any Shares (the “
Hedge Shares
”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for purposes of this Section 8(c) only, “
Dealer
”) for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement substantially similar to underwriting agreements customary for registered secondary offerings of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however
, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of a substantially similar size by similar companies, in form and substance reasonably satisfactory to Dealer, including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placements agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “
VWAP Price
” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg Screen LGND <Equity> VWAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange Business Day (or if such volume-weighted average price is unavailable or is manifestly incorrect, the market value of one Share on such Exchange Business Day, as determined by the Calculation Agent using a volume-weighted method).
(d)
Amendment to Equity Definitions
. The following amendment shall be made to the Equity Definitions:
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of
any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”
(e)
Repurchase and Conversion Rate Adjustment Notices
. Counterparty shall, at least one Scheduled Trading Day prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event (a “
Conversion Rate Adjustment Event
”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “
Repurchase Notice
”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is greater by 0.5%
than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater by 0.5% than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event, or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The “
Notice Percentage
” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “
Indemnified Party
”) from and against any and all losses, claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer.
(f)
Transfer and Assignment
. Either party may transfer any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, Dealer may condition its consent on any of the following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with respect to any legal and regulatory requirements relevant to Dealer, (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to “Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above, (iv) payment by Counterparty of all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such assignment, (v) Dealer not being obliged, as a result of such assignment, to pay the assignee on any payment date, an amount greater than Dealer would have been required to pay in the absence of such assignment, (vi) no Event of Default, Potential Event of Default or Termination Event existing or occurring as a result of such assignment and (vii) Counterparty causing the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that the results described in clauses (v) and (vi) will not occur upon or after such transfer. In the event of any such transfer or assignment, the transferee or assignee shall agree that Dealer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Dealer would have received from Counterparty in the absence of such transfer or assignment, except to the extent it results from a change in law that occurs after the date of that transfer or assignment. In addition, Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder and under the Agreement, in whole or in part, to any affiliate of Dealer that is (or whose guarantor is) of credit quality equivalent to Dealer, in each case, only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, and (y) such transfer or assignment would not result in a deemed exchange by Counterparty of the transferred or assigned portion of the Transaction for a modified transaction that differs materially in kind or extent for U.S. federal income tax purposes. In the event of any such transfer or assignment, the transferee or assignee shall agree that (A) Counterparty will not be required to pay the transferee on any payment date
an amount under Section 2(d)(i)(4) of the Agreement, all applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (B) Counterparty will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Counterparty would have received from Dealer in the absence of such transfer or assignment, except, in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment.
At any time at which any Excess Ownership Position exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Excess Ownership Position no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction. “
Excess Ownership Position
” means any of the following: (i) the Equity Percentage exceeds 8.0% or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination. The “
Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”), beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number) and (B) the denominator of which is the number of Shares outstanding on such day.
(g)
Staggered Settlement
. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the relevant “Nominal Settlement Date”, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “
Nominal Settlement Date
”), elect to deliver the Shares on two or more dates (each, a “
Staggered Settlement Date
”) or at two or more times on the Nominal Settlement Date as follows:
(i) in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but not prior to the beginning of the related “
Observation Period
”, as defined in the Indenture) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date.
(h)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer, with respect to some
or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.
(l)
No Netting and Set-off.
Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(m)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(n)
Early Unwind
. In the event the sale by Counterparty of the Optional Convertible Securities is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement)(or such later date as agreed upon by the parties) (such ”Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not
limited to, rights arising from Change in Law, Hedging Disruption, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.
(iii)
Tax documentation
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect. Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Counterparty, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents as are reasonably requested by Counterparty.
(iv)
Tax Representations
. Counterparty is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Counterparty is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Conduct Rules
. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.
(s) [
Reserved
].
(t)
Agreements and Acknowledgements Regarding Hedging
. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Counterparty shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.
(u)
Risk Disclosure Statement
. Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement provided by Dealer and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”
(v) [
Reserved
].
(w) [
Reserved
].
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF
.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
GOLDMAN SACHS & CO. LLC
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By:
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/s/ Gianfranco Bartellino
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Name: Gianfranco Bartellino
Title: Vice President
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
Premium: USD 7,480,000.
Exhibit 10.12
EXECUTION VERSION
GOLDMAN SACHS & CO. LLC | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198 | TEL: 212-902-1000
May 18, 2018
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To:
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Ligand Pharmaceuticals Incorporated
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3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attention: General Counsel
Telephone No.: 858-550-7835
Facsimile No.: 858-550-7272
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Re:
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Additional Issuer Warrant Transaction
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Ladies and Gentlemen:
The purpose of this communication (this “
Confirmation
”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “
Transaction
”) between Goldman Sachs & Co. LLC (“
Dealer
”) and Ligand Pharmaceuticals Incorporated (“
Issuer
”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1.
This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “
2006 Definitions
”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “
Equity Definitions
” and, together with the 2006 Definitions, the “
Definitions
”), in each case as published by the International Swaps and Derivatives Association, Inc. (“
ISDA
”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. For purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a reference to a Call Option or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “
Agreement
”) in the form of the ISDA 2002 Master Agreement as if Dealer and Issuer had executed an agreement in such form (without any Schedule but with the elections set forth in this Confirmation and the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Issuer with a “Threshold Amount” of USD 35 million and to Dealer with a Threshold Amount of 3% of the stockholders’ equity of The Goldman Sachs Group, in each case, as if (x) the phrase “, or becoming capable at such time of being declared,” were deleted from Section 5(a)(vi)(1) of the Agreement, (y) the term “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term did not include obligations in respect of deposits received in the ordinary course of a party’s banking business and (z) the following language shall be added to the end of such Section 5(a)(vi): “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”). For the avoidance of doubt, the Transaction shall be the only transaction under the Agreement.
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between this Confirmation and either the Definitions or the Agreement, this Confirmation shall govern. For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement or the Equity Definitions shall not be construed to exclude or limit the application of any other provision of this Confirmation, the Agreement or the Equity Definitions.
2. The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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Effective Date:
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May 22, 2018, or such other date as agreed between the parties, subject to Section 8(n) below
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Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement.
