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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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The Netherlands
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98-0509600
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Prins Bernhardplein 200
1097 JB Amsterdam, The Netherlands
(Address of principal executive offices)
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None
(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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•
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future actions of the SEC, the United States Attorney’s office, the U.S. Food and Drug Administration (FDA), the Department of Health and Human Services, or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the U.S. Foreign Corrupt Practices Act and similar laws, that could delay, limit, or suspend our development, manufacturing, commercialization, and sale of products, or result in seizures, injunctions, monetary sanctions, or criminal or civil liabilities;
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•
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risks associated with the merger between Tornier N.V. (Tornier or legacy Tornier) and Wright Medical Group, Inc. (WMG or legacy Wright), including the failure to realize intended benefits and anticipated synergies and cost-savings from the transaction or delay in realization thereof; our businesses may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; and business disruption after the transaction, including adverse effects on employee retention, our sales and distribution channel, especially in light of anticipated territory transitions, and business relationships with third parties;
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•
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risks associated with the divestiture of the U.S. rights to certain of legacy Tornier's ankle and silastic toe replacement products;
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•
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liability for product liability claims on hip/knee (OrthoRecon) products sold by legacy Wright prior to the divestiture of the OrthoRecon business and the anticipated sale of legacy Tornier’s large joints business;
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failure to realize the anticipated benefits from previous acquisitions or from the divestiture of legacy Wright's OrthoRecon business;
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adverse outcomes in existing product liability litigation;
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•
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new product liability claims;
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•
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inadequate insurance coverage;
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copycat claims against our modular hip systems resulting from a competitor’s recall of its modular hip product;
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•
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the ability of a creditor of any one particular entity within our corporate structure to reach the assets of the other entities within our corporate structure not liable for the underlying claims of the one particular entity, despite our corporate structure which is intended to ring-fence liabilities;
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•
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failure to obtain anticipated commercial sales of our AUGMENT
®
Bone Graft in the United States;
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•
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challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;
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adverse effects of diverting resources and attention to proposed sale of large joints business;
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•
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failures of, interruptions to, or unauthorized tampering with, our information technology systems;
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•
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failure or delay in obtaining FDA or other regulatory approvals for our products;
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•
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the potentially negative effect of our ongoing compliance efforts on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products;
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•
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the possibility of private securities litigation or shareholder derivative suits;
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•
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insufficient demand for and market acceptance of our new and existing products;
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•
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recently enacted healthcare laws and changes in product reimbursements, which could generate downward pressure on our product pricing;
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•
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potentially burdensome tax measures;
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•
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lack of suitable business development opportunities;
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•
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inability to capitalize on business development opportunities;
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•
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product quality or patient safety issues;
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•
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geographic and product mix impact on our sales;
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•
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inability to retain key sales representatives, independent distributors, and other personnel or to attract new talent;
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inventory reductions or fluctuations in buying patterns by wholesalers or distributors;
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inability to generate sufficient cash flow to satisfy our capital requirements, including future milestone payments, and existing debt, including the conversion features of our convertible senior notes, or refinance our existing debt as it matures;
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•
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inability to raise additional financing when needed and on favorable terms;
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•
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the negative impact of the commercial and credit environment on us, our customers, and our suppliers;
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deriving a significant portion of our revenues from operations in certain geographic markets that are subject to political, economic, and social instability, including in particular France, and risks and uncertainties involved in launching our products in certain new geographic markets;
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fluctuations in foreign currency exchange rates;
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not successfully developing and marketing new products and technologies and implementing our business strategy;
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not successfully competing against our existing or potential competitors and the effect of significant recent consolidations amongst our competitors;
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the reliance of our business plan on certain market assumptions;
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•
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our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;
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our inability to timely manufacture products or instrument sets to meet demand;
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our plans to bring the manufacturing of certain of our products in-house and possible disruptions we may experience in connection with such transition;
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•
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our plans to increase our gross margins by taking certain actions designed to do so;
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•
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the loss of key suppliers, which may result in our inability to meet customer orders for our products in a timely manner or within our budget;
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•
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the incurrence of significant expenditures of resources to maintain relatively high levels of inventory, which could reduce our cash flows and increase the risk of inventory obsolescence, which could harm our operating results;
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consolidation in the healthcare industry that could lead to demands for price concessions or the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition, or operating results;
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our clinical trials and their results and our reliance on third parties to conduct them;
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the compliance of our products and activities with the laws and regulations of the countries in which they are marketed, which compliance may be costly and time-consuming;
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•
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the use, misuse or off-label use of our products that may harm our image in the marketplace or result in injuries that may lead to product liability suits, which could be costly to our business or result in governmental sanctions; and
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•
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pending and future other litigation, which could have an adverse effect on our business, financial condition, or operating results.
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Wright Medical Group N.V.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
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|||||||
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June 26, 2016
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December 27, 2015
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||||
Assets:
|
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||||
Current assets:
|
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|
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||||
Cash and cash equivalents
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$
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326,251
|
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$
|
139,804
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|
Accounts receivable, net
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125,350
|
|
|
131,050
|
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||
Inventories
|
182,995
|
|
|
210,701
|
|
||
Prepaid expenses
|
13,040
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|
|
14,923
|
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||
Other current assets
|
114,257
|
|
|
44,919
|
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||
Current assets held for sale
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23,305
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|
18,487
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||
Total current assets
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785,198
|
|
|
559,884
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||
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||||
Property, plant and equipment, net
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216,041
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224,256
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||
Goodwill
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861,738
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866,989
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||
Intangible assets, net
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253,552
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250,928
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||
Deferred income taxes
|
2,647
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|
|
2,580
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Other assets
1
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124,789
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137,174
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Non-current assets held for sale
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—
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31,683
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||
Total assets
1
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$
|
2,243,965
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$
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2,073,494
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Liabilities and Shareholders’ Equity:
|
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||||
Current liabilities:
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||||
Accounts payable
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$
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28,104
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$
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30,904
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Accrued expenses and other current liabilities
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368,124
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|
171,171
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||
Current portion of long-term obligations
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2,009
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|
2,171
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Current liabilities held for sale
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1,799
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|
2,692
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||
Total current liabilities
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400,036
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|
206,938
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||
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|
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||||
Long-term debt and capital lease obligations
1
|
759,461
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|
561,201
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||
Deferred income taxes
|
39,073
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|
|
41,755
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Other liabilities
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203,026
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|
208,574
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||
Total liabilities
1
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1,401,596
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1,018,468
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Commitments and contingencies (
Note 13
)
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||||
Shareholders’ equity:
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||||
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 102,974,301 shares at June 26, 2016 and 102,672,678 shares at December 27, 2015
|
3,800
|
|
|
3,790
|
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||
Additional paid-in capital
|
1,892,994
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|
1,835,586
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Accumulated other comprehensive loss
|
(3,201
|
)
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|
(10,484
|
)
|
||
Accumulated deficit
|
(1,051,224
|
)
|
|
(773,866
|
)
|
||
Total shareholders’ equity
|
842,369
|
|
|
1,055,026
|
|
||
Total liabilities and shareholders’ equity
1
|
$
|
2,243,965
|
|
|
$
|
2,073,494
|
|
1
|
The prior period debt issuance costs were reclassified to account for adoption of ASU 2015-03 and ASU 2015-15 (See
Note 2
).
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Wright Medical Group N.V.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
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|||||||||||||||
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Three months ended
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Six months ended
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||||||||||||
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June 26, 2016
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June 30, 2015
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June 26, 2016
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June 30, 2015
|
||||||||
Net sales
|
$
|
170,716
|
|
|
$
|
80,420
|
|
|
$
|
340,007
|
|
|
$
|
158,354
|
|
Cost of sales
1, 2
|
49,009
|
|
|
21,635
|
|
|
95,675
|
|
|
40,760
|
|
||||
Gross profit
|
121,707
|
|
|
58,785
|
|
|
244,332
|
|
|
117,594
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
1
|
136,483
|
|
|
82,605
|
|
|
271,229
|
|
|
164,804
|
|
||||
Research and development
1
|
12,108
|
|
|
7,957
|
|
|
24,224
|
|
|
15,074
|
|
||||
Amortization of intangible assets
|
7,484
|
|
|
2,565
|
|
|
13,941
|
|
|
5,179
|
|
||||
Total operating expenses
|
156,075
|
|
|
93,127
|
|
|
309,394
|
|
|
185,057
|
|
||||
Operating loss
|
(34,368
|
)
|
|
(34,342
|
)
|
|
(65,062
|
)
|
|
(67,463
|
)
|
||||
Interest expense, net
|
13,024
|
|
|
10,959
|
|
|
24,878
|
|
|
18,608
|
|
||||
Other income, net
|
(2,061
|
)
|
|
(8,153
|
)
|
|
(3,129
|
)
|
|
(2,841
|
)
|
||||
Loss from continuing operations before income taxes
|
(45,331
|
)
|
|
(37,148
|
)
|
|
(86,811
|
)
|
|
(83,230
|
)
|
||||
(Benefit) provision for income taxes
|
(3,300
|
)
|
|
158
|
|
|
(4,588
|
)
|
|
324
|
|
||||
Net loss from continuing operations
|
$
|
(42,031
|
)
|
|
$
|
(37,306
|
)
|
|
$
|
(82,223
|
)
|
|
$
|
(83,554
|
)
|
Loss from discontinued operations, net of tax
|
$
|
(187,329
|
)
|
|
$
|
(7,009
|
)
|
|
$
|
(195,135
|
)
|
|
$
|
(10,509
|
)
|
Net loss
|
$
|
(229,360
|
)
|
|
$
|
(44,315
|
)
|
|
$
|
(277,358
|
)
|
|
$
|
(94,063
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss from continuing operations per share (Note 12):
3
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.41
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.80
|
)
|
|
$
|
(1.59
|
)
|
Diluted
|
$
|
(0.41
|
)
|
|
$
|
(0.71
|
)
|
|
$
|
(0.80
|
)
|
|
$
|
(1.59
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share (
Note 12
):
3
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
(2.23
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(2.70
|
)
|
|
$
|
(1.79
|
)
|
Diluted
|
$
|
(2.23
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(2.70
|
)
|
|
$
|
(1.79
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of ordinary shares outstanding-basic
3
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
||||
Weighted-average number of ordinary shares outstanding-diluted
3
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
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June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
Cost of sales
|
$
|
42
|
|
|
$
|
8
|
|
|
$
|
175
|
|
|
$
|
11
|
|
Selling, general and administrative
|
2,852
|
|
|
3,046
|
|
|
5,902
|
|
|
5,118
|
|
||||
Research and development
|
162
|
|
|
290
|
|
|
296
|
|
|
552
|
|
2
|
Cost of sales includes amortization of inventory step-up adjustment of
$10.4 million
and
$20.6 million
for the
three and six
months ended
June 26, 2016
, respectively.
|
3
|
The prior period weighted-average shares outstanding and net loss per share amounts were converted to meet post-merger valuations as described within
Note 12
.
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
Net loss
|
$
|
(229,360
|
)
|
|
$
|
(44,315
|
)
|
|
$
|
(277,358
|
)
|
|
$
|
(94,063
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Changes in foreign currency translation
|
(4,067
|
)
|
|
3,285
|
|
|
7,283
|
|
|
(5,712
|
)
|
||||
Other comprehensive (loss) income
|
(4,067
|
)
|
|
3,285
|
|
|
7,283
|
|
|
(5,712
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive loss
|
$
|
(233,427
|
)
|
|
$
|
(41,030
|
)
|
|
$
|
(270,075
|
)
|
|
$
|
(99,775
|
)
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
|
|||||||
|
Six months ended
|
||||||
|
June 26, 2016
|
|
June 30, 2015
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(277,358
|
)
|
|
$
|
(94,063
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
27,317
|
|
|
10,698
|
|
||
Share-based compensation expense
|
6,373
|
|
|
5,681
|
|
||
Amortization of intangible assets
|
14,282
|
|
|
5,179
|
|
||
Amortization of deferred financing costs and debt discount
|
17,126
|
|
|
12,556
|
|
||
Deferred income taxes
|
(3,199
|
)
|
|
2
|
|
||
Provision for excess and obsolete inventory
1
|
10,478
|
|
|
4,163
|
|
||
Non-cash loss on extinguishment of debt
|
12,343
|
|
|
24,746
|
|
||
Amortization of inventory step-up adjustment
1
|
22,895
|
|
|
49
|
|
||
Non-cash adjustment to derivative fair values
|
(23,273
|
)
|
|
(7,370
|
)
|
||
Impairment loss on large joints assets held for sale (
Note 4
)
|
21,876
|
|
|
—
|
|
||
Mark-to-market adjustment for CVRs (
Note 6
)
|
6,727
|
|
|
(21,863
|
)
|
||
Provision for metal-on-metal product liability loss (
Note 13
)
|
150,000
|
|
|
—
|
|
||
Other
|
2,052
|
|
|
2,302
|
|
||
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
||||
Accounts receivable
|
7,453
|
|
|
4,686
|
|
||
Inventories
1
|
(2,969
|
)
|
|
(26,311
|
)
|
||
Prepaid expenses and other current assets
|
1,551
|
|
|
1,912
|
|
||
Accounts payable
|
(3,004
|
)
|
|
6,609
|
|
||
Accrued expenses and other liabilities
|
(13,936
|
)
|
|
20,024
|
|
||
Net cash used in operating activities
|
(23,266
|
)
|
|
(51,000
|
)
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(24,761
|
)
|
|
(25,754
|
)
|
||
Purchase of intangible assets
|
(4,223
|
)
|
|
(82
|
)
|
||
Sales and maturities of available-for-sale marketable securities
|
—
|
|
|
2,566
|
|
||
Net cash used in investing activities
|
(28,984
|
)
|
|
(23,270
|
)
|
||
Financing activities:
|
|
|
|
||||
Issuance of ordinary shares
|
774
|
|
|
1,871
|
|
||
Proceeds from convertible notes
|
395,000
|
|
|
632,500
|
|
||
Redemption of convertible senior notes
|
(102,974
|
)
|
|
(240,000
|
)
|
||
Payment of notes premium
|
(1,619
|
)
|
|
(49,152
|
)
|
||
Proceeds from stock warrants
|
54,629
|
|
|
86,400
|
|
||
Payment of notes hedge option
|
(99,816
|
)
|
|
(144,843
|
)
|
||
Repurchase of stock warrants
|
(3,319
|
)
|
|
(59,803
|
)
|
||
Proceeds from notes hedge option
|
3,892
|
|
|
69,764
|
|
||
Payments of deferred financing costs and equity issuance costs
|
(8,318
|
)
|
|
(20,081
|
)
|
||
Proceeds from issuance of other long-term debt
|
821
|
|
|
—
|
|
||
Payments of capital lease obligations and other borrowings
|
(1,115
|
)
|
|
(398
|
)
|
||
Net cash provided by financing activities
|
237,955
|
|
|
276,258
|
|
||
|
|
|
|
||||
Effect of exchange rates on cash and cash equivalents
|
742
|
|
|
(1,449
|
)
|
||
|
|
|
|
||||
Net increase in cash and cash equivalents
|
186,447
|
|
|
200,539
|
|
||
|
|
|
|
||||
Cash and cash equivalents, beginning of period
|
139,804
|
|
|
227,326
|
|
||
|
|
|
|
||||
Cash and cash equivalents, end of period
|
$
|
326,251
|
|
|
$
|
427,865
|
|
1
|
The prior period balances were revised to show separate presentation related to provision for excess and obsolete inventory and amortization of inventory step-up adjustment.
|
Fair value of ordinary shares effectively transferred to Tornier shareholders
|
$
|
1,005,468
|
|
Fair value of ordinary shares effectively transferred to Tornier share award holders
|
8,091
|
|
|
Fair value of ordinary shares effectively issued to Tornier stock option holders
|
20,676
|
|
|
Fair value of total consideration
|
$
|
1,034,235
|
|
Cash and cash equivalents
|
$
|
30,117
|
|
Accounts receivable
|
64,005
|
|
|
Inventories
|
139,377
|
|
|
Other current assets
|
9,256
|
|
|
Property, plant and equipment, net
|
123,099
|
|
|
Intangible assets, net
|
213,600
|
|
|
Deferred income taxes
|
1,399
|
|
|
Other assets
|
8,658
|
|
|
Total assets acquired
|
589,511
|
|
|
Current liabilities
|
(104,623
|
)
|
|
Long-term debt
|
(79,554
|
)
|
|
Deferred income taxes
|
(36,544
|
)
|
|
Other non-current liabilities
|
(8,434
|
)
|
|
Total liabilities assumed
|
(229,155
|
)
|
|
Net assets acquired
|
360,356
|
|
|
|
|
||
Goodwill
|
673,879
|
|
|
|
|
||
Total preliminary purchase consideration
|
$
|
1,034,235
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
Net sales
|
$
|
170,716
|
|
|
$
|
150,206
|
|
|
$
|
340,007
|
|
|
$
|
300,183
|
|
Net loss from continuing operations
|
(31,644
|
)
|
|
(60,923
|
)
|
|
(67,180
|
)
|
|
(128,274
|
)
|
|
Three months ended
|
|
Six months ended
|
||||
|
June 26, 2016
|
|
June 26, 2016
|
||||
Net sales
|
$
|
10,164
|
|
|
$
|
21,900
|
|
Cost of sales
|
5,711
|
|
|
11,360
|
|
||
Selling, general and administrative
|
6,008
|
|
|
10,172
|
|
||
Other
|
627
|
|
|
1,234
|
|
||
Loss from discontinued operations before income taxes
|
(2,182
|
)
|
|
(866
|
)
|
||
Impairment loss on assets held for sale, before income taxes
|
(21,876
|
)
|
|
(21,876
|
)
|
||
Total loss from discontinued operations before income taxes
|
(24,058
|
)
|
|
(22,742
|
)
|
||
Benefit for income taxes
|
(5,175
|
)
|
|
(4,770
|
)
|
||
Total loss from discontinued operations, net of tax
|
$
|
(18,883
|
)
|
|
$
|
(17,972
|
)
|
Net loss from discontinued operations per share (
Note 12
):
|
|
|
|
||||
Basic
|
$
|
(0.18
|
)
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
(0.18
|
)
|
|
$
|
(0.18
|
)
|
|
|
|
|
||||
Weighted-average number of ordinary shares outstanding-basic
|
102,785
|
|
|
102,745
|
|
||
Weighted-average number of ordinary shares outstanding-diluted
|
102,785
|
|
|
102,745
|
|
1
|
The prior period weighted-average shares outstanding and net loss per share amounts were converted to meet post-merger valuations as described within
Note 12
.
