Goldman, Sachs & Co. New York, New York 10282-2198 Telephone No.: (212) 902-1000
| EXECUTION VERSION | Exhibit 10.72 | |
Xxxxxxx, Xxxxx & Co.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No.: (000) 000-0000
July 26, 2010
To: Gilead Sciences, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
A/C:
Ref. No.:
Re: Base Call Option Transaction (2016)
The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction entered into between Xxxxxxx, Sachs & Co. (“Dealer”) and Gilead Sciences, Inc. (“Counterparty”) as of the Trade Date specified below (the “Transaction”). This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This Confirmation shall replace any previous agreements and serve as the final documentation for this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated July 26, 2010 (the “Offering Memorandum”) relating to the 1.625% Convertible Senior Notes due May 1, 2016 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD 1,100,000,000 pursuant to an Indenture to be dated July 30, 2010 between Counterparty and Xxxxx Fargo Bank, National Association, as trustee (the “Indenture”). In the event of any inconsistency between the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum. If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation. The parties further acknowledge that the Indenture section numbers used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties. Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended following such date, any such amendment will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.
Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.
| 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 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. |
| 2. | The terms of the particular Transaction to which this Confirmation relates are as follows: |
| Trade Date: |
July 26, 2010 |
| 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 common stock of Counterparty, par value USD 0.001 per share (Exchange symbol “GILD”). |
| Number of Options: |
1,100,000. 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: |
50.0000% |
| Option Entitlement: |
A number equal to the product of the Applicable Percentage and 22.0214. |
| Strike Price: |
USD 45.4104 |
| Premium: |
USD 89,365,100 |
| Premium Payment Date: |
July 30, 2010 |
| Exchange: |
The NASDAQ Global Select Market |
| Related Exchange(s): |
All Exchanges |
| Excluded Provisions: |
Section 10.06 and Section 10.07 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 10.02 of the Indenture; provided that if Counterparty has elected to designate a financial institution to deliver the consideration due upon any conversion of a Convertible Note in exchange for such Convertible Note (an “Exchange Election”) pursuant to Section 10.09 of the Indenture and such financial institution accepts such Convertible Note (an “Excluded Convertible Note”), 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 such |
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conversion, unless, subject to Counterparty’s obligation to deliver to Dealer a Notice of Exercise in accordance with “Notice of Exercise” below, such financial institution informs Counterparty that it will not honor such exchange and Counterparty shall be obligated, pursuant to the Indenture, to deliver the amounts due upon conversion. For the avoidance of doubt, except as set forth in the preceding sentence, Counterparty will not provide Dealer with a Notice of Exercise with respect to any Excluded Convertible Notes, and such Excluded Convertible Notes may subsequently trigger the exercise of Options hereunder if such Excluded Convertible Notes are resubmitted for conversion in accordance with the terms of the Indenture (and are not subject to a subsequent Exchange Election).
| Free Convertibility Date: |
April 1, 2016 |
| Expiration Time: |
The Valuation Time |
| Expiration Date: |
May 1, 2016, 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, a number of Options equal to the principal amount of Convertible Notes with respect to which such Conversion Date has occurred, divided by USD 1,000 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. |
Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options.
| 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 before (i) 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 or (ii) 5:00 p.m. (New York City time) on the fifth Scheduled Valid Day immediately following the scheduled first day of the Settlement Averaging Period for the Options being exercised (in which case the Calculation Agent will determine the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction in a commercially reasonable manner as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and reasonable expenses incurred by Dealer in connection with its hedging |
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activities (including the unwinding of any hedge position) due to such notification occurring after the time specified in the immediately preceding clause (i)) of (x) the number of such Options (without regard to any adjustments by the Calculation Agent in accordance with the immediately preceding clause (ii)) and (y) the scheduled first day of the Settlement Averaging Period and the scheduled Settlement Date; provided that, notwithstanding the immediately preceding clause (i), in respect of Options relating to Convertible Notes with a Conversion Date occurring on or after the Free Convertibility Date, such notice may be given on or prior to the Business Day immediately preceding the Expiration Date and need specify only 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 its reasonable discretion. |
| Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following: |
“‘Market Disruption Event’ means, in respect of a Share, (i) a failure by the principal U.S. national or regional securities exchange or market on which the Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence for more than a one half-hour period in the aggregate on any Scheduled Valid Day for the Shares of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant securities exchange or otherwise) in the Shares or in any options, contracts or futures contracts relating to the Shares, and such aggregate suspension or limitation occurs or exists at any time before 1:00 p.m. (New York City time) on such Scheduled Valid Day.”