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Shares:
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The common stock of Issuer, par value USD 0.001 per share (Ticker Symbol: “LGND”).
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Number of Warrants:
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For each Component, as provided in
Annex A
to this Confirmation.
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Warrant Entitlement:
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One Share per Warrant
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Strike Price:
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As provided in
Annex A
to this Confirmation. Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, in no event shall the Strike Price be subject to adjustment to the extent that, after giving effect to such adjustment, the Strike Price would be less than USD 191.13, except for any adjustment pursuant to the terms of this Confirmation and the Equity Definitions in connection with stock splits or similar changes to Issuer’s capitalization.
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Premium:
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As provided in
Annex A
to this Confirmation.
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Premium Payment Date:
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The Effective Date
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Exchange:
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NASDAQ Global Market
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Related Exchange:
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All Exchanges
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Procedures for Exercise:
In respect of any Component:
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Expiration Time:
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Valuation Time
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Expiration Date:
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As provided in
Annex A
to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component);
provided
that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not already deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and
provided further
that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, Dealer may elect in its commercially
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reasonable discretion that the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Definitions, the VWAP Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. “
Final Disruption Date
” has the meaning provided in
Annex A
to this Confirmation. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent, acting commercially reasonably, may determine that such Expiration Date is a Disrupted Day only in part, in which case (i) the Calculation Agent shall make commercially reasonable adjustments to the Number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the second preceding sentence as the Expiration Date for the remaining Warrants for such Component, and (ii) the VWAP Price for such Disrupted Day shall be determined by the Calculation Agent based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Trading Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Trading Day is scheduled following the date hereof, but prior to the open of the regular trading session of the Exchange on such day, then such Scheduled Trading Day shall be deemed to be a Disrupted Day in full. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring in respect of an Expiration Date.
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Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended (A) by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof and (B) by replacing the words “or (iii) an Early Closure.” therein with “(iii) an Early Closure, or (iv) a Regulatory Disruption.”
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Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.
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Regulatory Disruption:
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Any event that Dealer, in its commercially reasonable discretion, based on advice of counsel, determines makes it appropriate with regard 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 Dealer in good faith in relation to such requirements), for Dealer to refrain from or decrease any market activity in connection with the Transaction. Dealer shall notify Issuer as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it.
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Automatic Exercise:
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Applicable; and means that the Number of Warrants for each Component will be deemed to be automatically exercised at the
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Expiration Time on the Expiration Date for such Component unless Dealer notifies Seller (by telephone or in writing) prior to the Expiration Time on the Expiration Date that it does not wish Automatic Exercise to occur, in which case Automatic Exercise will not apply.
Issuer’s Telephone Number
and Telex and/or Facsimile Number
and Contact Details for purpose of
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Giving Notice:
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To be provided by Issuer.
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Settlement Terms:
In respect of any Component
:
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Net Share Settlement:
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On each Settlement Date, Issuer shall, subject to Section 8(d)(ii), deliver to Dealer a number of Shares equal to the Number of Shares to be Delivered for such Settlement Date to the account specified by Dealer and cash in lieu of any fractional shares valued at the VWAP Price on the Valuation Date corresponding to such Settlement Date.
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Number of Shares to be Delivered:
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In respect of any Exercise Date, the product of (i) the number of Warrants exercised or deemed exercised on such Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess, if any, of the VWAP Price on the Valuation Date occurring in respect of such Exercise Date over the Strike Price
divided by
(B) such VWAP Price.
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The Number of Shares to be Delivered shall be delivered by Issuer to Dealer no later than noon (local time in New York City) on the relevant Settlement Date.
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VWAP Price:
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For any Valuation Date, the dollar volume weighted average price per Share for such Valuation Date based on transactions executed during such Valuation Date, as reported on Bloomberg Page “LGND <Equity> AQR” (or any successor thereto) or, in the event such price is not so reported on such Valuation Date for any reason or is manifestly incorrect, as determined by the Calculation Agent using a volume weighted method in a commercially reasonable manner.
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Other Applicable Provisions:
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The provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.
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Adjustments:
In respect of any Component
:
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Method of Adjustment:
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Calculation Agent Adjustment
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Extraordinary Dividend:
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Any Dividend that has an ex-dividend date occurring on or after the Trade Date and on or prior to the date on which Issuer satisfies all of its delivery obligations hereunder.
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Dividend:
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Any dividend or distribution on the Shares (other than any dividend or distribution of the type described in Sections 11.2(e)(i), 11.2(e)(ii)(A) or 11.2(e)(ii)(B) of the Equity Definitions).
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Extraordinary Events:
Consequences of Merger Events:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment;
provided
that, in its commercially reasonable discretion, the Calculation Agent may elect Cancellation and Payment (Calculation Agent Determination) for all or any part of the Transaction.
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Consequences of Tender Offers:
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(a)
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Share-for-Share: Modified Calculation Agent Adjustment
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(b)
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Share-for-Other: Modified Calculation Agent Adjustment
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(c)
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Share-for-Combined: Modified Calculation Agent Adjustment.
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Composition of
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Combined Consideration:
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Not Applicable;
provided
that, notwithstanding Sections 12.1(f) and 12.5(b) of the Equity Definitions, to the extent that the composition of the consideration for the relevant Shares pursuant to a Tender Offer or Merger Event could be elected by a holder of the Shares, the Calculation Agent will determine such composition.
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Modified Calculation
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Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in “Issuer” hereunder being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Dealer, the Issuer of the Affected Shares and the entity that will be the Issuer of the New Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Dealer that Dealer has determined, in its commercially reasonable discretion, to be reasonably necessary or appropriate to allow Dealer to continue as a party to the Transaction (assuming a commercially reasonable hedge position), as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements), and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result,
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then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply.