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Assets:
|
|
|
|
||||
Inventories, net
|
$
|
15,536
|
|
|
$
|
18,408
|
|
Prepaid expenses
|
80
|
|
|
79
|
|
||
Property, plant & equipment, net
|
15,057
|
|
|
16,513
|
|
||
Goodwill
|
8,353
|
|
|
9,355
|
|
||
Intangible assets, net
|
6,155
|
|
|
5,815
|
|
||
Impairment loss on assets held for sale
|
(21,876
|
)
|
|
—
|
|
||
Total assets held for sale
|
$
|
23,305
|
|
|
$
|
50,170
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Other current liabilities
|
$
|
1,799
|
|
|
$
|
2,692
|
|
Total liabilities held for sale
|
$
|
1,799
|
|
|
$
|
2,692
|
|
|
Three months ended
|
|
Six months ended
|
||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative
|
168,446
|
|
|
7,009
|
|
|
177,163
|
|
|
10,509
|
|
||||
Loss from discontinued operations before income taxes
|
(168,446
|
)
|
|
(7,009
|
)
|
|
(177,163
|
)
|
|
(10,509
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total loss from discontinued operations, net of tax
|
$
|
(168,446
|
)
|
|
$
|
(7,009
|
)
|
|
$
|
(177,163
|
)
|
|
$
|
(10,509
|
)
|
Net loss from discontinued operations per share (
Note 12
):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(1.64
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(0.20
|
)
|
Diluted
|
$
|
(1.64
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of ordinary shares outstanding-basic
1
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
||||
Weighted-average number of ordinary shares outstanding-diluted
1
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
1
|
The prior period weighted-average shares outstanding and net loss per share amounts were converted to meet post-merger valuations as described within
Note 12
.
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Raw materials
|
$
|
17,050
|
|
|
$
|
18,057
|
|
Work-in-process
|
26,491
|
|
|
27,946
|
|
||
Finished goods
|
139,454
|
|
|
164,698
|
|
||
|
$
|
182,995
|
|
|
$
|
210,701
|
|
Level 1:
|
Financial instruments with unadjusted, quoted prices listed on active market exchanges.
|
Level 2:
|
Financial instruments determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
|
Level 3:
|
Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.
|
|
Location on condensed consolidated balance sheet
|
June 26, 2016
|
December 27, 2015
|
||||
2021 Notes Hedges
|
Other assets
|
$
|
84,306
|
|
$
|
—
|
|
2021 Notes Conversion Derivative
|
Other liabilities
|
$
|
86,427
|
|
$
|
—
|
|
|
Three months ended
|
|
Six months ended
|
|||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
|||||||||
2021 Notes Hedges
|
$
|
(15,511
|
)
|
|
$
|
—
|
|
|
$
|
(15,511
|
)
|
|
$
|
—
|
|
|
2021 Notes Conversion Derivative
|
30,797
|
|
|
—
|
|
|
30,797
|
|
|
—
|
|
|||||
Net gain on changes in fair value
|
$
|
15,286
|
|
|
$
|
—
|
|
|
$
|
15,286
|
|
|
$
|
—
|
|
|
Location on condensed consolidated balance sheet
|
June 26, 2016
|
December 27, 2015
|
||||
2020 Notes Hedges
|
Other assets
|
$
|
33,421
|
|
$
|
127,758
|
|
2020 Notes Conversion Derivative
|
Other liabilities
|
$
|
39,435
|
|
$
|
129,107
|
|
|
Three months ended
|
|
Six months ended
|
|||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
|||||||||
2020 Notes Hedges
|
$
|
(28,308
|
)
|
|
$
|
(11,822
|
)
|
|
$
|
(90,445
|
)
|
|
$
|
(21,105
|
)
|
|
2020 Notes Conversion Derivative
|
28,238
|
|
|
11,376
|
|
|
90,122
|
|
|
24,412
|
|
|||||
Net (loss) gain on changes in fair value
|
$
|
(70
|
)
|
|
$
|
(446
|
)
|
|
$
|
(323
|
)
|
|
$
|
3,307
|
|
|
Location on condensed consolidated balance sheet
|
June 26, 2016
|
December 27, 2015
|
||||
2017 Notes Conversion Derivative
|
Other liabilities
|
$
|
61
|
|
$
|
10,440
|
|
|
Three months ended
|
|
Six months ended
|
|||||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
|||||||||
2017 Notes Hedges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10,236
|
)
|
|
2017 Notes Conversion Derivative
|
1,416
|
|
|
881
|
|
|
8,310
|
|
|
14,298
|
|
|||||
Net gain on changes in fair value
|
$
|
1,416
|
|
|
$
|
881
|
|
|
$
|
8,310
|
|
|
$
|
4,062
|
|
|
2017 Notes Conversion Derivative
|
2020 Notes Conversion Derivative
|
2020 Notes
Hedge |
2021 Notes Conversion Derivative
|
2021 Notes Hedge
|
Stock Price Volatility (1)
|
38.91%
|
38.91%
|
38.91%
|
38.91%
|
38.91%
|
Credit Spread for Wright (2)
|
6.79%
|
6.31%
|
N/A
|
6.03%
|
N/A
|
Credit Spread for Deutsche Bank AG (3)
|
N/A
|
N/A
|
2.03%
|
N/A
|
N/A
|
Credit Spread for Wells Fargo Securities, LLC (3)
|
N/A
|
N/A
|
0.54%
|
N/A
|
N/A
|
Credit Spread for JPMorgan Chase Bank (3)
|
N/A
|
N/A
|
0.58%
|
N/A
|
0.75%
|
Credit Spread for Bank of America (3)
|
N/A
|
N/A
|
N/A
|
N/A
|
1.04%
|
(1)
|
Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.
|
(2)
|
Credit spread implied from traded price.
|
(3)
|
Credit spread of each bank is estimated using CDS curves. Source: Bloomberg.
|
|
Total
|
Quoted Prices
in Active
Markets
(Level 1)
|
Prices with
Other
Observable
Inputs
(Level 2)
|
Prices with
Unobservable
Inputs
(Level 3)
|
||||||||
At June 26, 2016
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
326,251
|
|
$
|
326,251
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
33,421
|
|
—
|
|
—
|
|
33,421
|
|
||||
2021 Notes Hedges
|
84,306
|
|
—
|
|
—
|
|
84,306
|
|
||||
Total
|
$
|
443,978
|
|
$
|
326,251
|
|
$
|
—
|
|
$
|
117,727
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2017 Notes Conversion Derivative
|
$
|
61
|
|
$
|
—
|
|
$
|
—
|
|
$
|
61
|
|
2020 Notes Conversion Derivative
|
39,435
|
|
—
|
|
—
|
|
39,435
|
|
||||
2021 Notes Conversion Derivative
|
86,427
|
|
—
|
|
—
|
|
86,427
|
|
||||
Contingent consideration
|
2,526
|
|
—
|
|
—
|
|
2,526
|
|
||||
Contingent consideration (CVRs)
|
35,037
|
|
35,037
|
|
—
|
|
—
|
|
||||
Total
|
$
|
163,486
|
|
$
|
35,037
|
|
$
|
—
|
|
$
|
128,449
|
|
|
Total
|
Quoted Prices
in Active
Markets
(Level 1)
|
Prices with
Other
Observable
Inputs
(Level 2)
|
Prices with
Unobservable
Inputs
(Level 3)
|
||||||||
At December 27, 2015
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
139,804
|
|
$
|
139,804
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
127,758
|
|
—
|
|
—
|
|
127,758
|
|
||||
Total
|
$
|
267,562
|
|
$
|
139,804
|
|
$
|
—
|
|
$
|
127,758
|
|
|
|
|
|
|
|
|||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||
2017 Notes Conversion Derivative
|
$
|
10,440
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,440
|
|
2020 Notes Conversion Derivative
|
129,107
|
|
—
|
|
—
|
|
129,107
|
|
||||
Contingent consideration
|
2,340
|
|
—
|
|
—
|
|
2,340
|
|
||||
Contingent consideration (CVRs)
|
28,310
|
|
28,310
|
|
—
|
|
—
|
|
||||
Total
|
$
|
170,197
|
|
$
|
28,310
|
|
$
|
—
|
|
$
|
141,887
|
|
|
|
Balance at December 27, 2015
|
Additions
|
Transfers into Level 3
|
Gain/(Loss) included in Earnings
|
Settlements
|
Currency
|
Balance at June 26, 2016
|
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
2017 Notes Conversion Derivative
|
|
$
|
(10,440
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
8,310
|
|
$
|
2,069
|
|
$
|
—
|
|
$
|
(61
|
)
|
2020 Notes Hedges
|
|
127,758
|
|
—
|
|
—
|
|
(90,445
|
)
|
(3,892
|
)
|
—
|
|
33,421
|
|
|||||||
2020 Notes Conversion Derivative
|
|
(129,107
|
)
|
—
|
|
—
|
|
90,122
|
|
(450
|
)
|
—
|
|
(39,435
|
)
|
|||||||
2021 Notes Hedges
|
|
—
|
|
99,817
|
|
—
|
|
(15,511
|
)
|
—
|
|
—
|
|
84,306
|
|
|||||||
2021 Notes Conversion Derivative
|
|
—
|
|
(117,224
|
)
|
—
|
|
30,797
|
|
—
|
|
—
|
|
(86,427
|
)
|
|||||||
Contingent consideration
|
|
(2,340
|
)
|
—
|
|
—
|
|
(530
|
)
|
297
|
|
47
|
|
(2,526
|
)
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Property, plant and equipment, at cost
|
$
|
348,858
|
|
|
$
|
331,416
|
|
Less: Accumulated depreciation
|
(132,817
|
)
|
|
(107,160
|
)
|
||
|
$
|
216,041
|
|
|
$
|
224,256
|
|
|
U.S. Lower Extremities
& Biologics
|
U.S. Upper Extremities
|
International Extremities
& Biologics
|
Total
|
||||||||
Goodwill at December 27, 2015
|
$
|
221,327
|
|
$
|
555,312
|
|
$
|
90,350
|
|
$
|
866,989
|
|
Goodwill adjustment associated with Wright/Tornier merger
|
(2,261
|
)
|
5,085
|
|
(9,925
|
)
|
(7,101
|
)
|
||||
Foreign currency translation
|
—
|
|
—
|
|
1,850
|
|
1,850
|
|
||||
Goodwill at June 26, 2016
|
$
|
219,066
|
|
$
|
560,397
|
|
$
|
82,275
|
|
$
|
861,738
|
|
|
June 26, 2016
|
|
December 27, 2015
|
||||||||||||
|
Cost
|
|
Accumulated
amortization
|
|
Cost
|
|
Accumulated
amortization
|
||||||||
Indefinite life intangibles:
|
|
|
|
|
|
|
|
||||||||
In process research and development (IPRD) technology
|
$
|
15,310
|
|
|
|
|
$
|
15,290
|
|
|
|
||||
Total indefinite life intangibles
|
15,310
|
|
|
|
|
15,290
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Finite life intangibles:
|
|
|
|
|
|
|
|
||||||||
Distribution channels
|
900
|
|
|
$
|
231
|
|
|
250
|
|
|
$
|
219
|
|
||
Completed technology
|
124,032
|
|
|
20,800
|
|
|
122,604
|
|
|
14,828
|
|
||||
Licenses
|
4,868
|
|
|
911
|
|
|
4,868
|
|
|
703
|
|
||||
Customer relationships
|
125,616
|
|
|
11,605
|
|
|
115,457
|
|
|
7,918
|
|
||||
Trademarks
|
14,078
|
|
|
5,139
|
|
|
14,440
|
|
|
3,393
|
|
||||
Non-compete agreements
|
11,903
|
|
|
4,851
|
|
|
7,521
|
|
|
2,917
|
|
||||
Other
|
538
|
|
|
156
|
|
|
527
|
|
|
51
|
|
||||
Total finite life intangibles
|
281,935
|
|
|
$
|
43,693
|
|
|
265,667
|
|
|
$
|
30,029
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total intangibles
|
297,245
|
|
|
|
|
280,957
|
|
|
|
||||||
Less: Accumulated amortization
|
(43,693
|
)
|
|
|
|
(30,029
|
)
|
|
|
||||||
Intangible assets, net
|
$
|
253,552
|
|
|
|
|
$
|
250,928
|
|
|
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Capital lease obligations
|
$
|
14,547
|
|
|
$
|
13,763
|
|
|
|
|
|
||||
2021 Notes
|
271,905
|
|
|
—
|
|
||
2020 Notes
1
|
467,989
|
|
|
489,006
|
|
||
2017 Notes
1
|
1,928
|
|
|
55,865
|
|
||
|
|
|
|
||||
Mortgages/other
|
3,126
|
|
|
2,740
|
|
||
Shareholder debt
|
1,975
|
|
|
1,998
|
|
||
|
761,470
|
|
|
563,372
|
|
||
Less: current portion
|
(2,009
|
)
|
|
(2,171
|
)
|
||
|
$
|
759,461
|
|
|
$
|
561,201
|
|
1
|
The prior period debt issuance costs were reclassified to account for adoption of ASU 2015-03 and ASU 2015-15 (See
Note 2
).
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Principal amount of 2021 Notes
|
$
|
395,000
|
|
|
$
|
—
|
|
Unamortized debt discount
|
(115,860
|
)
|
|
—
|
|
||
Unamortized debt issuance costs
|
(7,235
|
)
|
|
—
|
|
||
Net carrying amount of 2021 Notes
|
$
|
271,905
|
|
|
$
|
—
|
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Principal amount of 2020 Notes
|
$
|
587,500
|
|
|
$
|
632,500
|
|
Unamortized debt discount
|
(106,567
|
)
|
|
(127,953
|
)
|
||
Unamortized debt issuance costs
|
(12,944
|
)
|
|
(15,541
|
)
|
||
Net carrying amount of 2020 Notes
1
|
$
|
467,989
|
|
|
$
|
489,006
|
|
1
|
The prior period debt issuance costs were reclassified to account for adoption of ASU 2015-03 and ASU 2015-15 (See
Note 2
).
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Principal amount of 2017 Notes
|
$
|
2,026
|
|
|
$
|
60,000
|
|
Unamortized debt discount
|
(84
|
)
|
|
(3,495
|
)
|
||
Unamortized debt issuance costs
|
(14
|
)
|
|
(640
|
)
|
||
Net carrying amount of 2017 Notes
1
|
$
|
1,928
|
|
|
$
|
55,865
|
|
1
|
The prior period debt issuance costs were reclassified to account for adoption of ASU 2015-03 and 2015-15 (See
Note 2
).
|
|
Six months ended June 26, 2016
|
||
|
Currency translation adjustment
|
||
Balance at December 27, 2015
|
$
|
(10,484
|
)
|
Other comprehensive income
|
7,283
|
|
|
Balance at June 26, 2016
|
$
|
(3,201
|
)
|
|
Six months ended June 30, 2015
|
||
|
Currency translation adjustment
|
||
Balance at December 31, 2014
|
$
|
2,398
|
|
Other comprehensive loss
|
(5,712
|
)
|
|
Balance at June 30, 2015
|
$
|
(3,314
|
)
|
|
Six months ended June 26, 2016
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
1
|
|
Accumulated deficit
|
|
Accumulated other comprehensive income (loss)
|
|
Total shareholders' equity
|
|||||||||||||
|
Number of shares
1
|
|
Amount
1
|
|
||||||||||||||||||
Balance at December 27, 2015
|
102,672,678
|
|
|
$
|
3,790
|
|
|
$
|
1,835,586
|
|
|
$
|
(773,866
|
)
|
|
$
|
(10,484
|
)
|
|
$
|
1,055,026
|
|
2016 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(277,358
|
)
|
|
—
|
|
|
(277,358
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,283
|
|
|
7,283
|
|
|||||
Issuances of ordinary shares
|
37,947
|
|
|
1
|
|
|
774
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|||||
Vesting of restricted stock units
|
263,676
|
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
6,331
|
|
|
—
|
|
|
—
|
|
|
6,331
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
50,312
|
|
|
—
|
|
|
—
|
|
|
50,312
|
|
|||||
Balance at June 26, 2016
|
102,974,301
|
|
|
$
|
3,800
|
|
|
$
|
1,892,994
|
|
|
$
|
(1,051,224
|
)
|
|
$
|
(3,201
|
)
|
|
$
|
842,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Six months ended June 30, 2015
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
1
|
|
Accumulated deficit
|
|
Accumulated other comprehensive income (loss)
|
|
Total shareholders' equity
|
|||||||||||||
|
Number of shares
1
|
|
Amount
1
|
|
||||||||||||||||||
Balance at December 31, 2014
|
52,913,093
|
|
|
$
|
2,101
|
|
|
$
|
749,469
|
|
|
$
|
(475,165
|
)
|
|
$
|
2,398
|
|
|
$
|
278,803
|
|
2015 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(94,063
|
)
|
|
—
|
|
|
(94,063
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,712
|
)
|
|
(5,712
|
)
|
|||||
Issuances of ordinary shares
|
82,272
|
|
|
3
|
|
|
1,874
|
|
|
—
|
|
|
—
|
|
|
1,877
|
|
|||||
Forfeitures of non-vested ordinary shares
|
(5,961
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of restricted stock units
|
9,407
|
|
|
7
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
5,701
|
|
|
—
|
|
|
—
|
|
|
5,701
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
24,575
|
|
|
—
|
|
|
—
|
|
|
24,575
|
|
|||||
Balance at June 30, 2015
|
52,998,811
|
|
|
$
|
2,111
|
|
|
$
|
781,612
|
|
|
$
|
(569,228
|
)
|
|
$
|
(3,314
|
)
|
|
$
|
211,181
|
|
1
|
The prior period balances of ordinary shares and additional paid-in capital were restated to meet post-merger conversion values as further described within
Note 12
.
|
•
|
ordinary shares and additional paid-in capital balances for the three and six months ended
June 30, 2015
included in
Note 11
;
|
•
|
June 30, 2015
earnings per share and weighted-average ordinary shares outstanding on the statements of operations; and
|
•
|
June 30, 2015
weighted-average ordinary shares outstanding below.
|
|
Three months ended
|
|
Six months ended
|
||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
June 26, 2016
|
|
June 30, 2015
|
||||
Weighted-average number of ordinary shares outstanding — basic
1
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
Ordinary share equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted-average number of ordinary shares outstanding — diluted
1
|
102,785
|
|
|
52,631
|
|
|
102,745
|
|
|
52,535
|
|
1
|
The prior period balances were converted to meet post-merger valuations as described above.