| Net Share Settlement; provided however that if Counterparty specifies a Cash Percentage in accordance with Section 10.03 of the Indenture in connection with the conversion of any Convertible Notes corresponding to the Options, Counterparty shall elect Combination Settlement, consistent with the settlement method elected by Counterparty for the corresponding Convertible Notes; provided further that, if Counterparty does not provide a Notice of Combination Settlement to Dealer in compliance with the requirements set forth in “Notice of Combination Settlement” below, Net Share Settlement shall be deemed to apply to the relevant Options. Counterparty agrees not to elect to specify a Cash Percentage (as defined in the Indenture) in connection with the conversion of any Convertible Notes, if Counterparty is in possession of any material non-public information with respect to Counterparty or the Shares. |
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| If Counterparty elects to specify a Cash Percentage in connection with the conversion of any Convertible Notes corresponding to the Options, Counterparty must notify Dealer in writing before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the scheduled first day of the corresponding Settlement Averaging Period (such time, the “Combination Notice Deadline”), which notice shall specify (i) that Counterparty has elected Combination Settlement with respect to such Options and (ii) the Cash Percentage; provided that, notwithstanding the foregoing, such notice shall be effective if given after the relevant Combination Notice Deadline but prior to 5:00 p.m. (New York City time) on the fifth Scheduled Valid Day immediately following the scheduled first day of the Settlement Averaging Period, in which case the Calculation Agent shall have the right to adjust the Cash Amount or the Share Amount as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and reasonable expenses incurred by Dealer in connection with its hedging activities (including the unwinding of any hedge position) as a result of its not having received such notice prior to the Combination Notice Deadline. The delivery of such notice shall be deemed to constitute a representation and warranty by Counterparty that it is not, at such time, in possession of any material non-public information with respect to Counterparty or the Shares. |
| If Net Share Settlement applies, Dealer will deliver to Counterparty, on the relevant Settlement Date, a number of Shares equal to the Net Shares in respect of any Option exercised or deemed exercised hereunder. In no event will the Net Shares be less than zero. Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Shares valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period. |
| Net Shares: |
In respect of any Option exercised or deemed exercised, a number of Shares equal to the sum of the quotients, for each Valid Day during the Settlement Averaging Period for such Option, of (A)(x) the Option Entitlement on such Valid Day multiplied by (y)(1) the Relevant Price on such Valid Day minus the Strike Price divided by (2) such Relevant Price, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation contained in clause (y)(1) 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 which the Shares are then listed or, if the Shares are not then listed on a United States national or regional securities exchange, on the |
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principal other market on which the Shares are then listed or admitted for trading. If the Shares are not so listed or admitted for trading, “Valid Day” means a Business Day.