Consequences of Announcement
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Events:
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If an Announcement Event occurs, then on a date occurring a commercially reasonable period of time (which may, for the avoidance of doubt, mean the period of time ending on the occurrence of the relevant Merger Event, Tender Offer or Acquisition Transaction or the earlier termination or settlement of all or a portion of the Transaction) after the date of the relevant Announcement Event (the “
Announcement Event Adjustment Date
”)” in respect of each Option, the Calculation Agent will determine the cumulative economic effect on such Option of the Announcement Event, if any (without duplication in respect of any other adjustment or cancellation valuation made pursuant to the Equity Definitions, hereunder or under the Agreement, regardless of whether the Announcement Event actually results in a Merger Event, Tender Offer or Acquisition Transaction, and taking into account such factors as the Calculation Agent shall determine appropriate, including, without limitation, changes in volatility, expected dividends or liquidity relevant to the Shares or the Transaction for the period from the time immediately prior to such Announcement Event to the relevant Announcement Event Adjustment Date, and taking into account a commercially reasonable Hedge Position with respect to the Transaction). If the Calculation Agent determines that such cumulative economic effect on any Option is material, then on the Announcement Event Adjustment Date for such Option, the Calculation Agent shall make such adjustment to the terms of the Transaction as the Calculation Agent determines appropriate to account for such cumulative economic effect and determine the effective date of such adjustment. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable.
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Announcement Event:
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(i) The public announcement by any entity of (x) any transaction or event that, if completed, would constitute a Merger Event or Tender Offer, (y) any acquisition by Issuer or any of its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Issuer as of the date of such announcement (an “
Acquisition Transaction
”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii) the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement by any entity of a withdrawal, discontinuation, termination or other change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence, as determined, in each case, by the Calculation Agent. For purposes of this definition of “Announcement Event,” the remainder of the definition of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger” therein shall be disregarded.
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, (a) the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors),” and (b) the phrase “and (iii) issued by a corporation organized under the laws of the United States, any State thereof or the District of Columbia” shall be inserted immediately prior to the period.
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Nationalization, Insolvency
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or Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
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Additional Disruption Events:
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(a)
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Change in Law: Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) adding the words “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” after the word “regulation” in the second line thereof, (y) adding the words “or any Hedge Positions” after the word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y) thereof.
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(b)
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Failure to Deliver: Applicable
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(c)
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Insolvency Filing: Applicable
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(d) Hedging Disruption:
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Applicable;
provided
that:
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(i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) inserting the following two phrases at the end of such Section:
“For the avoidance of doubt, the term “equity price risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms.”; and
(ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.
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(e)
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Increased Cost of Hedging: Not Applicable
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(f)
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Loss of Stock Borrow: Applicable
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Maximum Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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(g)
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Increased Cost of Stock Borrow: Applicable
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Initial Stock Loan Rate: As provided in
Annex A
to this Confirmation.
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Hedging Party:
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Dealer for all applicable Potential Adjustment Events and Extraordinary Events
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Determining Party:
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Dealer for all applicable Extraordinary Events
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Agreements and Acknowledgments
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Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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3.
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Calculation Agent
: Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Issuer, the Calculation Agent shall promptly (but in any event within five Scheduled Trading Days) provide to Issuer by email to the email address provided by Issuer in such request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that the Calculation Agent shall not be obligated to disclose any proprietary or confidential data or information or any proprietary or confidential models used by it for such determination or calculation.
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4.
Account Details
:
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Dealer Payment Instructions:
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Chase Manhattan Bank New York
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For A/C Goldman Sachs & Co. LLC
A/C #930-1-011483
ABA: 021-000021
Issuer Payment Instructions: To be provided by Issuer.
5.
Offices
:
The Office of Dealer for the Transaction is: 200 West Street, New York, New York 10282-2198
The Office of Issuer for the Transaction is: Not applicable
6.
Notices
: For purposes of this Confirmation:
(a) Address for notices or communications to Issuer:
To: Ligand Pharmaceuticals Incorporated
3911 Sorrento Valley Blvd, Suite 110
San Diego, CA 92121
Attn: Charles S. Berkman
Telephone: 858-550-7835
Facsimile: 858-550-7272
(b) Address for notices or communications to Dealer:
To: Goldman Sachs & Co. LLC
200 West Street
New York, NY 10282-2198
Attn: Joshua Murray
Equity Capital Markets
Telephone: 212-902-3291
Facsimile: 646-835-3576
Email: joshua.murray@gs.com
And email notification to the following address:
Eq-derivs-notifications@am.ibd.gs.com
7.
Representations, Warranties and Agreements
:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Issuer represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date and any date on which Issuer makes an election hereunder, (A) Issuer is not aware of any material nonpublic information regarding Issuer or the Shares and (B) all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) Without limiting the generality of Section 13.1 of the Equity Definitions, Issuer acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260,
Earnings Per Share
, ASC Topic 815,
Derivatives and Hedging
, or ASC Topic 480,
Distinguishing Liabilities from Equity
and ASC 815-40,
Derivatives and Hedging – Contracts in Entity’s Own Equity
(or any successor issue statements) or under FASB’s Liabilities & Equity Project.
(iii) On or reasonably promptly following the Trade Date, Issuer shall deliver to Dealer a resolution of Issuer’s board of directors or any committee thereof (together with a resolution of Issuer’s board of directors authorizing such committee to take such actions) authorizing the Transaction and such other certificate or certificates as Dealer shall, prior to the Trade Date, reasonably request.
(iv) Issuer is not entering into this Confirmation nor making any election hereunder to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(v) Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.
(vi) On the Trade Date, (A) the assets of Issuer at their fair valuation exceed the liabilities of Issuer, including contingent liabilities, (B) the capital of Issuer is adequate to conduct the business of Issuer and (C) Issuer has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.
(vii) From and after the date of the Available Shares Notice (as defined below), Issuer shall not take any action to decrease the number of Available Shares below the Capped Number (each as defined below), and prior to the date of the Available Shares Notice, Issuer shall not take any action to decrease the number of Available Shares below the number of Available Shares on the Effective Date.
(viii) The representations and warranties of Issuer set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement (the “
Purchase Agreement
”) dated as of May 17, 2018, between Issuer and Goldman
Sachs & Co. LLC and Barclays Capital Inc., as representatives of the Initial Purchasers party thereto are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.