|
|
Three months ended June 26, 2016
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
70,645
|
|
$
|
51,228
|
|
$
|
48,843
|
|
$
|
—
|
|
$
|
170,716
|
|
Depreciation expense
|
2,874
|
|
2,671
|
|
2,634
|
|
5,091
|
|
13,270
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
7,484
|
|
7,484
|
|
|||||
Segment operating income (loss)
|
$
|
18,968
|
|
$
|
16,849
|
|
$
|
2,208
|
|
$
|
(49,610
|
)
|
$
|
(11,585
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
10,387
|
|
|||||||||
Transaction and transition expenses
|
|
|
|
|
7,060
|
|
|||||||||
Product rationalization
|
|
|
|
|
1,954
|
|
|||||||||
Legal settlement
|
|
|
|
|
1,800
|
|
|||||||||
Management changes
|
|
|
|
|
1,348
|
|
|||||||||
Costs associated with new convertible debt
|
|
|
|
|
234
|
|
|||||||||
Operating loss
|
|
|
|
|
(34,368
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
13,024
|
|
|||||||||
Other income, net
|
|
|
|
|
(2,061
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(45,331
|
)
|
|
Three months ended June 30, 2015
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
54,096
|
|
$
|
4,174
|
|
$
|
22,150
|
|
$
|
—
|
|
$
|
80,420
|
|
Depreciation expense
|
2,946
|
|
227
|
|
735
|
|
1,510
|
|
5,418
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
2,540
|
|
2,540
|
|
|||||
Segment operating income (loss)
|
$
|
7,111
|
|
$
|
1,763
|
|
$
|
(2,443
|
)
|
$
|
(28,598
|
)
|
$
|
(22,167
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
21
|
|
|||||||||
Distributor conversion and non-compete charges
|
|
|
|
|
25
|
|
|||||||||
Due diligence, transaction and transition expenses
|
|
|
|
|
12,129
|
|
|||||||||
Operating loss
|
|
|
|
|
(34,342
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
10,959
|
|
|||||||||
Other income, net
|
|
|
|
|
(8,153
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(37,148
|
)
|
|
Six months ended June 26, 2016
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
143,905
|
|
$
|
102,512
|
|
$
|
93,590
|
|
$
|
—
|
|
$
|
340,007
|
|
Depreciation expense
|
5,689
|
|
5,219
|
|
5,455
|
|
9,757
|
|
26,120
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
13,941
|
|
13,941
|
|
|||||
Segment operating income (loss)
|
$
|
39,833
|
|
$
|
34,135
|
|
$
|
3,785
|
|
$
|
(98,970
|
)
|
$
|
(21,217
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
20,616
|
|
|||||||||
Transaction and transition expenses
|
|
|
|
|
17,893
|
|
|||||||||
Product rationalization
|
|
|
|
|
1,954
|
|
|||||||||
Legal settlement
|
|
|
|
|
1,800
|
|
|||||||||
Management changes
|
|
|
|
|
1,348
|
|
|||||||||
Costs associated with new convertible debt
|
|
|
|
|
234
|
|
|||||||||
Operating loss
|
|
|
|
|
(65,062
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
24,878
|
|
|||||||||
Other income, net
|
|
|
|
|
(3,129
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(86,811
|
)
|
|
Six months ended June 30, 2015
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
107,708
|
|
$
|
8,048
|
|
$
|
42,598
|
|
$
|
—
|
|
$
|
158,354
|
|
Depreciation expense
|
5,762
|
|
431
|
|
1,503
|
|
3,002
|
|
10,698
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
5,130
|
|
5,130
|
|
|||||
Segment operating income (loss)
|
$
|
11,950
|
|
$
|
3,376
|
|
$
|
(5,098
|
)
|
$
|
(54,440
|
)
|
$
|
(44,212
|
)
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
49
|
|
|||||||||
Distributor conversion and non-compete charges
|
|
|
|
|
49
|
|
|||||||||
Due diligence, transaction and transition expenses
|
|
|
|
|
23,153
|
|
|||||||||
Operating loss
|
|
|
|
|
(67,463
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
18,608
|
|
|||||||||
Other income, net
|
|
|
|
|
(2,841
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(83,230
|
)
|
1
|
The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.
|
|
Three months ended
|
||||||
Net sales by geographic region:
|
June 26, 2016
|
|
June 30, 2015
|
||||
United States
|
$
|
121,873
|
|
|
$
|
58,270
|
|
EMEA
|
32,192
|
|
|
11,985
|
|
||
Other
|
16,651
|
|
|
10,165
|
|
||
Total
|
$
|
170,716
|
|
|
$
|
80,420
|
|
|
Six months ended
|
||||||
Net sales by geographic region:
|
June 26, 2016
|
|
June 30, 2015
|
||||
United States
|
$
|
246,417
|
|
|
$
|
115,756
|
|
EMEA
|
63,347
|
|
|
24,233
|
|
||
Other
|
30,243
|
|
|
18,365
|
|
||
Total
|
$
|
340,007
|
|
|
$
|
158,354
|
|
|
June 26, 2016
|
|||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Assets held for sale
|
Total
|
||||||||||||
Total assets
|
$
|
478,806
|
|
$
|
822,902
|
|
$
|
327,585
|
|
$
|
591,367
|
|
$
|
23,305
|
|
$
|
2,243,965
|
|
|
December 27, 2015
|
|||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Assets held for sale
|
Total
|
||||||||||||
Total assets
|
$
|
490,798
|
|
$
|
833,432
|
|
$
|
365,621
|
|
$
|
333,473
|
|
$
|
50,170
|
|
$
|
2,073,494
|
|
•
|
Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;
|
•
|
Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;
|
•
|
Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and
|
•
|
Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products
|
•
|
$21.0 million
of incremental Corporate expenses, primarily due to expenses from the acquired Tornier business;
|
•
|
$10.4 million
of incremental amortization of the inventory step-up fair value adjustment associated with the Wright/Tornier merger; and
|
•
|
$6.1 million
decrease in other (income) expense, net, primarily driven by changes in fair value adjustments associated with derivative assets and liabilities and CVRs, as well as write-offs of unamortized debt discount and deferred financing charges associated with the portion of the 2017 Notes and 2020 Notes that were extinguished.
|
•
|
$15.1 million
increase in profitability of our U.S. Upper Extremities segment driven almost entirely by the acquired Tornier business;
|
•
|
$11.9 million
increase in profitability of our U.S. Lower Extremities and Biologics segment driven by leverage on increased sales, as operating expenses grew at a lower rate than net sales; and
|
•
|
$4.7 million
increase in profitability of our International Extremities and Biologics segment primarily driven by the acquired Tornier business.
|
|
Three months ended
|
||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
|
Amount
|
% of sales
|
|
Amount
|
% of sales
|
||||||
Net sales
|
$
|
170,716
|
|
100.0
|
%
|
|
$
|
80,420
|
|
100.0
|
%
|
Cost of sales
1,2
|
49,009
|
|
28.7
|
%
|
|
21,635
|
|
26.9
|
%
|
||
Gross profit
|
121,707
|
|
71.3
|
%
|
|
58,785
|
|
73.1
|
%
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
1
|
136,483
|
|
79.9
|
%
|
|
82,605
|
|
102.7
|
%
|
||
Research and development
1
|
12,108
|
|
7.1
|
%
|
|
7,957
|
|
9.9
|
%
|
||
Amortization of intangible assets
|
7,484
|
|
4.4
|
%
|
|
2,565
|
|
3.2
|
%
|
||
Total operating expenses
|
156,075
|
|
91.4
|
%
|
|
93,127
|
|
115.8
|
%
|
||
Operating loss
|
(34,368
|
)
|
(20.1
|
)%
|
|
(34,342
|
)
|
(42.7
|
)%
|
||
Interest expense, net
|
13,024
|
|
7.6
|
%
|
|
10,959
|
|
13.6
|
%
|
||
Other income, net
|
(2,061
|
)
|
(1.2
|
)%
|
|
(8,153
|
)
|
(10.1
|
)%
|
||
Loss from continuing operations before income taxes
|
(45,331
|
)
|
(26.6
|
)%
|
|
(37,148
|
)
|
(46.2
|
)%
|
||
(Benefit) provision for income taxes
|
(3,300
|
)
|
(1.9
|
)%
|
|
158
|
|
0.2
|
%
|
||
Net loss from continuing operations
|
$
|
(42,031
|
)
|
(24.6
|
)%
|
|
$
|
(37,306
|
)
|
(46.4
|
)%
|
Loss from discontinued operations, net of tax
|
(187,329
|
)
|
|
|
(7,009
|
)
|
|
||||
Net loss
|
$
|
(229,360
|
)
|
|
|
$
|
(44,315
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
||||||||||
|
June 26, 2016
|
% of sales
|
|
June 30, 2015
|
% of sales
|
||||||
Cost of sales
|
$
|
42
|
|
—
|
%
|
|
$
|
8
|
|
—
|
%
|
Selling, general and administrative
|
2,852
|
|
1.7
|
%
|
|
3,046
|
|
3.8
|
%
|
||
Research and development
|
162
|
|
0.1
|
%
|
|
290
|
|
0.4
|
%
|
|
Three months ended
|
|||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
% change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
52,008
|
|
|
$
|
42,360
|
|
|
22.8
|
%
|
Upper extremities
|
49,909
|
|
|
4,175
|
|
|
1,095.4
|
%
|
||
Biologics
|
17,792
|
|
|
11,281
|
|
|
57.7
|
%
|
||
Sports med & other
|
2,164
|
|
|
454
|
|
|
376.7
|
%
|
||
Total U.S.
|
$
|
121,873
|
|
|
$
|
58,270
|
|
|
109.2
|
%
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
16,241
|
|
|
$
|
12,600
|
|
|
28.9
|
%
|
Upper extremities
|
23,940
|
|
|
2,042
|
|
|
1,072.4
|
%
|
||
Biologics
|
4,867
|
|
|
5,318
|
|
|
(8.5
|
)%
|
||
Sports med & other
|
3,795
|
|
|
2,190
|
|
|
73.3
|
%
|
||
Total International
|
$
|
48,843
|
|
|
$
|
22,150
|
|
|
120.5
|
%
|
|
|
|
|
|
|
|||||
Total net sales
|
$
|
170,716
|
|
|
$
|
80,420
|
|
|
112.3
|
%
|
|
Three months ended
June 30, 2015
|
||||||||||||||
|
|||||||||||||||
|
Standalone Wright Medical Group, Inc.
|
|
Standalone Tornier N.V., recast
1
|
|
Discontinued
revenues
2
|
|
Non-GAAP
combined pro forma
net sales
|
||||||||
U.S.
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
42,360
|
|
|
$
|
9,518
|
|
|
$
|
(2,930
|
)
|
|
$
|
48,948
|
|
Upper extremities
|
4,175
|
|
|
38,525
|
|
|
—
|
|
|
42,700
|
|
||||
Biologics
|
11,281
|
|
|
415
|
|
|
—
|
|
|
11,696
|
|
||||
Sports med & other
|
454
|
|
|
1,606
|
|
|
—
|
|
|
2,060
|
|
||||
Total extremities & biologics
|
58,270
|
|
|
50,064
|
|
|
(2,930
|
)
|
|
105,404
|
|
||||
Large joint
|
—
|
|
|
40
|
|
|
(40
|
)
|
|
—
|
|
||||
Total U.S.
|
$
|
58,270
|
|
|
$
|
50,104
|
|
|
$
|
(2,970
|
)
|
|
$
|
105,404
|
|
|
|
|
|
|
|
|
|
||||||||
International
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
12,600
|
|
|
$
|
2,525
|
|
|
$
|
—
|
|
|
$
|
15,125
|
|
Upper extremities
|
2,042
|
|
|
18,316
|
|
|
—
|
|
|
20,358
|
|
||||
Biologics
|
5,318
|
|
|
127
|
|
|
—
|
|
|
5,445
|
|
||||
Sports med & other
|
2,190
|
|
|
1,684
|
|
|
—
|
|
|
3,874
|
|
||||
Total extremities & biologics
|
22,150
|
|
|
22,652
|
|
|
—
|
|
|
44,802
|
|
||||
Large joint
|
—
|
|
|
10,465
|
|
|
(10,465
|
)
|
|
—
|
|
||||
Total International
|
$
|
22,150
|
|
|
$
|
33,117
|
|
|
$
|
(10,465
|
)
|
|
$
|
44,802
|
|
|
|
|
|
|
|
|
|
||||||||
Global
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
54,960
|
|
|
$
|
12,043
|
|
|
$
|
(2,930
|
)
|
|
$
|
64,073
|
|
Upper extremities
|
6,217
|
|
|
56,841
|
|
|
—
|
|
|
63,058
|
|
||||
Biologics
|
16,599
|
|
|
542
|
|
|
—
|
|
|
17,141
|
|
||||
Sports med & other
|
2,644
|
|
|
3,290
|
|
|
—
|
|
|
5,934
|
|
||||
Total extremities & biologics
|
80,420
|
|
|
72,716
|
|
|
(2,930
|
)
|
|
150,206
|
|
||||
Large joint
|
—
|
|
|
10,505
|
|
|
(10,505
|
)
|
|
—
|
|
||||
Total sales
|
$
|
80,420
|
|
|
$
|
83,221
|
|
|
$
|
(13,435
|
)
|
|
$
|
150,206
|
|
1
|
Legacy Tornier product line sales have been recast to reflect the reclassification of cement, instruments and freight from the historical Tornier product line "Large Joints and Other" to the product line associated with those revenues that will be utilized for future revenue reporting.
|
2
|
To reduce from Tornier’s historical sales the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement products and the global sales associated with Tornier's Large Joints business.
|
|
Net sales
Three months ended
June 26, 2016
|
|
Non-GAAP combined pro forma net sales
Three months ended
June 30, 2015
|
|
%
change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
52,008
|
|
|
$
|
48,948
|
|
|
6.3
|
%
|
Upper extremities
|
49,909
|
|
|
42,700
|
|
|
16.9
|
%
|
||
Biologics
|
17,792
|
|
|
11,696
|
|
|
52.1
|
%
|
||
Sports med & other
|
2,164
|
|
|
2,060
|
|
|
5.0
|
%
|
||
Total U.S.
|
$
|
121,873
|
|
|
$
|
105,404
|
|
|
15.6
|
%
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
16,241
|
|
|
$
|
15,125
|
|
|
7.4
|
%
|
Upper extremities
|
23,940
|
|
|
20,358
|
|
|
17.6
|
%
|
||
Biologics
|
4,867
|
|
|
5,445
|
|
|
(10.6
|
)%
|
||
Sports med & other
|
3,795
|
|
|
3,874
|
|
|
(2.0
|
)%
|
||
Total International
|
$
|
48,843
|
|
|
$
|
44,802
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|||||
Global
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
68,249
|
|
|
$
|
64,073
|
|
|
6.5
|
%
|
Upper extremities
|
73,849
|
|
|
63,058
|
|
|
17.1
|
%
|
||
Biologics
|
22,659
|
|
|
17,141
|
|
|
32.2
|
%
|
||
Sports med & other
|
5,959
|
|
|
5,934
|
|
|
0.4
|
%
|
||
Total sales
|
$
|
170,716
|
|
|
$
|
150,206
|
|
|
13.7
|
%
|
|
Six months ended
|
||||||||||
|
June 26, 2016
|
|
June 30, 2015
|
||||||||
|
Amount
|
% of sales
|
|
Amount
|
% of sales
|
||||||
Net sales
|
$
|
340,007
|
|
100.0
|
%
|
|
$
|
158,354
|
|
100.0
|
%
|
Cost of sales
1,2
|
95,675
|
|
28.1
|
%
|
|
40,760
|
|
25.7
|
%
|
||
Gross profit
|
244,332
|
|
71.9
|
%
|
|
117,594
|
|
74.3
|
%
|
||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
1
|
271,229
|
|
79.8
|
%
|
|
164,804
|
|
104.1
|
%
|
||
Research and development
1
|
24,224
|
|
7.1
|
%
|
|
15,074
|
|
9.5
|
%
|
||
Amortization of intangible assets
|
13,941
|
|
4.1
|
%
|
|
5,179
|
|
3.3
|
%
|
||
Total operating expenses
|
309,394
|
|
91.0
|
%
|
|
185,057
|
|
116.9
|
%
|
||
Operating loss
|
(65,062
|
)
|
(19.1
|
)%
|
|
(67,463
|
)
|
(42.6
|
)%
|
||
Interest expense, net
|
24,878
|
|
7.3
|
%
|
|
18,608
|
|
11.8
|
%
|
||
Other (income) expense, net
|
(3,129
|
)
|
(0.9
|
)%
|
|
(2,841
|
)
|
(1.8
|
)%
|
||
Loss from continuing operations before income taxes
|
(86,811
|
)
|
(25.5
|
)%
|
|
(83,230
|
)
|
(52.6
|
)%
|
||
(Benefit) provision for income taxes
|
(4,588
|
)
|
(1.3
|
)%
|
|
324
|
|
0.2
|
%
|
||
Net loss from continuing operations
|
$
|
(82,223
|
)
|
(24.2
|
)%
|
|
$
|
(83,554
|
)
|
(52.8
|
)%
|
Loss from discontinued operations, net of tax
|
(195,135
|
)
|
|
|
(10,509
|
)
|
|
||||
Net loss
|
$
|
(277,358
|
)
|
|
|
$
|
(94,063
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Six months ended
|
||||||||||
|
June 26, 2016
|
% of sales
|
|
June 30, 2015
|
% of sales
|
||||||
Cost of sales
|
$
|
175
|
|
0.1
|
%
|
|
$
|
11
|
|
—
|
%
|
Selling, general and administrative
|
5,902
|
|
1.7
|
%
|
|
5,118
|
|
3.2
|
%
|
||
Research and development
|
296
|
|
0.1
|
%
|
|
552
|
|
0.3
|
%
|
|
Six months ended
|
|||||||||
|
June 26, 2016
|
|
June 30, 2015
|
|
% change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
107,286
|
|
|
$
|
84,348
|
|
|
27.2
|
%
|
Upper extremities
|
99,910
|
|
|
8,049
|
|
|
1,141.3
|
%
|
||
Biologics
|
34,920
|
|
|
22,414
|
|
|
55.8
|
%
|
||
Sports med & other
|
4,301
|
|
|
945
|
|
|
355.1
|
%
|
||
Total U.S.
|
$
|
246,417
|
|
|
$
|
115,756
|
|
|
112.9
|
%
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
31,783
|
|
|
$
|
24,396
|
|
|
30.3
|
%
|
Upper extremities
|
44,915
|
|
|
3,959
|
|
|
1,034.5
|
%
|
||
Biologics
|
9,065
|
|
|
9,810
|
|
|
(7.6
|
)%
|
||
Sports med & other
|
7,827
|
|
|
4,433
|
|
|
76.6
|
%
|
||
Total International
|
$
|
93,590
|
|
|
$
|
42,598
|
|
|
119.7
|
%
|
|
|
|
|
|
|
|
||||
Total net sales
|
$
|
340,007
|
|
|
$
|
158,354
|
|
|
114.7
|
%
|
|
Six months ended
June 30, 2015
|
||||||||||||||
|
|||||||||||||||
|
Standalone Wright Medical Group, Inc.
|
|
Standalone Tornier N.V., recast
1
|
|
Discontinued
revenues
2
|
|
Non-GAAP
combined pro forma
net sales
|
||||||||
U.S.