| A day that is scheduled to be a Valid Day on the principal U.S. 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 weekday that is not a day on which banking institutions in The City of New York are authorized or obligated by law or executive order to close. |
| Relevant Price: |
On any Valid Day, the per Share volume-weighted average price as displayed on Bloomberg (or any successor service) page “GILD.UQ<equity>AQR” (or its equivalent successor if such page is not available) under the heading “Bloomberg VWAP” in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Valid Day; or, if such price is not available, the market value of one Share on such Valid Day as determined by the Calculation Agent using a volume-weighted method. |
| Settlement Averaging Period: |
For any Option: |
| (i) | if the related Conversion Date occurs prior to the Free Convertibility Date, the 20 consecutive Valid Days commencing on, and including, the third Valid Day following such Conversion Date; or |
| (ii) | if the related Conversion Date occurs on or following the Free Convertibility Date, the 20 consecutive Valid Days commencing on, and including, the 22nd Scheduled Valid Day immediately prior to the Expiration Date. |
| If Combination Settlement applies, Dealer will deliver to Counterparty, on the relevant Settlement Date, an amount of cash equal to the Cash Amount as specified under “Combination Amount” below and a number of Shares, if any, equal to the Share Amount as specified under “Combination Amount” below, rounded down to the nearest whole number, together with cash in lieu of any fractional Share eliminated by such rounding valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period in respect of any Option exercised or deemed exercised hereunder. |
| Combination Amount: |
In respect of any Option exercised or deemed exercised, |
(a) an amount of cash (the “Cash Amount”) equal to the sum of the quotients, for each Valid Day during the Settlement Averaging Period for such Option, of:
| (i) | the Option Entitlement on such Valid Day; multiplied by |
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| (ii) | the Cash Percentage; multiplied by |
| (iii) | the excess, if any, of (A) the Relevant Price on such Valid Day over (B) the Strike Price; divided by |
| (iv) | the number of Valid Days in the Settlement Averaging Period; and |
(b) a number of Shares (the “Share Amount”) equal to:
| (i) | the difference between (x) 100% and (y) the Cash Percentage; multiplied by |
| (ii) | the Net Shares for such Option. |
| For any Option, the date cash or a combination of cash and Shares will be delivered under the terms of the Indenture with respect to the conversion of the Convertible Note related to such Option. |
| USD |
| Other Applicable Provisions: |
The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5 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 Option means that Net Share Settlement or Combination Settlement with a Cash Percentage less than 100% is applicable to that Option. |
| Representation and Agreement: |
Notwithstanding Section 9.11 of the Equity Definitions, the parties acknowledge that any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Counterparty’s status as issuer of the Shares under applicable securities laws. |
| 3. |
Adjustments 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 to the Conversion Rate (as defined in the Indenture) of the Convertible Notes. |
| 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 to the |
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extent an analogous adjustment is made under the Indenture.
| Dilution Adjustment Provisions: |
Xxxxxxx 00.00(x), (x), (x), (x), (x), (x), (x), (x) and Section 10.05(l) of the Indenture. |
Extraordinary Events applicable to the Transaction:
| 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 “Merger Event” in Section 10.08 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 clause (a) of the definition of “Change in Control” contained in Section 1.01 of the Indenture. |
| Consequence of Merger Events / 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, 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 and any other variable relevant to the exercise, settlement or payment for the Transaction; 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 an entity or person not organized under the laws of the United States, any State thereof or the District of Columbia or (ii) the Counterparty to the Transaction following such Merger Event or Tender Offer, will not be the Issuer following such Merger Event or Tender Offer, then Cancellation and Payment (Calculation Agent Determination) shall apply. |
| Nationalization, Insolvency or Delisting: |
Cancellation and Payment (Calculation Agent Determination); provided that if the Shares are immediately re-listed, re-traded or re-quoted on an exchange or quotation system in accordance with the provisions of Section 12.6(a)(iii) of the Equity Definitions, such exchange or quotation system shall thereafter be deemed to be the Exchange. |
Additional Disruption Events:
| Change in Law: |
Applicable; provided that Section 12.9(a)(ii)(X) of the Equity Definitions is hereby amended by replacing the word “Shares” with the phrase “Hedge Positions.” |
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| Failure to Deliver: |
Applicable. |
| Hedging Disruption: |
Not Applicable. |
| Increased Cost of Hedging: |
Not Applicable. |
| Loss of Stock Borrow: |
Not Applicable. |
| Increased Cost of Stock Borrow: |
Not Applicable. |
| Hedging Party: |
For all applicable Additional Disruption Events, Dealer. |
| Determining Party: |
For all applicable Extraordinary Events, Dealer. |
| Non-Reliance: |
Applicable |
| Agreements and Acknowledgements Regarding Hedging Activities: |
Applicable |
| Additional Acknowledgments: |
Applicable |
| Dealer, whose judgments, determinations and calculations shall be made in good faith and in a commercially reasonable manner. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent will provide to Counterparty by e-mail to the e-mail address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such calculation, it being understood that the Calculation Agent shall not be obligated to disclose any proprietary models used by it for such calculation. |