(ix) Issuer understands no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations will not be guaranteed by any Affiliate of Dealer or any governmental agency.
(x) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, during the period starting on the first Expiration Date and ending on the last Expiration Date (the “
Settlement Period
”), the Shares and any securities that are convertible into, or exchangeable or exercisable for, Shares will not be subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act, unless Issuer has provided written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the relevant “restricted period” not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”;
provided
that (I) Issuer shall provide written notice (which notice shall be deemed to contain representations and warranties that, as of the time such notice is given, (i) Issuer is not in possession of material nonpublic information with respect to Issuer or the Shares and (ii) Issuer is not engaging in the related activity to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act) to Dealer of the end of the relevant “restricted period” not later than the last day of such “restricted period”, (II) Issuer acknowledges and agrees that any notice under this clause (x) may result in a Regulatory Disruption or other adjustments in accordance with the terms of this Confirmation, (III) the Calculation Agent shall make a commercially reasonable adjustment in respect of any one or more of the terms relevant to the exercise, settlement, payment or other terms of the relevant Options to preserve the fair value of the Options to Dealer after taking into account such Regulatory Disruption, (IV) the aggregate number of Scheduled Trading Days that occur during any such “restricted period” (in the aggregate across all such “restricted periods” to which this clause (x) applies) will not exceed 15 Scheduled Trading Days and (V) the aggregate number of “restricted periods” to which this clause (x) applies will not exceed three “restricted periods”.
(xi) Unless Issuer has delivered the Available Shares Notice prior to the first Expiration Date, on each day during the Settlement Period, neither Issuer nor any “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“
Rule 10b-18
”)) shall, without the consent of Dealer, such consent not to be unreasonably withheld, conditioned or delayed, directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares;
provided
that such restrictions will not apply to the following: (A) privately negotiated, off-market purchases of Shares (or any security convertible into or exchangeable for Shares) at or below the then-prevailing fair market price thereof; (B) purchases of Shares pursuant to exercises of stock options granted to former or current employees, officers, directors, independent contractors or other affiliates of Issuer, including the withholding and/or purchase of Shares from holders of such options to satisfy payment of the option exercise price and/or to satisfy tax withholding requirements in connection with the exercise of such options; (C) purchases of Shares from holders of performance shares or units or restricted shares or units to satisfy tax withholding requirements in connection with vesting; (D) the conversion or exchange by holders of any convertible or exchangeable securities of Issuer pursuant to the terms of such securities; or (E) purchases of Shares effected by or for a plan by an agent that satisfy the requirements of Rule 10b-18(a)(13)(ii).
(xii) (A) On and after the date of the Available Shares Notice until termination or earlier expiration of the Transaction, a number of Shares equal to the Capped Number have been reserved for issuance by all required corporate action of Issuer; (B) on the Trade Date and at all times until termination or earlier expiration of the Transaction, the Shares issuable upon exercise of the Warrants (the “
Warrant Shares
”) have been duly authorized
and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrant following the exercise of the Warrant in accordance with the terms and conditions of the Warrant, will be validly issued, fully-paid and non-assessable; and (C)(i) the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and (ii) the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
(xiii) To Issuer’s actual knowledge, no state or local (including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.
(b) Each of Dealer and Issuer agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended.
(c) Each of Dealer and Issuer acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “
Securities Act
”), by virtue of Section 4(a)(2) thereof. Accordingly, Dealer represents and warrants to Issuer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.
(d) Issuer agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of Title 11 of the United States Code (the “
Bankruptcy Code
”). The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “termination value, payment amount, or other transfer obligation” within the meaning of Sections 362 and 546 of the Bankruptcy Code, and (B) Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.
(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement, Section 7(a)(v) of this Confirmation (replacing, solely for these purposes, the words “On the Trade Date (or, with respect to clause (C)(ii), the Effective Date) and at all times until termination or earlier expiration of the Transaction” with the words “On the Effective Date”) and such other matters as Dealer may, prior to the Trade Date, reasonably request;
provided
that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.
8.
Other Provisions
:
(a)
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If Issuer shall owe Dealer any amount pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions or pursuant to Section 6(d)(ii) of the Agreement (a “
Payment Obligation
”), Issuer shall have the right, in its sole discretion, to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the Merger Date, Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable (“
Notice of Share Termination
”);
provided
that if Issuer does not elect to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to require Issuer to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Issuer’s failure to elect or election to the contrary; and
provided further
that Issuer shall not have the right to so elect (but, for the
avoidance of doubt, Dealer shall have the right to so elect) in the event (i) of an Insolvency, a Nationalization, a Tender Offer or a Merger Event, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash, (ii) of an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is the Affected Party or an Extraordinary Event, which Event of Default, Termination Event or Extraordinary Event resulted from an event or events within Issuer’s control, (iii) that Issuer fails to remake the representation set forth in Section 7(a)(i) as of the date of such election or (iv) prior to Issuer’s delivery of the Available Shares Notice (as defined below). Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the Merger Date, the Tender Offer Date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of another Extraordinary Event, as applicable:
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Share Termination Alternative:
|
If applicable, means that Issuer shall deliver to Dealer the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date or dates as the Calculation Agent may reasonably determine (the “
Share Termination Payment Date
”), in satisfaction of the Payment Obligation.
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Share Termination Delivery
|
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Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
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Share Termination Unit Price:
|
The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Issuer.
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Share Termination Delivery Unit:
|
In the case of a Termination Event, Event of Default, Delisting, Additional Disruption Event or Announcement Event, one Share or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer, one Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Insolvency, Nationalization, Merger Event or Tender Offer, as applicable. If such Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of consideration to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
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Failure to Deliver:
|
Applicable
|
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Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Seller is the issuer of the Shares or any portion of the Share Termination Delivery Units), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to “Shares” shall be read as references to “Share Termination Delivery Units”.
|
(b)
Private Placement Procedures
. (i) If, in the reasonable judgment of Dealer, based on advice of counsel, for any reason, any Shares or any securities of Issuer or its affiliates comprising any Share Termination Delivery Units deliverable to Dealer hereunder (any such Shares or securities, “
Delivered Securities
”) would not be immediately freely transferable by Dealer under Rule 144 under the Securities Act, then the provisions set forth in this Section 8(b) shall apply. In such event, Issuer shall deliver additional Delivered Securities so that the value of such Delivered Securities, as determined by the Calculation Agent to reflect a commercially reasonable liquidity discount, equals the value of the number of Delivered
Securities that would otherwise be deliverable if such Delivered Securities were freely tradeable (without prospectus delivery) upon receipt by Dealer (such value, the “
Freely Tradeable Value
”).