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
84,348
|
|
|
$
|
20,961
|
|
|
$
|
(6,827
|
)
|
|
$
|
98,482
|
|
Upper extremities
|
8,049
|
|
|
77,938
|
|
|
—
|
|
|
85,987
|
|
||||
Biologics
|
22,414
|
|
|
878
|
|
|
—
|
|
|
23,292
|
|
||||
Sports med & other
|
945
|
|
|
3,211
|
|
|
—
|
|
|
4,156
|
|
||||
Total extremities & biologics
|
115,756
|
|
|
102,988
|
|
|
(6,827
|
)
|
|
211,917
|
|
||||
Large joint
|
—
|
|
|
86
|
|
|
(86
|
)
|
|
—
|
|
||||
Total U.S.
|
$
|
115,756
|
|
|
$
|
103,074
|
|
|
$
|
(6,913
|
)
|
|
$
|
211,917
|
|
|
|
|
|
|
|
|
|
||||||||
International
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
24,396
|
|
|
$
|
5,127
|
|
|
$
|
—
|
|
|
$
|
29,523
|
|
Upper extremities
|
3,959
|
|
|
36,431
|
|
|
—
|
|
|
40,390
|
|
||||
Biologics
|
9,810
|
|
|
243
|
|
|
—
|
|
|
10,053
|
|
||||
Sports med & other
|
4,433
|
|
|
3,867
|
|
|
—
|
|
|
8,300
|
|
||||
Total extremities & biologics
|
42,598
|
|
|
45,668
|
|
|
—
|
|
|
88,266
|
|
||||
Large joint
|
—
|
|
|
22,571
|
|
|
(22,571
|
)
|
|
—
|
|
||||
Total International
|
$
|
42,598
|
|
|
$
|
68,239
|
|
|
$
|
(22,571
|
)
|
|
$
|
88,266
|
|
|
|
|
|
|
|
|
|
||||||||
Global
|
|
|
|
|
|
|
|
||||||||
Lower extremities
|
$
|
108,744
|
|
|
$
|
26,088
|
|
|
$
|
(6,827
|
)
|
|
$
|
128,005
|
|
Upper extremities
|
12,008
|
|
|
114,369
|
|
|
—
|
|
|
126,377
|
|
||||
Biologics
|
32,224
|
|
|
1,121
|
|
|
—
|
|
|
33,345
|
|
||||
Sports med & other
|
5,378
|
|
|
7,078
|
|
|
—
|
|
|
12,456
|
|
||||
Total extremities & biologics
|
158,354
|
|
|
148,656
|
|
|
(6,827
|
)
|
|
300,183
|
|
||||
Large joint
|
—
|
|
|
22,657
|
|
|
(22,657
|
)
|
|
—
|
|
||||
Total sales
|
$
|
158,354
|
|
|
$
|
171,313
|
|
|
$
|
(29,484
|
)
|
|
$
|
300,183
|
|
1
|
Legacy Tornier product line sales have been recast to reflect the reclassification of cement, instruments and freight from the historical Tornier product line "Large Joints and Other" to the product line associated with those revenues that will be utilized for future revenue reporting.
|
2
|
To reduce from Tornier’s historical sales the U.S. sales associated with Tornier’s Salto Talaris and Salto XT ankle replacement products and silastic toe replacement product, and the global sales associated with Tornier's Large Joints business.
|
|
Net sales
Six months ended
June 26, 2016
|
|
Non-GAAP combined pro forma net sales
six months ended
June 30, 2015
|
|
%
change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
107,286
|
|
|
$
|
98,482
|
|
|
8.9
|
%
|
Upper extremities
|
99,910
|
|
|
85,987
|
|
|
16.2
|
%
|
||
Biologics
|
34,920
|
|
|
23,292
|
|
|
49.9
|
%
|
||
Sports med & other
|
4,301
|
|
|
4,156
|
|
|
3.5
|
%
|
||
Total U.S.
|
$
|
246,417
|
|
|
$
|
211,917
|
|
|
16.3
|
%
|
|
|
|
|
|
|
|
||||
International
|
|
|
|
|
|
|
||||
Lower extremities
|
$
|
31,783
|
|
|
$
|
29,523
|
|
|
7.7
|
%
|
Upper extremities
|
44,915
|
|
|
40,390
|
|
|
11.2
|
%
|
||
Biologics
|
9,065
|
|
|
10,053
|
|
|
(9.8
|
)%
|
||
Sports med & other
|
7,827
|
|
|
8,300
|
|
|
(5.7
|
)%
|
||
Total international
|
$
|
93,590
|
|
|
$
|
88,266
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
||||
Global
|
|
|
|
|
|
|
||||
Lower extremities
|
$
|
139,069
|
|
|
$
|
128,005
|
|
|
8.6
|
%
|
Upper extremities
|
144,825
|
|
|
126,377
|
|
|
14.6
|
%
|
||
Biologics
|
43,985
|
|
|
33,345
|
|
|
31.9
|
%
|
||
Sports med & other
|
12,128
|
|
|
12,456
|
|
|
(2.6
|
)%
|
||
Total sales
|
$
|
340,007
|
|
|
$
|
300,183
|
|
|
13.3
|
%
|
|
Three Months Ended
June 26, 2016 |
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
70,645
|
|
|
$
|
51,228
|
|
|
$
|
48,843
|
|
Operating income
|
$
|
18,968
|
|
|
$
|
16,849
|
|
|
$
|
2,208
|
|
Operating income as a percent of net sales
|
26.8
|
%
|
|
32.9
|
%
|
|
4.5
|
%
|
|
Three Months Ended
June 30, 2015 |
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
54,096
|
|
|
$
|
4,174
|
|
|
$
|
22,150
|
|
Operating income (loss)
|
$
|
7,111
|
|
|
$
|
1,763
|
|
|
$
|
(2,443
|
)
|
Operating income (loss) as a percent of net sales
|
13.1
|
%
|
|
42.2
|
%
|
|
(11.0
|
)%
|
|
Six Months Ended
June 26, 2016 |
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
143,905
|
|
|
$
|
102,512
|
|
|
$
|
93,590
|
|
Operating income
|
$
|
39,833
|
|
|
$
|
34,135
|
|
|
$
|
3,785
|
|
Operating income as a percent of net sales
|
27.7
|
%
|
|
33.3
|
%
|
|
4.0
|
%
|
|
Six Months Ended
June 30, 2015 |
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
107,708
|
|
|
$
|
8,048
|
|
|
$
|
42,598
|
|
Operating income (loss)
|
$
|
11,950
|
|
|
$
|
3,376
|
|
|
$
|
(5,098
|
)
|
Operating income (loss) as a percent of net sales
|
11.1
|
%
|
|
41.9
|
%
|
|
(12.0
|
)%
|
|
June 26, 2016
|
|
December 27, 2015
|
||||
Cash and cash equivalents
|
$
|
326,251
|
|
|
$
|
139,804
|
|
Working capital
|
385,162
|
|
|
352,946
|
|
•
|
AUGMENT
®
Injectable Bone Graft (Augment Injectable) combines rhPDGF-BB with an injectable bone matrix, and is targeted to be used in either open (surgical) treatment of fusions and fractures or closed (non-surgical) or minimally invasive treatment of fractures. AUGMENT
®
Injectable can be injected into a fusion or fracture site during an open surgical procedure, or it can be injected through the skin into a fracture site, in either case locally delivering rhPDGF-BB to promote fusion or fracture repair. Our initial clinical development program for AUGMENT
®
Injectable has focused on securing regulatory approval for open indications in the United States and in several markets outside the United States. We currently estimate it could take one to three years to complete this project. We have incurred expenses of approximately $4.3 million for AUGMENT
®
Injectable since the date of acquisition and $0.3 million in the quarter ended
June 26, 2016
. We are currently evaluating future costs related to AUGMENT
®
Injectable following the recent FDA approval of AUGMENT
®
.
|
•
|
PerFORM Rev/Rev+ is a next-generation reverse construct which replaces the existing Reverse II Glenoid Product. PerFORM Reverse consists of new baseplate options, with various backside angles and thicknesses to address additional glenoid deformities, and also includes a new central fixation technology that is different than any other system in the market. Development of this product is in manufacturing validation stage. Pre-market release trials began in the first quarter of 2016. We achieved CE marking for PerFORM Reverse in the first quarter of 2016, and 510(k) clearance is anticipated to occur later in 2016. We have an anticipated completion date in 2017 and the cost to complete the project is estimated to be less than $1 million. However, the risks and uncertainties associated with completion are dependent upon FDA clearance.
|
•
|
AEQUALIS
®
Flex Revive (previously AEQUALIS
®
Adjustable Reversed Ext (AARE)) will ultimately be our second-generation revision product, with an improved implant that is convertible and addresses more indications, and a revamped instrument set that includes universal extraction instrumentation. The implants in this system are complete from a design standpoint, have regulatory approval, and are being sold using a previous generation of instrumentation in a limited capacity. The instruments for the new revision system are currently in design phase. We have an anticipated completion date in 2017 and project cost to complete is estimated to be less than $1 million. However, the risks and uncertainties associated with completion are dependent upon testing validations and FDA clearance.
|
Share price
|
|
Cash payment in excess of principal (in thousands)
|
||
$27.98
|
(10% greater than conversion price)
|
$
|
203
|
|
$30.53
|
(20% greater than conversion price)
|
$
|
405
|
|
$33.07
|
(30% greater than conversion price)
|
$
|
608
|
|
$35.62
|
(40% greater than conversion price)
|
$
|
811
|
|
$38.16
|
(50% greater than conversion price)
|
$
|
1,013
|
|
Share price
|
|
Shares (in thousands)
|
$42.68
|
(10% greater than strike price)
|
1,533
|
$46.56
|
(20% greater than strike price)
|
2,811
|
$50.44
|
(30% greater than strike price)
|
3,892
|
$54.32
|
(40% greater than strike price)
|
4,818
|
$58.20
|
(50% greater than strike price)
|
5,621
|
Share price
|
|
Shares (in thousands)
|
$33.00
|
(10% greater than strike price)
|
1,681
|
$36.00
|
(20% greater than strike price)
|
3,082
|
$39.00
|
(30% greater than strike price)
|
4,268
|
$42.00
|
(40% greater than strike price)
|
5,284
|
$45.00
|
(50% greater than strike price)
|
6,164
|
•
|
the imposition of additional U.S. and foreign governmental controls or regulations on orthopaedic implants and biologic products;
|
•
|
new export license requirements;
|
•
|
the imposition of U.S. or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit continued business with that country, company, person, or entity;
|
•
|
economic instability, including currency risk between the U.S. dollar and foreign currencies, in our target markets;
|
•
|
the imposition of restrictions on the activities of foreign agents, representatives, and distributors;
|
•
|
scrutiny of foreign tax authorities, which could result in significant fines, penalties, and additional taxes being imposed upon us;
|
•
|
a shortage of high-quality international salespeople and distributors;
|
•
|
loss of any key personnel who possess proprietary knowledge or are otherwise important to our success in international markets;
|
•
|
changes in third-party reimbursement policy that may require some of the patients who receive our products to directly absorb medical costs or that may necessitate our reducing selling prices for our products;
|
•
|
unexpected changes in foreign regulatory requirements;
|
•
|
differing local product preferences and product requirements;
|
•
|
changes in tariffs and other trade restrictions, particularly related to the exportation of our biologic products;
|
•
|
work stoppages or strikes in the healthcare industry, such as those that have affected our operations in France, Canada, Korea, and Finland in the past;
|
•
|
difficulties in enforcing and defending intellectual property rights;
|
•
|
foreign currency exchange controls that might prevent us from repatriating cash earned in countries outside the Netherlands;
|
•
|
complex data privacy requirements and labor relations laws; and
|
•
|
exposure to different legal and political standards due to our conducting business in over 50 countries.
|
•
|
make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
|
•
|
restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;
|
•
|
place us at a competitive disadvantage compared to our competitors who have less debt; and
|
•
|
limit our ability to borrow additional amounts for working capital, capital expenditures, contractual obligations, research and development efforts, acquisitions, debt service requirements, execution of our business strategy, or other purposes.
|
(a)
|
Exhibits.
|
WRIGHT MEDICAL GROUP N.V.
|
|
By:
|
/s/ Robert J. Palmisano
|
|
Robert J. Palmisano
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
|
|
By:
|
/s/ Lance A. Berry
|
|
Lance A. Berry
|
|
Senior Vice President and Chief Financial Officer
|
|
(principal financial officer)
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
3.1
|
|
Articles of Association of Wright Medical Group N.V.
|
|
Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 1, 2016 (File No. 001-35065)
|
4.1
|
|
Indenture, dated as of May 20, 2016, between Wright Medical Group N.V. and The Bank of New York Mellon Trust Company, N.A. (including the form of the 2.25% Cash Convertible Senior Note due 2021)
|
|
Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 25, 2016 (File No. 001-35065)
|
10.1
|
|
Form of Exchange/Subscription Agreement, dated as of May 12, 2016, between Wright Medical Group N.V. and Each Investor Party Thereto
|
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 18, 2016 (File No. 001-35065)
|
10.2
|
|
Form of Subscription Agreement, dated as of May 12, 2016, between Wright Medical Group N.V. and Each Investor Party Thereto
|
|
Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 18, 2016 (File No. 001-35065)
|
10.3
|
|
Call Option Transaction Confirmation, dated as of May 12, 2016, between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association
|
|
Filed herewith
|
10.4
|
|
Call Option Transaction Confirmation, dated as of May 12, 2016, between Wright Medical Group N.V. and Bank of America, N.A.
|
|
Filed herewith
|
10.5
|
|
Warrants Confirmation, dated as of May 12, 2016, between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association
|
|
Filed herewith
|
10.6
|
|
Warrants Confirmation, dated as of May 12, 2016, between Wright Medical Group N.V. and Bank of America, N.A.
|
|
Filed herewith
|
10.7
|
|
Form of Partial Termination Confirmation among Wright Medical Group N.V., Wright Medical Group, Inc. and each of JPMorgan Chase Bank, National Association, Wells Fargo Bank, National Association and Deutsch Bank AG, London Branch
|
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (with respect to Item 1.01) as filed with the Securities and Exchange Commission on June 16, 2016 (File No. 001-35065)
|
10.8
|
|
Resignation Agreement dated June 10, 2016 between Wright Medical Group N.V. and Terry M. Rich
|
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (with respect to Item 5.02) as filed with the Securities and Exchange Commission on June 16, 2016 (File No. 001-35065)
|
10.9*
|
|
Commercial Supply Agreement dated March 29, 2016 between BioMimetic Therapeutics, LLC and FUJIFILM Diosynth Biotechnologies U.S.A., Inc.
|
|
Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on April 7, 2016 (File No. 001-35065)
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
Filed herewith
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002
|
|
Filed herewith
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
|
|
Furnished herewith
|
101
|
|
The following materials from Wright Medical Group N.V.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of June 26, 2016 and December 27, 2015, (ii) the Consolidated Statements of Operations for the three and six months ended June 26, 2016 and June 30, 2015, (iii) the Consolidated Statements of Comprehensive Loss for the three and six months ended June 26, 2016 and June 30, 2015, (iv) the Consolidated Statements of Cash Flows for the six months ended June 26, 2016 and June 30, 2015, and (v) Notes to Consolidated Financial Statements
|
|
Filed herewith
|
*
|
Portions of this exhibit have been redacted and are subject to an order granting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended (File No. 001-35065, CF #33696). The redacted material was filed separately with the Securities and Exchange Commission.
|
1.
|
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 supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “
Agreement
”) as if Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for (i) the election of US Dollars (“
USD
”) as the Termination Currency, and (ii) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date. In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement. The parties acknowledge that the Transaction to which this Confirmation relates is not governed by, and shall not be treated as a transaction under, any other ISDA Master Agreement entered into between the parties from time to time. In the event of any inconsistency between this Confirmation and the Agreement, this Confirmation shall govern.
|
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:
|
Trade Date:
|
May 12, 2016
|
Effective Date:
|
The third Exchange Business Day immediately prior to the Premium Payment Date
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
|
Option Type:
|
Call
|
Buyer:
|
Counterparty
|
Seller:
|
Dealer
|
Shares:
|
The ordinary shares of Counterparty, par value 0.03 Euros per share (Exchange symbol “WMGI”).
|
Number of Options:
|
395,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero.
|
Applicable Percentage:
|
50.0%
|
Option Entitlement:
|
A number equal to the product of the Applicable Percentage and 46.8165.
|
Strike Price:
|
USD 21.36
|
Premium:
|
USD 49,908,250.00
|
Premium Payment Date:
|
May 20, 2016
|
Exchange:
|
The NASDAQ Global Select Market
|
Related Exchange(s):
|
All Exchanges
|
Excluded Provisions:
|
Section 14.03 and Section 14.04(h) of the Indenture.
|
Conversion Date:
|
With respect to any conversion of a Convertible Note, the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in Section 14.02(b) of the Indenture;
provided
that if Counterparty has not delivered to Dealer a related Notice of Exercise, then in no event shall a Conversion Date be deemed to occur hereunder (and no Option shall be exercised or deemed to be exercised hereunder) with respect to any surrender of a Convertible Note for conversion in respect of which Counterparty has elected to designate a financial institution for exchange in lieu of conversion of such Convertible Note pursuant to Section 14.08 of the Indenture.
|
Expiration Time:
|
The Valuation Time
|
Expiration Date:
|
November 15, 2021, subject to earlier exercise.
|
Multiple Exercise:
|
Applicable, as described under “Automatic Exercise” below.
|
Automatic Exercise:
|
Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date in respect of which a Notice of Conversion that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred shall be deemed to be automatically exercised;
provided
that such Options shall be exercised or deemed exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise” below.
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions or under “Automatic Exercise” above, in order to exercise any Options, Counterparty must notify Dealer in writing, including by email, before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the scheduled first day of the Settlement Averaging Period for the Options being exercised of (i) the number of such Options and (ii) the scheduled first day of the Settlement Averaging Period and the scheduled Settlement Date;
provided
that in respect of Options relating to Convertible Notes with a Conversion Date occurring on or after the 45th Scheduled Valid Day preceding November 15, 2021, such notice may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options.
|
Valuation Time:
|
At the close of trading of the regular trading session on the Exchange;
provided
that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in good faith and in its commercially reasonable discretion.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
|
Settlement Method:
|
Cash Settlement
|
Cash Settlement:
|
In lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date, the Option Cash Settlement Amount in respect of any Option exercised or deemed exercised hereunder. In no event will the Option Cash Settlement Amount be less than zero.
|
Option Cash Settlement Amount:
|
In respect of any Option exercised or deemed exercised, an amount in cash equal to (A) the sum of the products, for each Valid Day during the Settlement Averaging Period for such Option, of (x) the Option Entitlement on such Valid Day
multiplied by
(y) the Relevant Price on such Valid Day
less
the Strike Price,
divided by
(B) the number of Valid Days in the Settlement Averaging Period;
provided
that if the calculation contained in clause (y) above results in a negative number, such number shall be replaced with the number “zero”.
|
Valid Day:
|
A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other United States national or regional securities exchange on
|
Scheduled Valid Day:
|
A day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
|
Business Day:
|
Any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
|
Relevant Price:
|
On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page WMGI <equity> AQR (or any successor thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent using, if practicable, a volume-weighted average method). The Relevant Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
|
Settlement Averaging Period:
|
For any Option:
|
Settlement Date:
|
For any Option, the date cash is paid under the terms of the Indenture with respect to the conversion of the Convertible Note related to such Option.
|
Settlement Currency:
|
USD
|
Representation and Agreement:
|
Notwithstanding anything to the contrary in Equity Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Issuer’s status as issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the Clearance System and (iii) any Shares delivered to Counterparty may be “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended (the “
Securities Act
”)).
|
3.
|
Additional Terms applicable to the Transaction
.
|
Potential Adjustment Events:
|
Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment under the Indenture to the “Conversion Rate” or the composition of a “unit of Reference Property” or to any “Last Reported Sale Price”, “Daily VWAP” or “Daily Conversion Value” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery obligation hereunder in respect of any “Distributed Property” delivered by Counterparty and/or Issuer pursuant to the fourth sentence of Section 14.04(c) of the Indenture or any payment obligation in respect of any cash paid by Counterparty and/or Issuer pursuant to the fourth
|
Method of Adjustment:
|
Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event, the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction.
|
Dilution Adjustment Provisions:
|
Section 14.04(a), (b), (c), (d), (e) and Section 14.05 of the Indenture.
|
Merger Events:
|
Applicable;
provided
that notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Reorganization Event” in Section 14.07(a) of the Indenture.
|
Tender Offers:
|
Applicable;
provided
that notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in Section 14.04(e) of the Indenture.
|
Tender Offers:
|
Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a Tender Offer, and to the extent the Calculation Agent determines appropriate, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options, Option Entitlement, the definitions of “Exchange”, “Relevant Price”, “Settlement Averaging Period”, “Valid Day”, “Scheduled Valid Day”, “Market Disruption Event”, the number of Share thresholds in Section 9(b)(i) and 9(b)(ii) of this Confirmation and any other variable relevant to the exercise, settlement or payment for the Transaction, subject to the second paragraph under “Method of Adjustment”;
provided
,
however
, that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision;
provided
further
that if, with respect to a Merger Event or a Tender Offer, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares of
|
Delisting:
|
Cancellation and Payment (Calculation Agent Determination);
provided that
, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re‑listed, re‑traded or re‑quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re‑quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange.