| 5. |
| (a) | Account for payments to Counterparty: |
Xxxxx Fargo Bank
| ABA No. | 000-000-000 |
| Acct.: | Gilead Sciences, Inc. |
| Acct. No.: | 4945057768 |
Account for delivery of Shares to Counterparty:
JPMorgan
| Acct.: | Gilead Sciences, Inc. |
| Acct. No.: | 06110238 |
| (b) | Account for payments to Dealer: |
Chase Manhattan Bank New York
| ABA No.: | 021-000021 |
| Acct.: | Xxxxxxx, Xxxxx & Co. |
| Acct. No.: | 000-0-000000 |
Account for delivery of Shares from Dealer:
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DTC 005
| 6. |
| (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: |
Xxxxxxx, Sachs & Co.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
| 7. |
| (a) | Address for notices or communications to Counterparty: |
To: Gilead Sciences, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
| Attention: | Treasurer |
| Telephone No.: | (000) 000-0000 |
| Facsimile No.: | (000) 000-0000 |
| (b) | Address for notices or communications to Dealer: |
To: Xxxxxxx, Xxxxx & Co.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
| Attention: | Xxxxx Xxxxxxx |
| Equity Capital Markets |
| Telephone No.: | (000) 000-0000 |
| Facsimile No.: | (000) 000-0000 |
| E-mail: | xxxxxx@xx.xxx.xx.xxx |
With a copy to:
| Attention: | Xxxxx Xxx |
| Equity Capital Markets |
| Telephone No.: | (000) 000-0000 |
| Facsimile No.: | (000) 000-0000 |
| E-mail: | xxxxx.xxx@xx.xxx |
And e-mail notification to the following address:
Xx-xxxxxx-xxxxxxxxxxxxx@xx.xxx.xx.xxx
| 8. |
Counterparty hereby represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:
| (a) | Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of this 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 |
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| 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 (i) the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, (ii) any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or (iii) 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, which, in the case of clauses (ii) and (iii), would have a material adverse effect on this Transaction or Dealer’s rights or obligations relating to this Transaction. |
| (c) | To Counterparty’s knowledge, 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 required to be filed on a Form 10-K, 10-Q or 8-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or state securities laws. |
| (d) | Counterparty is not and 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(12) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(12)(C) of the Commodity Exchange Act). |
| (f) | Counterparty is not, on the date hereof, in possession of any material non-public information with respect to Counterparty or the Shares and all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents) do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading. |
| (g) |
| (h) | Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act. |
| (i) | Counterparty has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”. |
| 9. |
| (a) | Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Premium Payment Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation; provided that such opinion of counsel may contain customary exceptions and |
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| qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions. 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 Counterparty 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 405.2208 million (in the case of the first such notice) or (ii) thereafter more than 31.1708 million (each number as adjusted by the Calculation Agent on account of stock splits and similar events) 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 claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act, 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 unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity. The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of this Transaction. |
| (c) | Regulation M. Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under 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 this Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to |
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| 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. |
| (e) |
| (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(n) or 9(s) of this Confirmation; |
| (B) | Any Transfer Options shall be transferred or assigned only to a third party that is a United States person (as defined in the Internal Revenue Code of 1986, as amended); |
| (C) | 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; |
| (D) | 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; |
| (E) | An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment; |
| (F) | 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 clauses (D) and (E) will not occur upon or after such transfer and assignment; and |
| (G) | 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 not transfer or assign all or any part of its rights or obligations under the Transaction to any person without the written consent of Counterparty, which consent shall not be unreasonably withheld. If, at any time at which (A) the Section 16 Percentage exceeds 8.5%, (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 does not receive the written consent of Counterparty within one Business Day of its request therefor or, upon receipt of Counterparty’s consent, is unable, after using its 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 |