(ii) (A) Dealer (or an Affiliate of Dealer designated by Dealer) and any potential institutional purchaser of any such Delivered Securities from Dealer or such Affiliate identified by Dealer shall be afforded a commercially reasonable opportunity to conduct a due diligence investigation in compliance with applicable law with respect to Issuer customary in scope for private placements of equity securities of substantially similar size for similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them);
(B) Dealer (or an Affiliate of Dealer designated by Dealer) and Issuer shall enter into an agreement (a “
Private Placement Agreement
”) on commercially reasonable terms in connection with the private placement of such Delivered Securities by Issuer to Dealer or such Affiliate and the private resale of such Delivered Securities by Dealer or such Affiliate, substantially similar to private placement purchase agreements customary for private placements of equity securities of substantially similar size for similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its Affiliates and Issuer, shall provide for the payment by Issuer of all expenses in connection with such resale, including all fees and expenses of counsel for Dealer, shall contain representations, warranties and agreements of Issuer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resale, and shall use best efforts to provide for the delivery of accountants’ “comfort letters” to Dealer or such Affiliate with respect to the financial statements and certain financial information contained in or incorporated by reference into the offering memorandum prepared for the resale of such Delivered Securities; and
(C) Issuer agrees that (i) any Delivered Securities so delivered to Dealer may be transferred by and among Dealer and its Affiliates, and Issuer shall effect such transfer without any further action by Dealer and (ii) after the minimum “holding period” within the meaning of Rule 144(d) under the Securities Act has elapsed with respect to such Delivered Securities, Issuer shall promptly remove, or cause the transfer agent for such Delivered Securities to remove, any legends referring to any such restrictions or requirements from any Delivered Securities, without any further requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
(D) Issuer shall not take, or cause to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Shares or Share Termination Delivery Units, as the case may be, or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resale of the Shares or Share Termination Delivery Units, as the case may be, by Dealer (or any such affiliate of Dealer).
(iii) Dealer or its affiliate may sell such Shares or Share Termination Delivery Units, as the case may be, during a period (the “
Resale Period
”) commencing on the Scheduled Trading Day following delivery of such Shares or Share Termination Delivery Units, as the case may be, and ending on the Scheduled Trading Day on which Dealer completes the sale of all such Shares or Share Termination Delivery Units, as the case may be, or a sufficient number of Shares or Share Termination Delivery Units, as the case may be, so that the realized net proceeds of such sales equal or exceed the Freely Tradeable Value (such amount of the Freely Tradeable Value, the “
Required Proceeds
”). If any of such delivered Shares or Share Termination Delivery Units remain after such realized net proceeds equal or exceed the Required Proceeds, Dealer shall return such remaining Shares or Share Termination Delivery Units to Issuer. If the Required Proceeds exceed the realized net proceeds from such resale, Issuer shall transfer to Dealer by the open of the regular trading session on the Exchange on the Scheduled Trading Day immediately following the last day of the Resale Period the amount of such excess (the “
Additional Amount
”) in cash or in a number of additional Shares or Share Termination Delivery Units, as the case may be, (“
Make-whole Shares
”) in an amount that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a dollar value equal to the Additional Amount. The Resale Period shall continue to enable the sale of the Make-whole Shares in the manner contemplated by this
Section 8(b)(iii). This provision shall be applied successively until the Additional Amount is equal to zero, subject to Section 8(d).
(c)
Beneficial Ownership
. Notwithstanding anything to the contrary in the Agreement or this Confirmation, in no event shall Dealer be entitled to receive, or shall be deemed to receive, any Shares in connection with this Transaction if, immediately upon giving effect to such receipt of such Shares, (i) Dealer’s Beneficial Ownership would be equal to or greater than 4.5% of the outstanding Shares or (ii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “
Dealer Person
”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Laws
”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to any consequences under the constitutive documents of Issuer or any contract or agreement to which Issuer is a party (in each case, excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act), in each case
minus
(y) 1% of the number of Shares outstanding on the date of determination (each of clause (i) and (ii) above, an “
Ownership Limitation
”). If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of an Ownership Limitation, Dealer’s right to receive such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Scheduled Trading Day after, Dealer gives notice to Issuer that such delivery would not result in any of such Ownership Limitations being breached. “
Dealer’s Beneficial Ownership
” means the “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and the rules promulgated thereunder (collectively, “
Section 13
”)) of Shares, without duplication, by Dealer, together with any of its affiliates or other person subject to aggregation with Dealer under Section 13 for purposes of “beneficial ownership”, or by any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates, persons and groups, collectively, “
Dealer Group
”) (or, to the extent that, as a result of a change in law, regulation or interpretation after the date hereof, the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such number). Notwithstanding anything in the Agreement or this Confirmation to the contrary, Dealer (or the affiliate designated by Dealer pursuant to Section 8(k) below) shall not become the record or beneficial owner, or otherwise have any rights as a holder, of any Shares that Dealer (or such affiliate) is not entitled to receive at any time pursuant to this Section 8(c), until such time as such Shares are delivered pursuant to this Section 8(c).
(d)
Limitations on Settlement by Issuer
.