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof.
|
Failure to Deliver:
|
Applicable
|
Hedging Disruption:
|
Applicable;
provided
that:
|
Increased Cost of Hedging:
|
Applicable
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Hedging Party shall be made in good faith and in a commercially reasonable manner (it being
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Determining Party shall be made in good faith and in a commercially reasonable manner (it being understood that Determining Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Non-Reliance:
|
Applicable.
|
Regarding Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
4.
|
Calculation Agent
. Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. The parties agree that they will work reasonably to resolve any disputes as set forth in the immediately following paragraph.
|
5.
|
Account Details
.
|
(a)
|
Account for payments to Counterparty:
|
(b)
|
Account for payments to Dealer:
|
6.
|
Offices
.
|
(a)
|
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party.
|
(b)
|
The Office of Dealer for the Transaction is: London
|
7.
|
Notices
.
|
(a)
|
Address for notices or communications to Counterparty:
|
(b)
|
Address for notices or communications to Dealer:
|
8.
|
Representations and Warranties of Counterparty
.
|
(a)
|
Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and constitutes its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification
|
(b)
|
Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.
|
(c)
|
No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “
Securities Act
”) or state securities laws or under the Dutch Act on Financial Supervision (Wet op het Financieel Toezicht).
|
(d)
|
Counterparty is not and, after consummation of 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.
|
(e)
|
Counterparty is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).
|
(f)
|
Each of it and its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Issuer or the Shares.
|
(g)
|
No state or local (including any non-U.S. jurisdiction’s) 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), except for the reporting requirements of the Exchange Act and rules promulgated thereunder, or, the reporting or registration requirements of the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969), in each case, as a result of Dealer or its affiliates owning or holding (however defined) Shares.
|
(h)
|
Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million.
|
(i)
|
It is a party which is able to adhere to the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) as if it were a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).
|
9.
|
Other Provisions
.
|
(a)
|
Counterparty shall deliver to Dealer an opinion of Dutch counsel, dated as of the date hereof, with respect to the matters set forth in Sections 8(a) through (c). Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.
|
(b)
|
Repurchase Notices
. Counterparty shall, on any day on which Issuer effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “
Repurchase Notice
”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 99,423,718 (in the case of the first such notice) or (ii) thereafter more than 3,073,706 less than the number of Shares included in the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “
Indemnified Person
”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding. Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person. If the indemnification provided for in this paragraph is
|
(c)
|
Regulation M
. Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.
|
(d)
|
No Manipulation
. Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act or the Dutch Act on Financial Supervision (
Wet op het Financieel Toezicht
).
|
(e)
|
Transfer or Assignment
.
|
(i)
|
Counterparty shall have the right to transfer or assign its rights and obligations hereunder with respect to all, but not less than all, of the Options hereunder (such Options, the “
Transfer Options
”);
provided
that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to the following conditions:
|
(A)
|
With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 9(b) or any obligations under Section 9(m) or 9(q) of this Confirmation;
|
(B)
|
Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect to compliance with applicable securities laws in a manner that, in the reasonable judgment of Dealer, will not expose Dealer to material risks under applicable securities laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by such third party and Counterparty, as are requested and reasonably satisfactory to Dealer;
|
(C)
|
Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would
|
(D)
|
An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment;
|
(E)
|
Without limiting the generality of clause (B), Counterparty shall cause 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 results described in clause (C) will not occur upon or after such transfer and assignment; and
|
(F)
|
Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment;
|
(ii)
|
Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction (A) to any affiliate of Dealer (1) that has a rating for its long term, unsecured and unsubordinated indebtedness that is equal to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer, or (B) to any other third party with a rating for its long term, unsecured and unsubordinated indebtedness equal to or better than the lesser of (1) the credit rating of Dealer at the time of the transfer and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor (“
S&P
”), or A3 by Moody’s Investor Service, Inc. (“
Moody’s
”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by Counterparty and Dealer. If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “
Excess Ownership Position
”), Dealer is unable after using its good faith and commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “
Terminated Portion
”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made 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 Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(k) shall apply to any amount
|
(iii)
|
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, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, 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.
|
(f)
|
Ratings Decline
. If at any time the long term, unsecured and unsubordinated indebtedness of Dealer is rated Ba1 or lower by Moody’s or BB+ or lower by S&P (any such rating, a “
Ratings Downgrade
”), then Counterparty may, at any time following the occurrence and during the continuation of such Ratings Downgrade, provide written notice to Dealer specifying that it elects for this Section 9(f) to apply (a “
Trigger Notice
”). Upon receipt by Dealer of a Trigger Notice from Counterparty, Dealer shall promptly elect that either (i) the parties shall negotiate in good faith
|
(g)
|
Role of Agent
.
Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of Dealer (“
JPMS
”), has acted solely as agent for Dealer (and not as agent for Counterparty) and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under the Transaction. For the avoidance of doubt, any performance by Dealer of its obligations hereunder solely to JPMS shall not relieve Dealer of such obligations. Any performance by Counterparty of its obligations (including notice obligations) through or by means of JPMS’ agency for Dealer shall constitute good performance of Counterparty’s obligations hereunder to Dealer.
|
(h)
|
Additional Termination Events
.
|
(i)
|
Notwithstanding anything to the contrary in this Confirmation if an event of default occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.
|
(ii)
|
Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty, within the applicable time period set forth under “Notice of Exercise” of any Notice of Exercise in respect of Options that relate to Convertible Notes as to which additional Shares would be added to the Conversion Rate pursuant to Section 14.03 of the Indenture in connection with a “Make-Whole Fundamental Change” (as defined in the Indenture) (such Convertible Notes, “
Make-Whole Convertible Notes
”) shall constitute an Additional Termination Event as provided in this Section 9(h). Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange Business Day following such Additional Termination Event (which Exchange Business Day shall in no event be earlier than the related settlement date for such Convertible Notes) as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “
Make-Whole Conversion Options
”) equal to the lesser of (A) the number of such Options specified in such Notice of Exercise and (B) the Number of Options as of the date Dealer designates such Early
|
(iii)
|
(a) Promptly following any Repayment Event (as defined below) (but, in any event, within 5 Scheduled Trading Days following settlement thereof), Counterparty may notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (the “
Repayment Convertible Securities
”) (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 Section 9(h)(iii).
|
(i)
|
Amendments to the Equity Definitions
.
|
(i)
|
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 Master Agreement with respect to that Issuer.”
|
(ii)
|
Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to Counterparty” in the first sentence of such section.
|
(j)
|
Setoff
. Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise. For the avoidance of doubt, in the event of bankruptcy or liquidation of either Counterparty or Dealer neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.
|
(k)
|
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If in respect of the Transaction, an amount is payable by Dealer to Counterparty (i) pursuant to Section 12.7 or Section 12.9 of the Equity
|
Share Termination Alternative:
|
If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d) (ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment.
|
Share Termination Delivery Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
|
Share Termination Unit Price:
|
The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the
|
Share Termination Delivery Unit:
|
One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “
Exchange Property
”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.
|
Failure to Deliver:
|
Applicable
|
Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.
|
(l)
|
Waiver of Jury Trial
. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that such other party
|
(m)
|
Registration
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, the Shares (“
Hedge Shares
”) acquired by 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 (or shall cause Issuer to), at its election, either (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 and enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary offering;
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 paragraph 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, in form and substance satisfactory 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 Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer.
|
(n)
|
Tax 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.
|
(o)
|
Right to Extend
. Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably and in good faith determines, based on the advice of counsel in the case of the immediately following clause (ii), that such action is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect transactions with respect to Shares in connection with its commercially reasonable 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.
|
(p)
|
Securities Contract; Swap Agreement
. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.
|
(q)
|
Notice of Certain Other Events
. Counterparty covenants and agrees that:
|
(i)
|
promptly following the public announcement of the results of any election by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written notice of the types and amounts of consideration that holders of Shares have elected to receive upon consummation of such Merger Event (the date of such notification, the “
Consideration Notification Date
”);
provided
that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and
|
(ii)
|
promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment.
|
(r)
|
Wall Street Transparency and Accountability Act
. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable 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, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).
|
(s)
|
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 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;
|
(t)
|
Early Unwind
. In the event the sale of the “Securities” (as defined in the Placement Agency Agreement) is not consummated with the Placement Agent for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date, the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) 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 the other party arising out of and to be performed as Hedging Positions in respect of this Transaction either prior to or after the Early Unwind Date. Each of Dealer and Counterparty represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
|
(u)
|
Designation of 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 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.
|
(v)
|
Non-US Merger Transactions.
Issuer shall not enter into or consummate any Non-US Merger Transaction unless the successor Issuer immediately following such Non-US Merger Transaction repeats to Dealer immediately following such Non-US Merger Transaction the representations and warranties set forth in Sections 8(a), 8(b), 8(c) and 8(d) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”).
|
(w)
|
Tax Forms
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service (“
IRS
”) Form W-8BEN-E on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-8BEN-E or other applicable IRS Form if the previously tendered IRS Form W-8BEN-E becomes obsolete or incorrect. Dealer shall provide Counterparty a valid IRS Form W-9 on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-9 or applicable IRS Form if the previously tendered IRS Form becomes obsolete or incorrect.
|
(x)
|
FATCA
. “Indemnifiable Tax” as defined in Section 14 of this 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 this Agreement.
|
(y)
|
Section 871 (m)
. Dealer and Counterparty hereby agree that this Agreement shall be treated as a Covered Master Agreement (as that term is defined in the 2015 Section 871(m) Protocol) and this Agreement shall be deemed to have been amended in accordance with the modifications specified in the Attachment to the 2015 Section 871(m) Protocol.
|
(z)
|
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that 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 Amendment”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to the Agreement (and “each Protocol Covered Agreement” shall be read accordingly), (iv) references to “Implementation Date” shall be deemed to be references to the date of this Amendment, and (v) the term “the parties” shall be construed as referring to Dealer and the Counterparty. For the purposes of this Section:
|
(i)
|
Dealer is a Portfolio Data Sending Entity and the Counterparty is a Portfolio Data Receiving entity;
|
(ii)
|
The Local Business Days for such purposes in relation to Dealer are London and in relation to Counterparty are New York and Amsterdam;
|
(iii)
|
The provisions in this section shall survive the termination of the Transaction; and
|
(iv)
|
The following are the applicable email addresses.
|
1.
|
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 supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “
Agreement
”) as if Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for (i) the election of US Dollars (“
USD
”) as the Termination Currency, and (ii) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date. In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates. The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement. The parties acknowledge that the Transaction to which this Confirmation relates is not governed by, and shall not be treated as a transaction under, any other ISDA Master Agreement entered into between the parties from time to time. In the event of any inconsistency between this Confirmation and the Agreement, this Confirmation shall govern.
|
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:
|
Trade Date:
|
May 12, 2016
|
Effective Date:
|
The third Exchange Business Day immediately prior to the Premium Payment Date
|
Option Style:
|
“Modified American”, as described under “Procedures for Exercise” below
|
Option Type:
|
Call
|
Buyer:
|
Counterparty
|
Seller:
|
Dealer
|
Shares:
|
The ordinary shares of Counterparty, par value 0.03 Euros per share (Exchange symbol “WMGI”).
|
Number of Options:
|
395,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero.
|
Applicable Percentage:
|
50.0%
|
Option Entitlement:
|
A number equal to the product of the Applicable Percentage and 46.8165.
|
Strike Price:
|
USD 21.36
|
Premium:
|
USD 49,908,250.00
|
Premium Payment Date:
|
May 20, 2016
|
Exchange:
|
The NASDAQ Global Select Market
|
Related Exchange(s):
|
All Exchanges
|
Excluded Provisions:
|
Section 14.03 and Section 14.04(h) of the Indenture.
|
Conversion Date:
|
With respect to any conversion of a Convertible Note, the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in Section 14.02(b) of the Indenture;
provided
that if Counterparty has not delivered to Dealer a related Notice of Exercise, then in no event shall a Conversion Date be deemed to occur hereunder (and no Option shall be exercised or deemed to be exercised hereunder) with respect to any surrender of a Convertible Note for conversion in respect of which Counterparty has elected to designate a financial institution for exchange in lieu of conversion of such Convertible Note pursuant to Section 14.08 of the Indenture.
|
Expiration Time:
|
The Valuation Time
|
Expiration Date:
|
November 15, 2021, subject to earlier exercise.
|
Multiple Exercise:
|
Applicable, as described under “Automatic Exercise” below.
|
Automatic Exercise:
|
Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date in respect of which a Notice of Conversion that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred shall be deemed to be automatically exercised;
provided
that such Options shall be exercised or deemed exercised only if Counterparty has provided a Notice of Exercise to Dealer in accordance with “Notice of Exercise” below.
|
Notice of Exercise:
|
Notwithstanding anything to the contrary in the Equity Definitions or under “Automatic Exercise” above, in order to exercise any Options, Counterparty must notify Dealer in writing, including by email, before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the scheduled first day of the Settlement Averaging Period for the Options being exercised of (i) the number of such Options and (ii) the scheduled first day of the Settlement Averaging Period and the scheduled Settlement Date;
provided
that in respect of Options relating to Convertible Notes with a Conversion Date occurring on or after the 45th Scheduled Valid Day preceding November 15, 2021, such notice may be given on or prior to the second Scheduled Valid Day immediately preceding the Expiration Date and need only specify the number of such Options.
|
Valuation Time:
|
At the close of trading of the regular trading session on the Exchange;
provided
that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in good faith and in its commercially reasonable discretion.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
|
Settlement Method:
|
Cash Settlement
|
Cash Settlement:
|
In lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date, the Option Cash Settlement Amount in respect of any Option exercised or deemed exercised hereunder. In no event will the Option Cash Settlement Amount be less than zero.
|
Option Cash Settlement Amount:
|
In respect of any Option exercised or deemed exercised, an amount in cash equal to (A) the sum of the products, for each Valid Day during the Settlement Averaging Period for such Option, of (x) the Option Entitlement on such Valid Day
multiplied by
(y) the Relevant Price on such Valid Day
less
the Strike Price,
divided by
(B) the number of Valid Days in the Settlement Averaging Period;
provided
that if the calculation contained in clause (y) above results in a negative number, such number shall be replaced with the number “zero”.
|
Valid Day:
|
A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other United States national or regional securities exchange on
|
Scheduled Valid Day:
|
A day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
|
Business Day:
|
Any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed.
|
Relevant Price:
|
On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page WMGI <equity> AQR (or any successor thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent using, if practicable, a volume-weighted average method). The Relevant Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.
|
Settlement Averaging Period:
|
For any Option:
|
Settlement Date:
|
For any Option, the date cash is paid under the terms of the Indenture with respect to the conversion of the Convertible Note related to such Option.
|
Settlement Currency:
|
USD
|
Representation and Agreement:
|
Notwithstanding anything to the contrary in Equity Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Issuer’s status as issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the Clearance System and (iii) any Shares delivered to Counterparty may be “restricted securities” (as defined in Rule 144 under the Securities Act of 1933, as amended (the “
Securities Act
”)).
|
3.
|
Additional Terms applicable to the Transaction
.
|
Potential Adjustment Events:
|
Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment under the Indenture to the “Conversion Rate” or the composition of a “unit of Reference Property” or to any “Last Reported Sale Price”, “Daily VWAP” or “Daily Conversion Value” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery obligation hereunder in respect of any “Distributed Property” delivered by Counterparty and/or Issuer pursuant to the fourth sentence of Section 14.04(c) of the Indenture or any payment obligation in respect of any cash paid by Counterparty and/or Issuer pursuant to the fourth
|
Method of Adjustment:
|
Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon any Potential Adjustment Event, the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction.
|
Dilution Adjustment Provisions:
|
Section 14.04(a), (b), (c), (d), (e) and Section 14.05 of the Indenture.
|
Merger Events:
|
Applicable;
provided
that notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event” means the occurrence of any event or condition set forth in the definition of “Reorganization Event” in Section 14.07(a) of the Indenture.
|
Tender Offers:
|
Applicable;
provided
that notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the occurrence of any event or condition set forth in Section 14.04(e) of the Indenture.
|
Tender Offers:
|
Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a Tender Offer, and to the extent the Calculation Agent determines appropriate, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options, Option Entitlement, the definitions of “Exchange”, “Relevant Price”, “Settlement Averaging Period”, “Valid Day”, “Scheduled Valid Day”, “Market Disruption Event”, the number of Share thresholds in Section 9(b)(i) and 9(b)(ii) of this Confirmation and any other variable relevant to the exercise, settlement or payment for the Transaction, subject to the second paragraph under “Method of Adjustment”;
provided
,
however
, that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision;
provided
further
that if, with respect to a Merger Event or a Tender Offer, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares of
|
Delisting:
|
Cancellation and Payment (Calculation Agent Determination);
provided that
, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re‑listed, re‑traded or re‑quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re‑quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange.