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| 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, as applicable, (i) the Section 16 Percentage is less than or equal to 8.5% (but not less than 7.5%), (ii) the Option Equity Percentage is less than or equal to 14.5% (but not less than 13.5%) or the Share Amount will be less than or equal to the Applicable Share Limit (but not less than 2.0% less than the Applicable Share Limit). 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 this 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. 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 and/or who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer under Section 13 of the Exchange Act and rules promulgated thereunder directly or indirectly “beneficially own” (as defined under Section 13 of the Exchange Act and rules promulgated thereunder, unless the determination of “any person who is direct or indirect beneficial owner of 10% or more of any class of equity securities” under Section 16(a) of the Exchange Act is made by reference to some other law, rule or regulation, in which case, as defined under such other law, rule or regulation), and (B) the denominator of which is the number of Shares outstanding. The “Option 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 Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, 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 and/or who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Dealer (Dealer or any such person, a “Dealer Person”) under Section 203 of the Delaware General Corporation Law or any other law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion. The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding. |
| (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 this Transaction and any such designee may assume such obligations. Dealer shall be discharged of its obligations to Counterparty solely to the extent of any such performance. |
| (f) | Staggered Settlement. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on the Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a |
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| “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) as follows: |
| (i) | in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each of which will be on or prior to such Nominal Settlement Date) and the number of Shares that it will deliver on each Staggered Settlement Date; |
| (ii) | the aggregate number of Shares (together with cash in lieu of fractional Shares) that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates will equal the number of Shares (together with cash in lieu of fractional Shares) that Dealer would otherwise be required to deliver on such Nominal Settlement Date; and |
| (iii) | if the Net Share Settlement terms set forth above were to apply on the Nominal Settlement Date, then the Net Share Settlement terms will apply on each Staggered Settlement Date, except that the Net Shares will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause (i) above. |
| (g) |
| (h) | FINRA Rules. Each party acknowledges and agrees to be bound by the Financial Industry Regulatory Authority, Inc. Rules applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein. |
| (i) |
| (i) | Notwithstanding anything to the contrary in this Confirmation, if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture that results in an acceleration of the Convertible Notes pursuant to the terms 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) | Promptly following, but in no event later than the fifth Exchange Business Day after, any repurchase and cancellation of Convertible Notes (whether pursuant to Section 3.02 of the Indenture in connection with a Change in Control (as defined in the Indenture) or otherwise), Counterparty shall notify Dealer in writing of such repurchase and cancellation and the aggregate principal amount of Convertible Notes so repurchased and cancelled (any such notice, a “Repurchase Notice”). Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty of any Repurchase Notice, within the applicable time period set forth in the preceding sentence, shall constitute an Additional Termination Event as provided in this Section 9(i)(ii). Upon receipt of any such Repurchase Notice, Dealer shall designate an Exchange Business Day following receipt of such Repurchase Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for the repurchase of such Convertible Notes) as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “Repurchase Options”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Repurchase Notice, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repurchase Options. Any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Options equal to the number of Repurchase Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination |
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| Event and (3) the terminated portion of the Transaction were the sole Affected Transaction. |
| (iii) | 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” above, 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 10.07 of the Indenture in connection with a “Change in Control” (as defined in the Indenture) shall constitute an Additional Termination Event as provided in this Section 9(i)(iii). 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 be on or as promptly as reasonably practicable after 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 and, as of such date, the Number of Options shall be reduced by the number of Make-Whole Conversion Options. Any payment hereunder with respect to such termination (the “Make-Whole Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to 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 10.07 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 and (y) the excess of (I) (1) the number of Make-Whole Conversion Options multiplied by (2) the Conversion Rate (after taking into account any applicable adjustments to the Conversion Rate pursuant to Section 10.07 of the Indenture) multiplied by (3) a price per Share determined by the Calculation Agent over (II) the aggregate principal amount of such Convertible Notes, as determined by the Calculation Agent in a commercially reasonable manner. Counterparty may irrevocably elect, if so designated in its Notice of Exercise to Dealer as set forth above, to receive the Make-Whole Unwind Payment in Shares, in which case, in lieu of making such Make-Whole Unwind Payment as set forth above, Dealer shall deliver to Counterparty, within a commercially reasonable period of time after such designation as determined by Dealer (taking into account existing liquidity conditions and Dealer’s hedging and hedge unwind activity or settlement activity in connection with such delivery) a number of Shares equal to such Make-Whole Unwind Payment divided by a price per Share determined by the Calculation Agent in good faith and in a commercially reasonable manner. |