(i) Notwithstanding anything herein or in the Agreement to the contrary, once Issuer delivers a notice (such notice, the “
Available Shares Notice
”) to Dealer representing and warranting that the number of authorized but unissued Shares that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) (such Shares, the “Available Shares”) exceeds the Capped Number of Shares (as provided in Annex A to this Confirmation), subject to adjustment from time to time in accordance with the provisions of this Confirmation or the Definitions, other than an adjustment resulting from actions of Issuer or events within Issuer’s control (the Capped Number of Shares, as so adjusted, the “
Capped Number
”) (provided that no such adjustment shall cause the Capped Number to exceed the number of Available Shares), Issuer shall not be required to deliver Shares in connection with the Transaction in excess of the Capped Number. Upon delivery of the Available Shares Notice, Issuer shall be deemed to represent and warrant to Dealer (which representation and warranty shall be deemed to be repeated on each day that the Transaction is outstanding) that the Capped Number is equal to or less than the number of Available Shares. In the event that, following the date of the Available Shares Notice, Issuer shall not have delivered the full number of Shares otherwise deliverable as a result of this Section 8(d) (the resulting deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to deliver, from time to time until the full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when, and to the extent, that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries after the date of the Available Shares Notice (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved
or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter.
(ii) Notwithstanding anything herein or in the Agreement to the contrary, prior to the date of the Available Shares Notice, to the extent that Issuer would otherwise be required to deliver any Shares to Dealer (whether upon settlement of the Transaction, upon termination or otherwise), and the number of Available Shares is less than the number of Shares otherwise so required to be delivered, Counterparty shall, on the date such delivery would otherwise be due, pay cash to Dealer in lieu of such delivery of such excess number of Shares, with the amount of such payment determined by the Calculation Agent in its commercially reasonable discretion and notified by the Calculation Agent to Issuer no later than the Scheduled Trading Day preceding such date of payment. Prior to the date of the Available Shares Notice, Issuer shall ensure that, to the extent that (i) Shares are repurchased, acquired or otherwise received by Issuer or any of its subsidiaries (whether or not in exchange for cash, fair value or any other consideration), (ii) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (iii) Issuer additionally authorizes any unissued Shares that are not reserved for other transactions, such shares shall constitute “Available Shares” under this Transaction or any similar transaction entered on or about the date hereof, such Shares to be allocated proportionally to each such transaction based on the number of “Options” outstanding thereunder (up to the “Capped Number” specified in each such transaction). Upon Dealer’s reasonable request from time to time, Issuer shall promptly notify Dealer of the then-current number of Available Shares.
(e)
Right to Extend
. The Calculation Agent, acting commercially reasonably, may postpone, without duplication of any postponements made pursuant to the provisions applicable to Regulatory Disruptions hereunder, any Exercise Date or Settlement Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Number of Shares to be Delivered with respect to one or more Components), if Dealer determines, in its reasonable discretion, based on advice of counsel in the case of the immediately following clause (ii), that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements).
(f)
Equity Rights
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Issuer’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Issuer’s bankruptcy to any claim arising as a result of a breach by Issuer of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Issuer herein under or pursuant to any other agreement.
(g)
Amendments to Equity Definitions
. The following amendments shall be made to the Equity Definitions:
(i) Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “an”; and adding the phrase “or Warrants” at the end of the sentence.
(ii) The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has an effect on the theoretical value of the relevant Shares or options on the Shares and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(and, for the avoidance of doubt,
adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii) Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative” and replacing them with “material” and adding the phrase “or Warrants” at the end of the sentence;
(iv) Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer.”;
(v) Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; and
(vi) Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.
(h)
Transfer and Assignment
. Dealer may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, without the consent of Issuer to any affiliate of Dealer or any internationally recognized investment bank, in each case that is (or whose guarantor is) of credit quality equivalent to Dealer. In the event of any such transfer or assignment, the transferee or assignee shall agree that (i) Issuer will not receive from the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement that is less than the amount that Issuer would have received from Dealer in the absence of such transfer or assignment and (ii) Issuer will not be required to pay to the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, if applicable, greater than the amount that Issuer would have been required to pay to Dealer in the absence of such transfer or assignment, except in each case, to the extent it results from a change in law that occurs after the date of that transfer or assignment. At any time at which any Ownership Limitation exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after using its commercially reasonable efforts on pricing terms and within a time period reasonably acceptable to Dealer such that an Ownership Limitation no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “
Terminated Portion
”) of the Transaction, such that such Ownership Limitation no longer exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Issuer shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only Terminated Transaction.
(i)
Adjustments
. For the avoidance of doubt, whenever the Calculation Agent is called upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.
(j)
Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Issuer and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Issuer relating to such tax treatment and tax structure.
(k)
Designation by Dealer
. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s
obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Issuer to the extent of any such performance.
(l)
Additional Termination Events
. The occurrence of any of the following shall constitute an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction and Issuer shall be the sole Affected Party;
provided
that with respect to any Additional Termination Event, Dealer, acting in good faith and commercially reasonably, may choose to treat part of the Transaction as the sole Affected Transaction, and, upon the termination of the Affected Transaction, a Transaction with terms identical to those set forth herein except with a Number of Warrants equal to the unaffected number of Warrants shall be treated for all purposes as the Transaction, which shall remain in full force and effect:
(i) Dealer reasonably determines, based on advice of counsel, that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer in good faith in relation to such requirements);
(ii) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act other than Issuer, Issuer’s wholly-owned subsidiaries and Issuer’s and their employee benefit plans files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of Issuer’s common stock representing more than 50% of the voting power of Issuer’s common stock;
(iii) the consummation of (A) any recapitalization, reclassification or change of the Issuer’s common stock (other than changes resulting from a subdivision or combination) as a result of which the Issuer’s common stock would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Issuer’s common stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its subsidiaries, taken as a whole, to any person other than one of the Issuer’s wholly owned subsidiaries;; or
(iv) Issuer’s stockholders approve any plan or proposal for Issuer’s liquidation or dissolution.
Notwithstanding the foregoing, a transaction or transactions set forth in clause (iii) above shall not constitute an Additional Termination Event if at least 90% of the consideration received or to be received by the holders of Issuer’s common stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with such transaction or transactions otherwise constituting an Additional Termination Event under clause (iii) above consists of shares of common stock that are listed or quoted (or depositary receipts representing shares of common stock, which depositary receipts are listed or quoted) on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and such transaction(s) constitutes a common stock change event whose reference property consists of such consideration, and as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made in respect of dissenters’ statutory appraisal rights.