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof.
|
Failure to Deliver:
|
Applicable
|
Hedging Disruption:
|
Applicable;
provided
that:
|
Increased Cost of Hedging:
|
Applicable
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Hedging Party shall be made in good faith and in a commercially reasonable manner (it being
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Determining Party shall be made in good faith and in a commercially reasonable manner (it being understood that Determining Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Non-Reliance:
|
Applicable.
|
Regarding Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
4.
|
Calculation Agent
. Dealer; provided, however, that all calculations, adjustments, specifications, choices and determinations by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. The parties agree that they will work reasonably to resolve any disputes as set forth in the immediately following paragraph.
|
5.
|
Account Details
.
|
(a)
|
Account for payments to Counterparty:
|
(b)
|
Account for payments to Dealer:
|
6.
|
Offices
.
|
(a)
|
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch Party.
|
(b)
|
The Office of Dealer for the Transaction is: New York
|
7.
|
Notices
.
|
(a)
|
Address for notices or communications to Counterparty:
|
(b)
|
Address for notices or communications to Dealer:
|
8.
|
Representations and Warranties of Counterparty
.
|
(a)
|
Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and constitutes its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.
|
(b)
|
Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.
|
(c)
|
No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery
|
(d)
|
Counterparty is not and, after consummation of 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.
|
(e)
|
Counterparty is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).
|
(f)
|
Each of it and its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Issuer or the Shares.
|
(g)
|
No state or local (including any non-U.S. jurisdiction’s) 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), except for the reporting requirements of the Exchange Act and rules promulgated thereunder, or, the reporting or registration requirements of the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969), in each case, as a result of Dealer or its affiliates owning or holding (however defined) Shares.
|
(h)
|
Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million.
|
(i)
|
It is a party which is able to adhere to the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) as if it were a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).
|
9.
|
Other Provisions
.
|
(a)
|
Counterparty shall deliver to Dealer an opinion of Dutch counsel, dated as of the date hereof, with respect to the matters set forth in Sections 8(a) through (c). Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.
|
(b)
|
Repurchase Notices
. Counterparty shall, on any day on which Issuer effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “
Repurchase Notice
”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 97,296,541 (in the case of the first such notice) or (ii) thereafter more than 4,863,283 less than the number of Shares included in the immediately preceding Repurchase Notice. Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons
|
(c)
|
Regulation M
. Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10)
|
(d)
|
No Manipulation
. Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act or the Dutch Act on Financial Supervision (
Wet op het Financieel Toezicht
).
|
(e)
|
Transfer or Assignment
.
|
(i)
|
Counterparty shall have the right to transfer or assign its rights and obligations hereunder with respect to all, but not less than all, of the Options hereunder (such Options, the “
Transfer Options
”);
provided
that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to the following conditions:
|
(A)
|
With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 9(b) or any obligations under Section 9(m) or 9(q) of this Confirmation;
|
(B)
|
Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect to compliance with applicable securities laws in a manner that, in the reasonable judgment of Dealer, will not expose Dealer to material risks under applicable securities laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by such third party and Counterparty, as are requested and reasonably satisfactory to Dealer;
|
(C)
|
Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have been required to pay to Counterparty in the absence of such transfer and assignment;
|
(D)
|
An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment;
|
(E)
|
Without limiting the generality of clause (B), Counterparty shall cause 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 results described in clause (C) will not occur upon or after such transfer and assignment; and
|
(F)
|
Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment;
|
(ii)
|
Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction (A) to any affiliate of Dealer
|
(iii)
|
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, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, 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.
|
(f)
|
Ratings Decline
. If at any time the long term, unsecured and unsubordinated indebtedness of Dealer is rated Ba1 or lower by Moody’s or BB+ or lower by S&P (any such rating, a “
Ratings Downgrade
”), then Counterparty may, at any time following the occurrence and during the continuation of such Ratings Downgrade, provide written notice to Dealer specifying that it elects for this Section 9(f) to apply (a “
Trigger Notice
”). Upon receipt by Dealer of a Trigger Notice from Counterparty, Dealer shall promptly elect that either (i) the parties shall negotiate in good faith terms for collateral arrangements pursuant to which Dealer is required to provide collateral (including, but not limited to, equity or equity-linked securities issued by Counterparty or Issuer, as applicable) to Counterparty in respect of the Transaction with a value equal to the full mark-to-market exposure of Counterparty under the Transaction, as determined by Dealer in a good faith commercially reasonable manner, or (ii) an Additional Termination Event shall occur and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, and (B) the Transaction shall be the sole Affected Transaction.
|
(g)
|
[Reserved
.
]
|
(h)
|
Additional Termination Events
.
|
(i)
|
Notwithstanding anything to the contrary in this Confirmation if an event of default occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect
|
(ii)
|
Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty, within the applicable time period set forth under “Notice of Exercise” of any Notice of Exercise in respect of Options that relate to Convertible Notes as to which additional Shares would be added to the Conversion Rate pursuant to Section 14.03 of the Indenture in connection with a “Make-Whole Fundamental Change” (as defined in the Indenture) (such Convertible Notes, “
Make-Whole Convertible Notes
”) shall constitute an Additional Termination Event as provided in this Section 9(h). Upon receipt of any such Notice of Exercise, Dealer shall designate an Exchange Business Day following such Additional Termination Event (which Exchange Business Day shall in no event be earlier than the related settlement date for such Convertible Notes) as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “
Make-Whole Conversion Options
”) equal to the lesser of (A) the number of such Options specified in such Notice of Exercise and (B) the Number of Options as of the date Dealer designates such Early Termination Date (prior to giving effect to a reduction thereto on such date pursuant to the immediately following sentence). As of any such Early Termination Date, the Number of Options shall be reduced by the applicable number of Make-Whole Conversion Options. Any payment hereunder with respect to such termination of the Make-Whole Conversion Options shall be calculated pursuant to Section 6 of the Agreement using a volatility input that is equal to the Relevant Volatility Input, as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Options equal to the number of Make-Whole 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, for the avoidance of doubt, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the Option Entitlement that result from corresponding adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture);
provided
that the amount of cash deliverable in respect of such early termination by Dealer to Counterparty shall not be greater than the product of (x) the Applicable Percentage, (y) the number of Make-Whole Conversion Options and (z) the excess of (I) (1) the Conversion Rate (after taking into account any applicable adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture)
multiplied by
(2) a price per Share determined by the Calculation Agent over (II) the principal amount per Make-Whole Convertible Note, as determined by the Calculation Agent. For the avoidance of doubt, if the Transaction (or a portion of the Transaction)
|
(iii)
|
(a) Promptly following any Repayment Event (as defined below) (but, in any event, within 5 Scheduled Trading Days following settlement thereof), Counterparty may notify Dealer of such Repayment Event and the aggregate principal amount of Convertible Securities subject to such Repayment Event (the “
Repayment Convertible Securities
”) (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 Section 9(h)(iii).
|
(i)
|
Amendments to the Equity Definitions
.
|
(i)
|
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
|
(ii)
|
Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to Counterparty” in the first sentence of such section.
|
(j)
|
Setoff
. Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise. For the avoidance of doubt, in the event of bankruptcy or liquidation of either Counterparty or Dealer neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.
|
(k)
|
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
. If in respect of the Transaction, an amount is payable by Dealer to Counterparty (i) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (ii) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “
Payment Obligation
”), Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, the Tender Offer Date, the Announcement Date (in the case of Nationalization, Insolvency or Delisting), the Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Counterparty remakes (which representation is confirmed to Dealer in writing by Issuer, if other than Counterparty) the representation set forth in Section 8(f) as of the date of such election and (c) Dealer agrees, in its reasonable discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.
|
Share Termination Alternative:
|
If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d) (ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner
|
Share Termination Delivery Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
|
Share Termination Unit Price:
|
The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider, if commercially reasonable, the purchase price paid in connection with the purchase of Share Termination Delivery Property.
|
Share Termination Delivery Unit:
|
One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “
Exchange Property
”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.
|
Failure to Deliver:
|
Applicable
|
Other applicable provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.
|
(l)
|
Waiver of Jury Trial
. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.
|
(m)
|
Registration
. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, the Shares (“
Hedge Shares
”) acquired by 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 (or shall cause Issuer to), at its election, either (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 and enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary offering;
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 paragraph 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, in form and substance satisfactory 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
|
(n)
|
Tax 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.
|
(o)
|
Right to Extend
. Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably and in good faith determines, based on the advice of counsel in the case of the immediately following clause (ii), that such action is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) to enable Dealer to effect transactions with respect to Shares in connection with its commercially reasonable 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.
|
(p)
|
Securities Contract; Swap Agreement
. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.
|
(q)
|
Notice of Certain Other Events
. Counterparty covenants and agrees that:
|
(i)
|
promptly following the public announcement of the results of any election by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written notice of the types and amounts of consideration that holders of Shares have elected to receive upon consummation of such Merger Event (the date of such notification, the “
Consideration Notification Date
”);
provided
that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and
|
(ii)
|
promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment.
|
(r)
|
Wall Street Transparency and Accountability Act
. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable 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, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).
|
(s)
|
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 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 Counterparty.
|
(t)
|
Early Unwind
. In the event the sale of the “Securities” (as defined in the Placement Agency Agreement) is not consummated with the Placement Agent for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date, the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) 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 the other party arising out of and to be performed as Hedging Positions in respect of this Transaction either prior to or after the Early Unwind Date. Each of Dealer and Counterparty represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
|
(u)
|
Designation of 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 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.
|
(v)
|
Non-US Merger Transactions.
Issuer shall not enter into or consummate any Non-US Merger Transaction unless the successor Issuer immediately following such Non-US Merger Transaction repeats to Dealer immediately following such Non-US Merger Transaction the representations and warranties set forth in Sections 8(a), 8(b), 8(c) and 8(d) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”).
|
(w)
|
Tax Forms
. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service (“
IRS
”) Form W-8BEN-E on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-8BEN-E or other applicable IRS Form if the previously tendered IRS Form W-8BEN-E becomes obsolete or incorrect. Dealer shall provide Counterparty a valid IRS Form W-9 on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-9 or applicable IRS Form if the previously tendered IRS Form becomes obsolete or incorrect.
|
(x)
|
FATCA
. “Indemnifiable Tax” as defined in Section 14 of this 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 this Agreement.
|
(y)
|
Section 871 (m)
. Dealer and Counterparty hereby agree that this Agreement shall be treated as a Covered Master Agreement (as that term is defined in the 2015 Section 871(m) Protocol) and this Agreement shall be deemed to have been amended in
|
(z)
|
The Counterparty acknowledges that it has not been solicited by Dealer, or any person acting on behalf of the Dealer, to enter into this Transaction but rather it has independently approached the Dealer, through the Counterparty’s advisor, and invited the Dealer to bid competitively for this Transaction.
|
(aa)
|
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that 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 Amendment”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to the Agreement (and “each Protocol Covered Agreement” shall be read accordingly), (iv) references to “Implementation Date” shall be deemed to be references to the date of this Amendment, and (v) the term “the parties” shall be construed as referring to Dealer and the Counterparty. For the purposes of this Section:
|
(i)
|
Dealer is a Portfolio Data Sending Entity and the Counterparty is a Portfolio Data Receiving entity;
|
(ii)
|
The Local Business Days for such purposes in relation to Dealer are London and in relation to Counterparty are New York and Amsterdam;
|
(iii)
|
The provisions in this section shall survive the termination of the Transaction; and
|
(iv)
|
The following are the applicable email addresses.
|
To:
|
Wright Medical Group N.V. | Legal
|
Re:
|
Warrants
|
1.
|
This Confirmation evidences a complete and binding agreement between Dealer and Company as to the terms of the Transaction to which this Confirmation relates. This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “
Agreement
”) as if Dealer and Company had executed an agreement in such form (but without any Schedule except for (i) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine), and (ii) the election of US Dollars (“
USD
”) as the Termination Currency) on the Trade Date. In the event of any inconsistency between provisions of that Agreement
|
Trade Date:
|
May 12, 2016
|
Effective Date:
|
The third Exchange Business Day immediately prior to the Premium Payment Date
|
Warrants:
|
Equity call warrants, each giving the holder the right to purchase a number of Shares equal to the Warrant Entitlement at a price per Share equal to the Strike Price, subject to the terms set forth under the caption “Settlement Terms” below. For the purposes of the Equity Definitions, each reference to a Warrant herein shall be deemed to be a reference to a Call Option.
|
Warrant Style:
|
European
|
Seller:
|
Company
|
Buyer:
|
Dealer
|
Shares:
|
The ordinary shares of Company, par value 0.03 Euros per share (Exchange symbol “WMGI”).
|
Number of Warrants:
|
9,246,259. For the avoidance of doubt, the Number of Warrants shall be reduced by any Warrants exercised or deemed exercised hereunder. In no event will the Number of Warrants be less than zero.
|
Warrant Entitlement:
|
One Share per Warrant
|
Strike Price:
|
USD 30.00.
|
Premium:
|
USD
27,314,250.00 in the aggregate (the “
Aggregate Premium Amount
”), to be paid by Dealer to Company on the Premium Payment Date as follows:
|
Premium Payment Date:
|
May 20, 2016
|
Exchange:
|
The NASDAQ Global Select Market
|
Related Exchange(s):
|
All Exchanges
|
Expiration Time:
|
The Valuation Time
|
Expiration Dates:
|
Each Scheduled Trading Day during the period from, and including, the First Expiration Date to, but excluding, the 100
th
Scheduled Trading Day following the First Expiration Date shall be an “Expiration Date” for a number of Warrants equal to the Daily Number of Warrants on such date;
provided
that, notwithstanding anything to the contrary in the Equity Definitions, if any such date is a Disrupted Day, the Calculation Agent shall make adjustments, if applicable, to the Daily Number of Warrants or shall reduce such Daily Number of Warrants to zero for which such day shall be an Expiration Date and shall designate a Scheduled Trading Day or a number of Scheduled Trading Days as the Expiration Date(s) for the remaining Daily Number of Warrants or a portion thereof for the originally scheduled Expiration Date;
|
First Expiration Date:
|
February 15, 2022, (or if such day is not a Scheduled Trading Day, the next following Scheduled Trading Day), subject to Market Disruption Event below.
|
Daily Number of Warrants:
|
For any Expiration Date, the Number of Warrants that have not expired or been exercised as of such day,
divided
by the remaining number of Expiration Dates (including such day), rounded down to the nearest whole number, subject to adjustment pursuant to the provisos to “Expiration Dates”.
|
Automatic Exercise:
|
Applicable; and means that for each Expiration Date, a number of Warrants equal to the Daily Number of Warrants for such Expiration Date will be deemed to be automatically exercised at the Expiration Time on such Expiration Date.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions is hereby amended by replacing clause (ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting immediately following clause (iii) the phrase “; in each case that the Calculation Agent determines is material.”
|
Valuation Time:
|
Scheduled Closing Time;
provided
that if the principal trading session is extended, the Calculation Agent
|
Valuation Date:
|
Each Exercise Date.
|
Settlement Method:
|
Net Share Settlement.
|
Net Share Settlement:
|
On the relevant Settlement Date, Company shall deliver to Dealer a number of Shares equal to the Share Delivery Quantity for such Settlement Date to the account specified herein free of payment (other than, for the avoidance of doubt, the payment obligation that will be satisfied by the Par Value Payment) through the Clearance System, and Dealer shall be treated as the holder of record of such Shares at the time of delivery of such Shares or, if earlier, at 5:00 p.m. (New York City time) on such Settlement Date.
|
Share Delivery Quantity:
|
For any Settlement Date, a number of Shares (rounded down to the nearest whole Share), as calculated by the Calculation Agent, equal to the Net Share Settlement Amount for such Settlement Date
divided by
the Settlement Price on the Valuation Date for such Settlement Date.
|
Net Share Settlement Amount:
|
For any Settlement Date, an amount equal to the product of (i) the number of Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant Valuation Date and (iii) the Warrant Entitlement.
|
Settlement Price:
|
For any Valuation Date, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page WMGI <equity> AQR (or any successor thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time on such Valuation Date (or if such volume-weighted average price is unavailable, the market value of one Share on such Valuation Date, as determined by the Calculation Agent). Notwithstanding the foregoing, if (i) any Expiration Date is a Disrupted Day and (ii) the Calculation Agent determines that such Expiration
|
Settlement Dates:
|
As determined pursuant to Section 9.4 of the Equity Definitions, subject to Section 9(k)(i) hereof.
|
Other Applicable Provisions:
|
The provisions of Sections 9.1(c), 9.8, 9.9, 9.11 (except that, with respect to any Private Placement Settlement, 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) and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Net Share Settled.” “Net Share Settled” in relation to any Warrant means that Net Share Settlement is applicable to that Warrant.
|
Representation and Agreement:
|
Notwithstanding Section 9.11 of the Equity Definitions, the parties acknowledge that any Shares delivered to Dealer may be, upon delivery, subject to restrictions and limitations arising from Issuer’s status as issuer of the Shares under applicable securities laws.
|
3.
|
Additional Terms applicable to the Transaction
.
|
Method of Adjustment:
|
Calculation Agent Adjustment. For the avoidance of doubt, in making any adjustments under the Equity Definitions, the Calculation Agent may make adjustments, if any, to any one or more of the Strike Price, the Number of Warrants, the Daily Number of Warrants and the Warrant Entitlement. Notwithstanding the foregoing, any cash dividends or
|
New Shares:
|
Section 12.1(i) of the Equity Definitions is hereby amended (a) by deleting the text in clause (i) thereof in its entirety (including the word “and” following clause (i)) and replacing it with the phrase “publicly quoted, traded or listed (or whose related depositary receipts are 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) by inserting immediately prior to the period the phrase “and (iii) of an entity or person that is a (I) Dutch public limited company, (II) corporation or limited liability company that is treated, or, if disregarded for U.S. federal income tax purposes, its regarded owner is treated, as a “United States person” under Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (any such corporation or limited liability company being referred to hereinafter as a “
U.S. Entity
”) or (III) solely in the case of a Non-US Merger Transaction in respect of which Company and Issuer have satisfied all of the requirements set forth in Section 9(y) below, a corporation or entity treated as a corporation for U.S. federal income tax purposes organized and existing under the laws of the Islands of Bermuda, the Netherlands, Belgium, Switzerland, Luxembourg, the Republic of Ireland, Canada or the United Kingdom), in each case, that also becomes Company under the Transaction following such Merger Event or Tender Offer”.
|
Merger Event:
|
Applicable;
provided, however
, that if an event occurs that constitutes both a Merger Event under Section 12.1(b) of the Equity Definitions and an Additional Termination Event under Section 9(h)(ii)(B) of this Confirmation, Dealer may elect, in its commercially reasonable judgment, whether the
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment (Calculation Agent Determination)
|
Share-for-Combined:
|
Cancellation and Payment (Calculation Agent Determination);
provided
that Dealer may elect, in its commercially reasonable judgment, Component Adjustment (Calculation Agent Determination) for all or any portion of the Transaction.
|
Tender Offer:
|
Applicable;
provided, however
, that if an event occurs that constitutes both a Tender Offer under Section 12.1(d) of the Equity Definitions and Additional Termination Event under Section 9(h)(ii)(A) of this Confirmation, Dealer may elect, in its commercially reasonable judgment, whether the provisions of Section 12.3 of the Equity Definitions or Section 9(h)(ii)(A) will apply.
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Modified Calculation Agent Adjustment
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Announcement Event:
|
If an Announcement Date occurs in respect of a Merger Event (for the avoidance of doubt, determined without regard to the language in the definition of “Merger Event” following the definition of “Reverse Merger” therein) or Tender Offer (such occurrence, an “
Announcement Event
”), then on the earliest of the Expiration Date, Early Termination Date or other date of cancellation (the “
Announcement Event Adjustment Date
”) in respect of each Warrant, the Calculation Agent will determine the economic effect on such Warrant of the Announcement Event (regardless of whether the Announcement Event actually results in a Merger Event or Tender Offer, and taking into account such factors as the Calculation Agent may determine, including, without limitation,
|
Announcement Date:
|
The definition of “Announcement Date” in Section 12.1 of the Equity Definitions is hereby amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (iii) replacing the words “voting shares” with the word “Shares” in the fifth line thereof, and (iv) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof.
|
Delisting:
|
Cancellation and Payment (Calculation Agent Determination);
provided,
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof.
|
Failure to Deliver:
|
Not Applicable
|
Insolvency Filing:
|
Applicable
|
Hedging Disruption:
|
Applicable;
provided
that:
|
(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:
|
(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”.
|
Increased Cost of Hedging:
|
Applicable.
|
Loss of Stock Borrow:
|
Applicable.
|
Maximum Stock Loan Rate:
|
100 basis points
|
Increased Cost of Stock Borrow:
|
Applicable.
|
Initial Stock Loan Rate:
|
25 basis points
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer;
provided, however,
that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Hedging Party shall be made in good faith and in a commercially reasonable manner (it being understood that Hedging Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer;
provided, however,
that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Determining Party shall be made in good faith and in a commercially reasonable manner (it being understood that Determining Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Non-Reliance:
|
Applicable.
|
Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
4.
|
Calculation Agent
. Dealer. All calculations, adjustments, specifications, choices and determinations by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. The parties agree that they will work reasonably to resolve any disputes as set forth in the immediately following paragraph.
|
5.
|
Account Details
.
|
(a)
|
Account for payments to Company:
|
(b)
|
Account for payments to Dealer:
|
6.
|
Offices
.
|
(a)
|
The Office of Company for the Transaction is: Inapplicable, Company is not a Multibranch Party.
|
(b)
|
The Office of Dealer for the Transaction is: London
|
7.
|
Notices
.
|
(a)
|
Address for notices or communications to Company:
|
(b)
|
Address for notices or communications to Dealer:
|
8.
|
Representations and Warranties of Company
.
|
(a)
|
Company has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.
|
(b)
|
Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.
|
(c)
|
No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “
Securities Act
”) or state securities laws or under the Dutch Act on Financial Supervision (
Wet op het Financieel Toezicht
).
|
(d)
|
All corporate action has been taken by the Company to duly authorize the granting of rights to acquire a number of Shares equal to the Maximum Number of Shares (as defined below) (the “
Warrant Shares
”). The Warrant Shares have been duly authorized and, upon application of the Par Value Payment to satisfy the payment obligation of the par value of the Shares and otherwise as contemplated by the terms of the Warrants, following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and the Warrant Shares shall upon issuance be accepted for listing or quotation on the Exchange.
|
(e)
|
Company is not and, after consummation of 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.
|
(f)
|
Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18) (C) of the Commodity Exchange Act).
|
(g)
|
Company and each of its affiliates are not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.
|
(h)
|
No state or local (including any non-U.S. jurisdiction’s) 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), except for the reporting requirements of the Exchange Act and rules promulgated thereunder, or, the reporting or registration requirements of the Dutch Corporate Income Tax Act 1969 (
Wet op de vennootschapsbelasting 1969
), in each case, as a result of Dealer or its affiliates owning or holding (however defined) Shares.
|
(i)
|
Company (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million.
|
(j)
|
It is a party which is able to adhere to the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) as if it were a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).
|
(a)
|
Company shall deliver to Dealer an opinion of Dutch counsel, dated as of the date hereof, with respect to the matters set forth in Sections 8(a) through (d). Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.
|
(b)
|
Repurchase Notices
. Issuer shall, on any day on which Issuer effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “
Repurchase Notice
”) on such day if following such repurchase, the number of outstanding Shares on such day, subject to any adjustments provided herein, is (i) less than 99,423,718 (in the case of the first such notice) or (ii) thereafter more than 3,073,706 less than the number of Shares included in the immediately preceding Repurchase Notice. Issuer agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “
Indemnified Person
”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities
|
(c)
|
Regulation M
. Issuer is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “
Exchange Act”
), of any securities of Issuer, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Issuer shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.
|
(d)
|
No Manipulation
. Issuer is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or
|
(e)
|
Transfer or Assignment
. Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer. Dealer may, without Company’s or Issuer’s (if other than Company) consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party;
provided
,
however
, that the transferee or assignee shall not be entitled to receive any greater payment of additional amounts under Section 2(d)(i)(4) of the Agreement than Dealer would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Tax Law that occurs after the date of the transfer or assignment. If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “
Excess Ownership Position
”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “
Terminated Portion
”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made 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 Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(j) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company was not the Affected Party). The “
Section 16 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 each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding. The “
Warrant Equity Percentage
” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company or Issuer, as applicable, and (B) the denominator of which is the number of Shares outstanding. The “
Share Amount
” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “
Dealer Person
”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“
Applicable Restrictions
”),
|
(f)
|
Dividends
. If at any time during the period from and including the Effective Date, to and including the last Expiration Date, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “
Ex‑Dividend Date
”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend.
|
(g)
|
Role of Agent
.
Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of Dealer (“
JPMS
”), has acted solely as agent for Dealer (and not as agent for Company) and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under the Transaction. For the avoidance of doubt, any performance by Dealer of its obligations hereunder solely to JPMS shall not relieve Dealer of such obligations. Any performance by Company of its obligations (including notice obligations) through or by means of JPMS’ agency for Dealer shall constitute good performance of Company’s obligations hereunder to Dealer.
|
(h)
|
Additional Provisions
.
|
(i)
|
Amendments to the Equity Definitions:
|
(A)
|
Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “an”; and adding the phrase “or Warrants” at the end of the sentence.
|
(B)
|
Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the
|
(C)
|
Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material”; and adding the phrase “or Warrants” at the end of the sentence.
|
(D)
|
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”
|
(E)
|
Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:
|
(x)
|
deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and
|
(y)
|
replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.
|
(F)
|
Section 12.9(b)(v) of the Equity Definitions is hereby amended by:
|
(x)
|
adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and
|
(y)
|
(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence.
|
(ii)
|
Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the
|
(A)
|
A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Issuer or its 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 equity of Issuer representing more than 50% of the voting power of such common equity.
|
(B)
|
Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination), as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets; (II) any share exchange, consolidation or merger of Issuer pursuant to which the Shares will be converted into cash, securities or other property; or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Issuer and its subsidiaries, taken as a whole, to any person other than one of Issuer’s subsidiaries;
provided
,
however
, that a transaction or transactions described in this clause (B) shall not constitute an Additional Termination Event pursuant to this clause (B), if at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights, in connection with such transaction or transactions consists of ordinary shares of (1) a U.S. Entity or (2) an entity treated as a corporation for U.S. federal income tax purposes organized and existing under the laws of the Netherlands, the Republic of Ireland or the United Kingdom, in each case that 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 as a result of such transaction or transactions, the reference property for the Shares becomes such consideration, excluding cash payments for fractional Shares. For purposes of the exception described in the immediately
|
(C)
|
Default by the Issuer or any of its subsidiaries 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 $25 million in the aggregate of the Issuer and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being accelerated and declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable (after the expiration of any applicable grace period) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise.
|
(D)
|
Certain events of bankruptcy, insolvency, or reorganization of the Issuer or any of its significant subsidiaries as defined in Article 1, Rule 1‑02 of Regulation S‑X.
|
(E)
|
Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).
|
(F)
|
On any day during the period from and including the date hereof, to and including the final Expiration Date, (I) the Notional Unwind Shares (as defined below) as of such day exceeds a number of Shares equal to 90.0% of the Par Value Delivery Number (as of the date of such determination), or (II) Company or any of its controlled affiliates makes a public announcement of any transaction or event that, in the reasonable opinion of Dealer would, upon consummation of such transaction or upon the occurrence of such event, as applicable, and after giving effect to any applicable adjustments hereunder, cause the Notional Unwind Shares immediately following the consummation of such transaction or the occurrence of such event to exceed a number of Shares equal to 90.0% of the Par Value Delivery Number (as of the date of such determination). The “
Notional Unwind Shares
” as of any day is a number of Shares equal to (1) the amount that would be payable pursuant to Section 6 of the Agreement (determined as of such day as if an Early Termination Date had been designated in respect of the Transaction and as if the Company were the sole Affected Party and the Transaction were the sole Affected Transaction),
divided by
(2) the Settlement Price (determined as if such day were a Valuation Date). “
Par Value Delivery Number
”
|
(i)
|
No Collateral or Setoff
. Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral. Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise. For the avoidance of doubt, in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.
|
(j)
|
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
.
|
(i)
|
If, in respect of the Transaction, an amount is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “
Payment Obligation
”), Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Company represents to Dealer that each of Company and its affiliates is not, as of the date of such election, in possession of any material non-public information with respect to Company or the Shares and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.
|
Alternative:
|
If applicable, Company shall deliver to Dealer the Share Termination Delivery Property on the date (the “
Share Termination Payment Date
”) on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, subject to Section 9(k)(i) below, in satisfaction, subject to Section 9(k)(ii) below, of the relevant Payment Obligation, in the manner reasonably requested by Dealer free of payment (other
|
Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the relevant Payment Obligation
divided by
the Share Termination Unit Price. The Calculation Agent shall adjust the amount of Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price (without giving effect to any discount pursuant to Section 9(k)(i)).
|
Price:
|
The value to Dealer 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. In the case of a Private Placement of Share Termination Delivery Units that are Restricted Shares (as defined below), as set forth in Section 9(k)(i) below, the Share Termination Unit Price shall be determined by the discounted price applicable to such Share Termination Delivery Units. In the case of a Registration Settlement of Share Termination Delivery Units that are Restricted Shares (as defined below) as set forth in Section 9(k)(ii) below, notwithstanding the foregoing, the Share Termination Unit Price shall be the Settlement Price on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable. The Calculation Agent shall notify Company of the Share Termination Unit Price at the time of notification of such Payment Obligation to
|
Unit:
|
One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “
Exchange Property
”), a unit consisting of the type and amount of Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event. If such Nationalization, Insolvency or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
|
Failure to Deliver:
|
Inapplicable
|
provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.
|
(k)
|
Registration/Private Placement Procedures
. If, in the reasonable opinion of Dealer, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or
|
(i)
|
If Issuer elects to settle the Transaction pursuant to this clause (i) (a “
Private Placement Settlement
”), then delivery of Restricted Shares by Issuer shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer;
provided
that Issuer may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(a)(2) of the Securities Act for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(a)(1) or Section 4(a)(3) of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer). In addition to, and without limitation of, the other requirements set forth in this Section 9(k)(i), the Issuer will use its best efforts to provide that the Private Placement Settlement of such Restricted Shares shall include 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 Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements, all commercially reasonably acceptable to Dealer. In the case of a Private Placement Settlement, Dealer shall determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of
|
(ii)
|
If Issuer elects to settle the Transaction pursuant to this clause (ii) (a “
Registration Settlement
”), then Issuer shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer. If Dealer, in its reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply. If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “
Resale Period
”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the earliest of (i) the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above), (ii) the date upon which all Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act and (iii) the date upon which all Restricted Shares may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act. If the Payment Obligation exceeds 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 Exchange Trading Day immediately following such resale the amount of such excess (the “
Additional Amount
”) in cash or in a number of Shares
|
(iii)
|
Without limiting the generality of the foregoing, Issuer agrees that (A) any Restricted Shares 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 (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Issuer) has elapsed in respect of any Restricted Shares delivered to Dealer, Issuer shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Issuer or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 of the Securities Act or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court change after the Trade Date, the agreements of Issuer herein shall be deemed modified to the extent necessary, in the opinion of outside counsel of Issuer, to comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the relevant Shares or Share Termination Delivery Property.
|
(iv)
|
If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Issuer shall be the Defaulting Party.
|
(l)
|
Limit on Beneficial Ownership
. Notwithstanding any other provisions hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery of any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent (but only to the extent) that, after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed
|
(m)
|
Share Deliveries
. Notwithstanding anything to the contrary herein, Issuer agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.
|
(n)
|
Waiver of Jury Trial
. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.
|
(o)
|
Tax Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Company and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Company relating to such tax treatment and tax structure.
|
(p)
|
Maximum Share Delivery
.
|
(i)
|
Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to issue a number of Shares greater than two times the Number of Warrants (the “
Maximum Number of Shares
”) to Dealer in connection with the Transaction, subject to the provisions regarding Deficit Shares in Section 9 (p)(ii).
|
(ii)
|
In the event Issuer shall not have issued to Dealer the full number of Shares or Restricted Shares otherwise to be issued by Issuer to Dealer pursuant to the terms of the Transaction because Issuer has insufficient authorized capital to issue the full number of Shares or Restricted Shares (such deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to transfer, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been transferred pursuant to this Section 9(p)(ii), when, and to the extent that Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), provided that in no event shall Issuer transfer any Shares or Restricted Shares to Dealer pursuant to this Section 9(p)(ii) to the extent that
|
(iii)
|
The Maximum Number of Shares shall only be subject to adjustment on account of (w) adjustments of the type specified in Section 9(f), (x) Potential Adjustment Events of the type specified in (1) Section 11.2(e)(i) through (vi) of the Equity Definitions or (2) Section 11.2(e)(vii) of the Equity Definitions as long as, in the case of this sub-clause (2), such event is within Issuer’s control, (y) Merger Events or Tender Offers requiring corporate action of the Issuer and (z) Announcement Events that are not outside the Issuer’s control. Any Payment Obligation hereunder shall be calculated without regard to the Maximum Number of Shares;
provided
that, for the avoidance of doubt, the number of Shares deliverable under Section 9(j) shall be limited to the Maximum Number of Shares.
|
(q)
|
Right to Extend
. Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in good faith and in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect transactions with respect to 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.
|
(r)
|
Status of Claims in Bankruptcy
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Issuer with respect to the Transaction that are senior to the claims of shareholders of Issuer in any bankruptcy proceedings of Issuer;
provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Issuer of its obligations and agreements with respect to the Transaction other than during any such bankruptcy proceedings; provided further that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.
|
(s)
|
Securities Contract; Swap Agreement
. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
|
(t)
|
Wall Street Transparency and Accountability Act
. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable 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, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).
|
(u)
|
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the last 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 Settlement 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 Settlement Prices, each in a manner that may be adverse to Issuer.
|
(v)
|
Early Unwind
. In the event the exchange and sale of the “Securities” (as defined in the Placement Agency Agreement) is not consummated with the Placement Agent for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) 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 the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Company represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
|
(w)
|
Payment by Dealer
. In the event that (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.
|
(x)
|
Designation of Deale
r. 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 Company or Issuer, as applicable, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Company to the extent of any such performance.
|
(y)
|
Non-US Merger Transactions
. Issuer shall not enter into or consummate any Non-US Merger Transaction unless the successor Issuer immediately following such Non-US Merger Transaction repeats to Dealer immediately following such Non-US Merger Transaction the representations and warranties set forth in Sections 8(a), 8(b), 8(c) and 8(d) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”).
|
(z)
|
Par Value Payment
. Company and Dealer each acknowledges and agrees that, by paying the Premium hereunder to Company, on the Premium Payment Date Dealer will have made a payment for purposes of paying up the aggregate par value of the Shares issuable pursuant to the Transaction (for the avoidance of doubt, prior to any subsequent adjustment to the Transaction), equal to EUR554,775.54 (the “
Initial
Par Value Payment
”). Upon receipt, the Company shall reserve the Initial Par Value Payment and apply the Initial Par Value Payment against the obligation to pay-up the Shares upon issue of the Shares. To the extent that the Initial Par Value Payment
|
(aa)
|
Certain Adjustments.
Notwithstanding anything to the contrary in the Confirmation, if Dealer or the Calculation Agent is required to calculate any payment under Section 6(e) of the Agreement or Sections 12.7 or 12.8 of the Equity Definitions, in each case, with respect to a Merger Termination Event, then Dealer or the Calculation Agent, as applicable, will make such calculation based on a volatility input that is equal to the Relevant Volatility Input.
|
(ab)
|
Taxes.
|
(i)
|
“Indemnifiable Tax” as defined in Section 14 of this 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 this Agreement.
|
(ii)
|
Dealer and Company hereby agree that this Agreement shall be treated as a Covered Master Agreement (as that term is defined in the 2015 Section 871(m) Protocol) and this Agreement shall be deemed to have been amended in accordance with the modifications specified in the Attachment to the 2015 Section 871(m) Protocol.
|
(ac)
|
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that 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
|
(i)
|
Dealer is a Portfolio Data Sending Entity and the Company is a Portfolio Data Receiving entity;
|
(ii)
|
The Local Business Days for such purposes in relation to Dealer are London and in relation to Company are New York and Amsterdam;
|
(iii)
|
The provisions in this section shall survive the termination of the Transaction; and
|
(iv)
|
The following are the applicable email addresses.
|
To:
|
Wright Medical Group N.V. | Legal
|
Re:
|
Warrants
|
Trade Date:
|
May 12, 2016
|
Effective Date:
|
The third Exchange Business Day immediately prior to the Premium Payment Date
|
Warrants:
|
Equity call warrants, each giving the holder the right to purchase a number of Shares equal to the Warrant Entitlement at a price per Share equal to the Strike Price, subject to the terms set forth under the caption “Settlement Terms” below. For the purposes of the Equity Definitions, each reference to a Warrant herein shall be deemed to be a reference to a Call Option.
|
Warrant Style:
|
European
|
Seller:
|
Company
|
Buyer:
|
Dealer
|
Shares:
|
The ordinary shares of Company, par value 0.03 Euros per share (Exchange symbol “WMGI”).
|
Number of Warrants:
|
9,246,259. For the avoidance of doubt, the Number of Warrants shall be reduced by any Warrants exercised or deemed exercised hereunder. In no event will the Number of Warrants be less than zero.
|
Warrant Entitlement:
|
One Share per Warrant
|
Strike Price:
|
USD 30.00.
|
Premium:
|
USD27,314,250.00 in the aggregate (the “
Aggregate Premium Amount
”), to be paid by Dealer to Company on the Premium Payment Date as follows:
|
Premium Payment Date:
|
May 20, 2016
|
Exchange:
|
The NASDAQ Global Select Market
|
Related Exchange(s):
|
All Exchanges
|
Expiration Time:
|
The Valuation Time
|
Expiration Dates:
|
Each Scheduled Trading Day during the period from, and including, the First Expiration Date to, but excluding, the 100
th
Scheduled Trading Day following the First Expiration Date shall be an “Expiration Date” for a number of Warrants equal to the Daily Number of Warrants on such date;
provided
that, notwithstanding anything to the contrary in the Equity Definitions, if any such date is a Disrupted Day, the Calculation Agent shall make adjustments, if applicable, to the Daily Number of Warrants or shall reduce such Daily Number of Warrants to zero for which such day shall be an Expiration Date and shall designate a Scheduled Trading Day or a number of
|
First Expiration Date:
|
February 15, 2022, (or if such day is not a Scheduled Trading Day, the next following Scheduled Trading Day), subject to Market Disruption Event below.
|
Daily Number of Warrants:
|
For any Expiration Date, the Number of Warrants that have not expired or been exercised as of such day,
divided
by the remaining number of Expiration Dates (including such day), rounded down to the nearest whole number, subject to adjustment pursuant to the provisos to “Expiration Dates”.
|
Automatic Exercise:
|
Applicable; and means that for each Expiration Date, a number of Warrants equal to the Daily Number of Warrants for such Expiration Date will be deemed to be automatically exercised at the Expiration Time on such Expiration Date.
|
Market Disruption Event:
|
Section 6.3(a) of the Equity Definitions is hereby amended by replacing clause (ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting immediately following clause (iii) the phrase “; in each case that the Calculation Agent determines is material.”
|
Valuation Time:
|
Scheduled Closing Time;
provided
that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in good faith and in its reasonable discretion.
|
Valuation Date:
|
Each Exercise Date.
|
Settlement Method:
|
Net Share Settlement.
|
Net Share Settlement:
|
On the relevant Settlement Date, Company shall deliver to Dealer a number of Shares equal to the Share Delivery Quantity for such Settlement Date to the account specified herein free of payment (other than, for the avoidance of doubt, the payment obligation that will be satisfied by the Par Value Payment) through the Clearance System, and Dealer shall be treated as the holder of record of such Shares at the time of delivery of such Shares or, if earlier, at 5:00 p.m. (New York City time) on such Settlement Date.
|
Share Delivery Quantity:
|
For any Settlement Date, a number of Shares (rounded down to the nearest whole Share), as calculated by the Calculation Agent, equal to the Net Share Settlement Amount for such Settlement Date
divided by
the Settlement Price on the Valuation Date for such Settlement Date.
|
Net Share Settlement Amount:
|
For any Settlement Date, an amount equal to the product of (i) the number of Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant Valuation Date and (iii) the Warrant Entitlement.
|
Settlement Price:
|
For any Valuation Date, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page WMGI <equity> AQR (or any successor thereto) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time on such Valuation Date (or if such volume-weighted average price is unavailable, the market value of one Share on such Valuation Date, as determined by the Calculation Agent). Notwithstanding the foregoing, if (i) any
|
Settlement Dates:
|
As determined pursuant to Section 9.4 of the Equity Definitions, subject to Section 9(k)(i) hereof.
|
Other Applicable Provisions:
|
The provisions of Sections 9.1(c), 9.8, 9.9, 9.11 (except that, with respect to any Private Placement Settlement, 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) and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Net Share Settled.” “Net Share Settled” in relation to any Warrant means that Net Share Settlement is applicable to that Warrant.
|
Representation and Agreement:
|
Notwithstanding Section 9.11 of the Equity Definitions, the parties acknowledge that any Shares delivered to Dealer may be, upon delivery, subject to restrictions and limitations arising from Issuer’s status as issuer of the Shares under applicable securities laws.
|
Method of Adjustment:
|
Calculation Agent Adjustment. For the avoidance of doubt, in making any adjustments under the Equity
|
New Shares:
|
Section 12.1(i) of the Equity Definitions is hereby amended (a) by deleting the text in clause (i) thereof in its entirety (including the word “and” following clause (i)) and replacing it with the phrase “publicly quoted, traded or listed (or whose related depositary receipts are 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) by inserting immediately prior to the period the phrase “and (iii) of an entity or person that is a (I) Dutch public limited company, (II) corporation or limited liability company that is treated, or, if disregarded for U.S. federal income tax purposes, its regarded owner is treated, as a “United States person” under Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (any such corporation or limited liability company being referred to hereinafter as a “
U.S. Entity
”) or (III) solely in the case of a Non-US Merger Transaction in respect of which Company and Issuer have satisfied all of the requirements set forth in Section 9(y) below, a corporation or entity treated as a corporation for U.S. federal income tax purposes organized and existing under the laws of the Islands of Bermuda, the Netherlands, Belgium, Switzerland, Luxembourg, the Republic of Ireland, Canada or the United Kingdom), in each case, that also becomes Company under the Transaction following such Merger Event or Tender Offer”.
|
Merger Event:
|
Applicable;
provided, however
, that if an event occurs that constitutes both a Merger Event under Section 12.1(b) of the Equity Definitions and an Additional Termination Event under Section 9(h)(ii)(B) of this Confirmation, Dealer may elect, in its commercially reasonable judgment, whether the provisions of Section 12.2 of the Equity Definitions or Section 9(h)(ii)(B) will apply.