(m)
No Netting and Set-off
. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.
(n)
Early Unwind
. In the event the sale by Issuer of the “Option Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers pursuant to the Purchase Agreement for any reason by the relevant “Date of Delivery” (as defined in the Purchase Agreement) (or such later date as agreed upon by the parties) (such “Date of Delivery” or such later date being the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Issuer thereunder shall be cancelled and terminated. Following such termination and cancellation, each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of either party arising out of and to be performed in connection with the Transaction either
prior to or after the Early Unwind Date. Dealer and Issuer represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
(o)
Wall Street Transparency and Accountability Act of 2010
. The parties hereby agree that none of (v) Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Loss of Stock Borrow, Increased Cost of Stock Borrow, an Excess Ownership Position or Illegality (as defined in the Agreement)).
(p)
Tax Matters.
(i)
Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “
Code
”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “
FATCA Withholding Tax
”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(ii)
HIRE Act and Section 305
. “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 305 (as in effect on the date hereof) or Section 871(m) of the Code or any regulations issued thereunder (each such tax, “
Dividend Tax
”). Without duplication for (1) any amount that Issuer has deducted on account of such Dividend Tax from any amount paid to Dealer or (2) any amount that Issuer has paid from money or other property of Dealer, the amount of Dividend Taxes so required to be remitted shall be payable by Dealer to Issuer on the date on which the remittance of such required withholding or deduction is required to be made, and Dealer’s aforementioned obligations shall survive the termination of any Transaction.
(iii)
Tax documentation
. Issuer shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Issuer has become obsolete or incorrect. Additionally, Issuer shall, promptly upon request by Dealer, provide such other tax forms and documents as are reasonably requested by Dealer. Dealer shall provide Issuer, as applicable, (x) a valid U.S. Internal Revenue Service Form W-9 or W-8ECI or (y) (A) a valid Internal Revenue Service Form W-8IMY along with a withholding statement and (B) attached a valid Internal Revenue Service Form W-9 or Internal Revenue Service Form W-8ECI, or, in each case, any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect. Additionally, Dealer shall, promptly upon request by Issuer, provide such other tax forms and documents as are reasonably requested by Issuer.
(iv)
Tax Representations
. Issuer is a corporation for U.S. federal income tax purposes and is organized under the laws of the State of Delaware. Issuer is a “U.S. person” (as that term is used in section 1.1441-4(a)(3)(ii) of United States Treasury Regulations) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).
(q) Role of Agent. Each of Dealer and Issuer acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement
or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Issuer is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction. Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder. Issuer acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.
(r)
Conduct Rules
. Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.
(s) [
Reserved
].
(t)
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Issuer.
(u)
Risk Disclosure Statement
. Issuer represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement provided by Dealer and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”
(v) [
Reserved
].
(w) [
Reserved
].
(x) [
Reserved
].
(y)
Waiver of Trial by Jury
.
EACH OF ISSUER AND BUYER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF BUYER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.
(z)
Governing Law; Jurisdiction
.
THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
[
Signature Page Follows
]
Issuer hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Issuer with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Dealer.
Yours faithfully,
GOLDMAN SACHS & CO. LLC
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By:
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/s/ Gianfranco Bartellino
|
Name: Gianfranco Bartellino
Title: Vice President
Agreed and Accepted By:
LIGAND PHARMACEUTICALS INCORPORATED