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Cancellation and Payment (Calculation Agent Determination)
|
Share-for-Combined:
|
Cancellation and Payment (Calculation Agent Determination);
provided
that Dealer may elect, in its commercially reasonable judgment, Component Adjustment (Calculation Agent Determination) for all or any portion of the Transaction.
|
Tender Offer:
|
Applicable;
provided, however
, that if an event occurs that constitutes both a Tender Offer under Section 12.1(d) of the Equity Definitions and Additional Termination Event under Section 9(h)(ii)(A) of this Confirmation, Dealer may elect, in its commercially reasonable judgment, whether the provisions of Section 12.3 of the Equity Definitions or Section 9(h)(ii)(A) will apply.
|
Share-for-Share:
|
Modified Calculation Agent Adjustment
|
Share-for-Other:
|
Modified Calculation Agent Adjustment
|
Share-for-Combined:
|
Modified Calculation Agent Adjustment
|
Announcement Event:
|
If an Announcement Date occurs in respect of a Merger Event (for the avoidance of doubt, determined without regard to the language in the definition of “Merger Event” following the definition of “Reverse Merger” therein) or Tender Offer (such occurrence, an “
Announcement Event
”), then on the earliest of the Expiration Date, Early Termination Date or other date of cancellation (the “
Announcement Event Adjustment Date
”) in respect of each Warrant, the
|
Announcement Date:
|
The definition of “Announcement Date” in Section 12.1 of the Equity Definitions is hereby amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (iii) replacing the words “voting shares” with the word “Shares” in the fifth line thereof, and (iv) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof.
|
Delisting:
|
Cancellation and Payment (Calculation Agent Determination);
provided,
that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The
|
Change in Law:
|
Applicable;
provided
that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the word “Shares” with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting the parenthetical “(including, for the avoidance of doubt and without limitation, adoption or promulgation of new regulations authorized or mandated by existing statute)” at the end of clause (A) thereof.
|
Failure to Deliver:
|
Not Applicable
|
Insolvency Filing:
|
Applicable
|
Hedging Disruption:
|
Applicable;
provided
that:
|
(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:
|
(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
|
Increased Cost of Hedging:
|
Applicable.
|
Loss of Stock Borrow:
|
Applicable.
|
Maximum Stock Loan Rate:
|
100 basis points
|
Increased Cost of Stock Borrow:
|
Applicable.
|
Initial Stock Loan Rate:
|
25 basis points
|
Hedging Party:
|
For all applicable Additional Disruption Events, Dealer;
provided, however,
that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Hedging Party shall be made in good faith and in a commercially reasonable manner (it being understood that Hedging Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Determining Party:
|
For all applicable Extraordinary Events, Dealer;
provided, however,
that all calculations, adjustments, specifications, choices and determinations by Dealer acting in its capacity as the Determining Party shall be made in good faith and in a commercially reasonable manner (it being understood that Determining Party will be subject to the requirements of the second paragraph under “Calculation Agent” below).
|
Non-Reliance:
|
Applicable.
|
Hedging Activities:
|
Applicable
|
Additional Acknowledgments:
|
Applicable
|
(a)
|
Account for payments to Company:
|
(b)
|
Account for payments to Dealer:
|
(a)
|
The Office of Company for the Transaction is: Inapplicable, Company is not a Multibranch Party.
|
(b)
|
The Office of Dealer for the Transaction is: New York
|
(a)
|
Address for notices or communications to Company:
|
(b)
|
Address for notices or communications to Dealer:
|
(a)
|
Company has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.
|
(b)
|
Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.
|
(c)
|
No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “
Securities Act
”) or state securities laws or under the Dutch Act on Financial Supervision (
Wet op het Financieel Toezicht
).
|
(d)
|
All corporate action has been taken by the Company to duly authorize the granting of rights to acquire a number of Shares equal to the Maximum Number of Shares (as defined below) (the “
Warrant Shares
”). The Warrant Shares have been duly authorized and, upon application of the Par Value Payment to satisfy the payment obligation of the par value of the Shares and otherwise as contemplated by the terms of the Warrants, following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights and the
|
(e)
|
Company is not and, after consummation of 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.
|
(f)
|
Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18) (C) of the Commodity Exchange Act).
|
(g)
|
Company and each of its affiliates are not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.
|
(h)
|
No state or local (including any non-U.S. jurisdiction’s) 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), except for the reporting requirements of the Exchange Act and rules promulgated thereunder, or, the reporting or registration requirements of the Dutch Corporate Income Tax Act 1969 (
Wet op de vennootschapsbelasting 1969
), in each case, as a result of Dealer or its affiliates owning or holding (however defined) Shares.
|
(i)
|
Company (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million.
|
(j)
|
It is a party which is able to adhere to the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “
NFC Representation Protocol
”) as if it were a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).
|
(a)
|
Company shall deliver to Dealer an opinion of Dutch counsel, dated as of the date hereof, with respect to the matters set forth in Sections 8(a) through (d). Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.
|
(b)
|
Repurchase Notices
. Issuer shall, on any day on which Issuer effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “
Repurchase
|
(c)
|
Regulation M
. Issuer is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “
Exchange Act”
), of any securities of Issuer, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Issuer shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.
|
(d)
|
No Manipulation
. Issuer is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act or the Dutch Act on Financial Supervision (
Wet op het Financieel Toezicht
).
|
(e)
|
Transfer or Assignment
. Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer. Dealer may, without Company’s or Issuer’s (if other than Company) consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party;
provided
,
however
, that the transferee or assignee shall not be entitled to receive any greater payment of additional amounts under Section 2(d)(i)(4) of the Agreement than Dealer would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Tax Law that occurs after the date of the transfer or assignment. If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “
Excess Ownership Position
”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “
Terminated Portion
”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made 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 Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(j) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company was not the Affected Party). The “
Section 16 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 each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or
|
(f)
|
Dividends
. If at any time during the period from and including the Effective Date, to and including the last Expiration Date, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “
Ex‑Dividend Date
”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend.
|
(g)
|
[Reserved
.
]
|
(h)
|
Additional Provisions
.
|
(i)
|
Amendments to the Equity Definitions:
|
(A)
|
Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them
|
(B)
|
Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”
|
(C)
|
Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material”; and adding the phrase “or Warrants” at the end of the sentence.
|
(D)
|
Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”
|
(E)
|
Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:
|
(x)
|
deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and
|
(y)
|
replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.
|
(F)
|
Section 12.9(b)(v) of the Equity Definitions is hereby amended by:
|
(x)
|
adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and
|
(y)
|
(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and
|
(ii)
|
Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its reasonable discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction;
provided
that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:
|
(A)
|
A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Issuer or its 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 equity of Issuer representing more than 50% of the voting power of such common equity.
|
(B)
|
Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination), as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets; (II) any share exchange, consolidation or merger of Issuer pursuant to which the Shares will be converted into cash, securities or other property; or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Issuer and its subsidiaries, taken as a whole, to any person other than one of Issuer’s subsidiaries;
provided
,
however
, that a transaction or transactions described in this clause (B) shall not constitute an Additional Termination Event pursuant to this clause (B), if at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights, in
|
(C)
|
Default by the Issuer or any of its subsidiaries 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 $25 million in the aggregate of the Issuer and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being accelerated and declared due and payable prior to its stated maturity date or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable (after the expiration of any applicable grace period) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise.
|
(D)
|
Certain events of bankruptcy, insolvency, or reorganization of the Issuer or any of its significant subsidiaries as defined in Article 1, Rule 1‑02 of Regulation S‑X.
|
(E)
|
Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).
|
(F)
|
On any day during the period from and including the date hereof, to and including the final Expiration Date, (I) the Notional Unwind Shares (as defined below) as of such day exceeds a number of Shares equal to 90.0% of the Par Value Delivery Number (as of the date of
|
(i)
|
No Collateral or Setoff
. Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral. Obligations under the Transaction shall not be set off by either party against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise. For the avoidance of doubt, in the event of bankruptcy or liquidation of either Company or Dealer, neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.
|
(j)
|
Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events
.
|
(i)
|
If, in respect of the Transaction, an amount is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “
Payment Obligation
”), Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Company represents to Dealer that each of
|
Alternative:
|
If applicable, Company shall deliver to Dealer the Share Termination Delivery Property on the date (the “
Share Termination Payment Date
”) on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, subject to Section 9(k)(i) below, in satisfaction, subject to Section 9(k)(ii) below, of the relevant Payment Obligation, in the manner reasonably requested by Dealer free of payment (other than, for the avoidance of doubt, the Par Value Payment pursuant to Section 9(z)).
|
Property:
|
A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the relevant Payment Obligation
divided by
the Share Termination Unit Price. The Calculation Agent shall adjust the amount of Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price (without giving effect to any discount pursuant to Section 9(k)(i)).
|
Price:
|
The value to Dealer 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. In the case
|
Unit:
|
One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “
Exchange Property
”), a unit consisting of the type and amount of Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event. If such Nationalization, Insolvency or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.
|
Failure to Deliver:
|
Inapplicable
|
provisions:
|
If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.
|
(k)
|
Registration/Private Placement Procedures
. If, in the reasonable opinion of Dealer, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “
Restricted Shares
”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Issuer, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below. Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Issuer shall elect, prior to the first Settlement Date for the first applicable Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants. The Calculation Agent shall make reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.
|
(i)
|
If Issuer elects to settle the Transaction pursuant to this clause (i) (a “
Private Placement Settlement
”), then delivery of Restricted Shares by Issuer shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer;
provided
that Issuer may
|
(ii)
|
If Issuer elects to settle the Transaction pursuant to this clause (ii) (a “
Registration Settlement
”), then Issuer shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer. If Dealer, in its reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply. If Dealer is satisfied with such procedures and documentation, it shall
|
(iii)
|
Without limiting the generality of the foregoing, Issuer agrees that (A) any Restricted Shares 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 (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Issuer) has elapsed in respect of any Restricted Shares delivered to Dealer, Issuer shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Issuer or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer).
|
(iv)
|
If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Issuer shall be the Defaulting Party.
|
(l)
|
Limit on Beneficial Ownership
. Notwithstanding any other provisions hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery of any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent (but only to the extent) that, after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed 7.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.
|
(m)
|
Share Deliveries
. Notwithstanding anything to the contrary herein, Issuer agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.
|
(n)
|
Waiver of Jury Trial
. Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction. Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been
|
(o)
|
Tax Disclosure
. Effective from the date of commencement of discussions concerning the Transaction, Company and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Company relating to such tax treatment and tax structure.
|
(p)
|
Maximum Share Delivery
.
|
(i)
|
Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to issue a number of Shares greater than two times the Number of Warrants (the “
Maximum Number of Shares
”) to Dealer in connection with the Transaction, subject to the provisions regarding Deficit Shares in Section 9 (p)(ii).
|
(ii)
|
In the event Issuer shall not have issued to Dealer the full number of Shares or Restricted Shares otherwise to be issued by Issuer to Dealer pursuant to the terms of the Transaction because Issuer has insufficient authorized capital to issue the full number of Shares or Restricted Shares (such deficit, the “
Deficit Shares
”), Issuer shall be continually obligated to transfer, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been transferred pursuant to this Section 9(p)(ii), when, and to the extent that Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), provided that in no event shall Issuer transfer any Shares or Restricted Shares to Dealer pursuant to this Section 9(p)(ii) to the extent that such transfer would cause the aggregate number of Shares and Restricted Shares transferred to Dealer to exceed the Maximum Number of Shares. Issuer shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares that are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date and the corresponding number of Shares or Restricted Shares, as the case may be, to be transferred) and promptly transfer such Shares or Restricted Shares, as the case may be, thereafter.
|
(iii)
|
The Maximum Number of Shares shall only be subject to adjustment on account of (w) adjustments of the type specified in Section 9(f), (x) Potential Adjustment Events of the type specified in (1) Section 11.2(e)(i) through (vi) of the Equity Definitions or (2) Section 11.2(e)(vii) of the Equity Definitions as long as, in the case of this sub-clause (2), such event is within Issuer’s control, (y) Merger Events or Tender Offers requiring corporate action of the
|
(q)
|
Right to Extend
. Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in good faith and in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect transactions with respect to 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.
|
(r)
|
Status of Claims in Bankruptcy
. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Issuer with respect to the Transaction that are senior to the claims of shareholders of Issuer in any bankruptcy proceedings of Issuer;
provided
that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Issuer of its obligations and agreements with respect to the Transaction other than during any such bankruptcy proceedings; provided further that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.
|
(s)
|
Securities Contract; Swap Agreement
. The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “
Bankruptcy Code
”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.
|
(t)
|
Wall Street Transparency and Accountability Act
. In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“
WSTAA
”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by
|
(u)
|
Agreements and Acknowledgements Regarding Hedging
. Issuer understands, acknowledges and agrees that: (A) at any time on and prior to the last 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 Settlement 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 Settlement Prices, each in a manner that may be adverse to Issuer.
|
(v)
|
Early Unwind
. In the event the exchange and sale of the “Securities” (as defined in the Placement Agency Agreement) is not consummated with the Placement Agent for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “
Early Unwind Date
”), the Transaction shall automatically terminate (the “
Early Unwind
”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) 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 the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Each of Dealer and Company represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.
|
(w)
|
Payment by Dealer
. In the event that (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount
|
(x)
|
Designation of Deale
r. 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 Company or Issuer, as applicable, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer obligations in respect of the Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Company to the extent of any such performance.
|
(y)
|
Non-US Merger Transactions
. Issuer shall not enter into or consummate any Non-US Merger Transaction unless the successor Issuer immediately following such Non-US Merger Transaction repeats to Dealer immediately following such Non-US Merger Transaction the representations and warranties set forth in Sections 8(a), 8(b), 8(c) and 8(d) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”).
|
(z)
|
Par Value Payment
. Company and Dealer each acknowledges and agrees that, by paying the Premium hereunder to Company, on the Premium Payment Date Dealer will have made a payment for purposes of paying up the aggregate par value of the Shares issuable pursuant to the Transaction (for the avoidance of doubt, prior to any subsequent adjustment to the Transaction), equal to EUR554,775.54 (the “
Initial
Par Value Payment
”). Upon receipt, the Company shall reserve the Initial Par Value Payment and apply the Initial Par Value Payment against the obligation to pay-up the Shares upon issue of the Shares. To the extent that the Initial Par Value Payment exceeds the aggregate nominal value of the Shares issued, then such excess shall be regarded as share premium. Company acknowledges and agrees that such Initial Par Value Payment constitutes, based on the par value per Share as of the date hereof, a
|
(aa)
|
Certain Adjustments.
Notwithstanding anything to the contrary in the Confirmation, if Dealer or the Calculation Agent is required to calculate any payment under Section 6(e) of the Agreement or Sections 12.7 or 12.8 of the Equity Definitions, in each case, with respect to a Merger Termination Event, then Dealer or the Calculation Agent, as applicable, will make such calculation based on a volatility input that is equal to the Relevant Volatility Input.
|
(ab)
|
Taxes.
|
(i)
|
“Indemnifiable Tax” as defined in Section 14 of this 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 this Agreement.
|
(ii)
|
Dealer and Company hereby agree that this Agreement shall be treated as a Covered Master Agreement (as that term is defined in the 2015 Section 871(m) Protocol) and this Agreement shall be deemed to have been amended in accordance with the modifications specified in the Attachment to the 2015 Section 871(m) Protocol.
|
(ac)
|
The Company acknowledges that it has not been solicited by Dealer, or any person acting on behalf of the Dealer, to enter into this Transaction but rather it has
|
(ad)
|
2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol
. The parties agree that 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 Amendment”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to the Agreement (and “each Protocol Covered Agreement” shall be read accordingly), (iv) references to “Implementation Date” shall be deemed to be references to the date of this Amendment, and (v) the term “the parties” shall be construed as referring to Dealer and the Company. For the purposes of this Section:
|
(i)
|
Dealer is a Portfolio Data Sending Entity and the Company is a Portfolio Data Receiving entity;
|
(ii)
|
The Local Business Days for such purposes in relation to Dealer are London and in relation to Company are New York and Amsterdam;
|
(iii)
|
The provisions in this section shall survive the termination of the Transaction; and
|
(iv)
|
The following are the applicable email addresses.
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended
June 26, 2016
, of Wright Medical Group N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Robert J. Palmisano
|
|
|
Robert J. Palmisano
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended
June 26, 2016
, of Wright Medical Group N.V.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Lance A. Berry
|
|
|
Lance A. Berry
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
/s/ Robert J. Palmisano
|
|
|
Robert J. Palmisano
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ Lance A. Berry
|
|
|
Lance A. Berry
|
|
|
Senior Vice President and Chief Financial Officer
|
|