Name: Charles Berkman
Title: Senior Vice President, General Counsel and Secretary
Annex A
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth below.
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Component Number
|
Number of Warrants
|
Expiration Date
|
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1
|
1,341
|
Tue 15 Aug 2023
|
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2
|
1,341
|
Wed 16 Aug 2023
|
|
3
|
1,341
|
Thu 17 Aug 2023
|
|
4
|
1,341
|
Fri 18 Aug 2023
|
|
5
|
1,341
|
Mon 21 Aug 2023
|
|
6
|
1,341
|
Tue 22 Aug 2023
|
|
7
|
1,341
|
Wed 23 Aug 2023
|
|
8
|
1,341
|
Thu 24 Aug 2023
|
|
9
|
1,341
|
Fri 25 Aug 2023
|
|
10
|
1,341
|
Mon 28 Aug 2023
|
|
11
|
1,341
|
Tue 29 Aug 2023
|
|
12
|
1,341
|
Wed 30 Aug 2023
|
|
13
|
1,341
|
Thu 31 Aug 2023
|
|
14
|
1,341
|
Fri 1 Sep 2023
|
|
15
|
1,341
|
Tue 5 Sep 2023
|
|
16
|
1,341
|
Wed 6 Sep 2023
|
|
17
|
1,341
|
Thu 7 Sep 2023
|
|
18
|
1,341
|
Fri 8 Sep 2023
|
|
19
|
1,341
|
Mon 11 Sep 2023
|
|
20
|
1,341
|
Tue 12 Sep 2023
|
|
21
|
1,341
|
Wed 13 Sep 2023
|
|
22
|
1,341
|
Thu 14 Sep 2023
|
|
23
|
1,341
|
Fri 15 Sep 2023
|
|
24
|
1,341
|
Mon 18 Sep 2023
|
|
25
|
1,341
|
Tue 19 Sep 2023
|
|
26
|
1,341
|
Wed 20 Sep 2023
|
|
27
|
1,341
|
Thu 21 Sep 2023
|
|
28
|
1,341
|
Fri 22 Sep 2023
|
|
29
|
1,341
|
Mon 25 Sep 2023
|
|
30
|
1,341
|
Tue 26 Sep 2023
|
|
31
|
1,341
|
Wed 27 Sep 2023
|
|
32
|
1,341
|
Thu 28 Sep 2023
|
|
33
|
1,341
|
Fri 29 Sep 2023
|
|
34
|
1,341
|
Mon 2 Oct 2023
|
|
35
|
1,341
|
Tue 3 Oct 2023
|
|
36
|
1,341
|
Wed 4 Oct 2023
|
|
37
|
1,341
|
Thu 5 Oct 2023
|
|
38
|
1,341
|
Fri 6 Oct 2023
|
|
39
|
1,341
|
Mon 9 Oct 2023
|
|
40
|
1,341
|
Tue 10 Oct 2023
|
|
|
|
|
|
|
|
41
|
1,341
|
Wed 11 Oct 2023
|
|
42
|
1,341
|
Thu 12 Oct 2023
|
|
43
|
1,341
|
Fri 13 Oct 2023
|
|
44
|
1,341
|
Mon 16 Oct 2023
|
|
45
|
1,341
|
Tue 17 Oct 2023
|
|
46
|
1,341
|
Wed 18 Oct 2023
|
|
47
|
1,341
|
Thu 19 Oct 2023
|
|
48
|
1,341
|
Fri 20 Oct 2023
|
|
49
|
1,341
|
Mon 23 Oct 2023
|
|
50
|
1,341
|
Tue 24 Oct 2023
|
|
51
|
1,341
|
Wed 25 Oct 2023
|
|
52
|
1,341
|
Thu 26 Oct 2023
|
|
53
|
1,341
|
Fri 27 Oct 2023
|
|
54
|
1,341
|
Mon 30 Oct 2023
|
|
55
|
1,341
|
Tue 31 Oct 2023
|
|
56
|
1,341
|
Wed 1 Nov 2023
|
|
57
|
1,341
|
Thu 2 Nov 2023
|
|
58
|
1,341
|
Fri 3 Nov 2023
|
|
59
|
1,341
|
Mon 6 Nov 2023
|
|
60
|
1,341
|
Tue 7 Nov 2023
|
|
61
|
1,341
|
Wed 8 Nov 2023
|
|
62
|
1,341
|
Thu 9 Nov 2023
|
|
63
|
1,341
|
Fri 10 Nov 2023
|
|
64
|
1,341
|
Mon 13 Nov 2023
|
|
65
|
1,342
|
Tue 14 Nov 2023
|
|
66
|
1,342
|
Wed 15 Nov 2023
|
|
67
|
1,342
|
Thu 16 Nov 2023
|
|
68
|
1,342
|
Fri 17 Nov 2023
|
|
69
|
1,342
|
Mon 20 Nov 2023
|
|
70
|
1,342
|
Tue 21 Nov 2023
|
|
71
|
1,342
|
Wed 22 Nov 2023
|
|
72
|
1,342
|
Mon 27 Nov 2023
|
|
73
|
1,342
|
Tue 28 Nov 2023
|
|
74
|
1,342
|
Wed 29 Nov 2023
|
|
75
|
1,342
|
Thu 30 Nov 2023
|
|
76
|
1,342
|
Fri 1 Dec 2023
|
|
77
|
1,342
|
Mon 4 Dec 2023
|
|
78
|
1,342
|
Tue 5 Dec 2023
|
|
79
|
1,342
|
Wed 6 Dec 2023
|
|
80
|
1,342
|
Thu 7 Dec 2023
|
|
81
|
1,342
|
Fri 8 Dec 2023
|
|
82
|
1,342
|
Mon 11 Dec 2023
|
|
83
|
1,342
|
Tue 12 Dec 2023
|
|
84
|
1,342
|
Wed 13 Dec 2023
|
|
85
|
1,342
|
Thu 14 Dec 2023
|
|
86
|
1,342
|
Fri 15 Dec 2023
|
|
|
|
|
|
|
|
87
|
1,342
|
Mon 18 Dec 2023
|
|
88
|
1,342
|
Tue 19 Dec 2023
|
|
89
|
1,342
|
Wed 20 Dec 2023
|
|
90
|
1,342
|
Thu 21 Dec 2023
|
|
91
|
1,342
|
Fri 22 Dec 2023
|
|
92
|
1,342
|
Tue 26 Dec 2023
|
|
93
|
1,342
|
Wed 27 Dec 2023
|
|
94
|
1,342
|
Thu 28 Dec 2023
|
|
95
|
1,342
|
Fri 29 Dec 2023
|
|
96
|
1,342
|
Tue 2 Jan 2024
|
|
97
|
1,342
|
Wed 3 Jan 2024
|
|
98
|
1,342
|
Thu 4 Jan 2024
|
|
99
|
1,342
|
Fri 5 Jan 2024
|
|
100
|
1,342
|
Mon 8 Jan 2024
|
|
101
|
1,342
|
Tue 9 Jan 2024
|
|
102
|
1,342
|
Wed 10 Jan 2024
|
|
103
|
1,342
|
Thu 11 Jan 2024
|
|
104
|
1,342
|
Fri 12 Jan 2024
|
|
105
|
1,342
|
Tue 16 Jan 2024
|
|
106
|
1,342
|
Wed 17 Jan 2024
|
|
107
|
1,342
|
Thu 18 Jan 2024
|
|
108
|
1,342
|
Fri 19 Jan 2024
|
|
109
|
1,342
|
Mon 22 Jan 2024
|
|
110
|
1,342
|
Tue 23 Jan 2024
|
|
111
|
1,342
|
Wed 24 Jan 2024
|
|
112
|
1,342
|
Thu 25 Jan 2024
|
|
113
|
1,342
|
Fri 26 Jan 2024
|
|
114
|
1,342
|
Mon 29 Jan 2024
|
|
115
|
1,342
|
Tue 30 Jan 2024
|
|
116
|
1,342
|
Wed 31 Jan 2024
|
|
117
|
1,342
|
Thu 1 Feb 2024
|
|
118
|
1,342
|
Fri 2 Feb 2024
|
|
119
|
1,342
|
Mon 5 Feb 2024
|
|
120
|
1,342
|
Tue 6 Feb 2024
|
|
|
|
|
Strike Price:
|
USD 315.3810
|
|
|
|
|
Final Disruption Date:
|
February 19, 2024
|
|
|
|
|
Maximum Stock Loan Rate:
|
200 basis points
|
|
|
|
|
Initial Stock Loan Rate:
|
Prior to May 16, 2023, zero basis points, and thereafter, 25 basis points
|
|
|
|
|
Capped Number of Shares:
|
241,464
|