| (iv) | If Counterparty fails to give Dealer a Notice of Exercise in respect of any Options corresponding to Convertible Notes for which the Conversion Date occurs prior to the Free Convertibility Date prior to 5:00 p.m. (New York City time) on the fifth Scheduled Valid Day immediately following the scheduled first day of the Settlement Averaging Period for such Options (an “Unexercised Options Event”), then at any time on or prior to the 20th Exchange Business Day following the settlement date for such Convertible Notes, Counterparty may notify Dealer in writing of such Unexercised Options Event, the aggregate principal amount of the Convertible Notes to which such Unexercised Options Event relates, the Conversion Rate (as defined in the Indenture, but excluding any adjustment pursuant to the Excluded Provisions) that was applicable to such Convertible Notes on each Scheduled Valid Day during the relevant Settlement Averaging Period, each Valid Day during the relevant Settlement Averaging Period and the Relevant Price |
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| on each such Valid Day (the “Unexercised Options Event Notice”). Notwithstanding anything to the contrary in this Confirmation, but subject to the deemed representations, warranties and agreements by Counterparty listed below, the receipt by Dealer from Counterparty of an Unexercised Options Event Notice, within the applicable time period set forth in the preceding sentence, shall constitute an Additional Termination Event as provided in this Section 9(i)(iv). Upon receipt of any such Unexercised Options Event Notice, Dealer shall designate an Exchange Business Day occurring as promptly as practicable following receipt of such Unexercised Options Event Notice as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “Unexercised Options”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Unexercised Options Event Notice, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Unexercised Options. Any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Options equal to the number of Unexercised 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; 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 and (y) the sum of the excess, for each Valid Day during the Settlement Averaging Period identified in the Unexercised Options Event Notice, of (A) (I)(1) the number of Unexercised Options multiplied by (2) the Conversion Rate on such Valid Day (excluding any adjustment pursuant to the Excluded Provisions), multiplied by (3) the Relevant Price on such Valid Day, over (II) the aggregate principal amount of the Convertible Notes corresponding to the Unexercised Options, divided by (B) 20 (the “Unexercised Options Payment”). Counterparty may irrevocably elect, if so designated in its Unexercised Options Event Notice, to receive the Unexercised Options Payment in Shares, in which case, in lieu of making such Unexercised Options Payment as set forth above, Dealer shall deliver to Counterparty, within a commercially reasonable period of time after such designation as determined by Dealer (taking into account existing liquidity conditions and Dealer’s hedging and hedge unwind activity or settlement activity in connection with such delivery) a number of Shares equal to such Unexercised Options Payment divided by a price per Share determined by the Calculation Agent in good faith and in a commercially reasonable manner. The delivery by Counterparty of an Unexercised Options Event Notice shall be deemed a representation, warranty and agreement by Counterparty as follows: (i) it is not in possession of material non-public information in respect of itself or the Shares, (ii) it is not delivering the Unexercised Options Event Notice to create actual or apparent trading activity in the Shares or to manipulate the price of the Shares, (iii) it is not engaged in, and will not engage in until the occurrence of the related Early Termination Date, a “distribution” (as defined in Regulation M) of the Shares (or any security convertible, exchangeable or exercisable for Shares), (iv) there has not been any public announcement (as defined in Rule 165(f) under the Securities Act) of any merger, acquisition, or similar transaction involving a recapitalization relating to it that would fall within the scope of Rule 10b-18(a)(13)(iv), (v) it agrees that, without the prior written consent of Dealer, it shall not, and shall cause its affiliates and affiliated purchasers (each as defined in Rule 10b-18) not to, directly or indirectly (including, without limitation, by means of a derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable for Shares prior to the related Early Termination Date, and (vi) its assets at their fair valuation exceed its liabilities, including contingent liabilities, its capital is adequate to conduct its business and it has the ability to pay its debts and obligations as such debts mature and does not |
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| intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature. |
| (j) | Amendments to Equity Definitions. 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. |
| (k) | No Collateral or Setoff. Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral. Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise. |
| (l) | Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If in respect of this 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 (a “Payment Obligation”), Counterparty may request Dealer to satisfy any such Payment Obligation by the Share Termination Alternative (as defined below) (except that Counterparty shall not make such an election in the event of a Nationalization, Insolvency, Merger Event or Tender Offer, in each case, in which the consideration to be paid to holders of Shares consists solely of cash, or an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement in each case that resulted from an event or events outside Counterparty’s control) and shall give irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 5:00 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; provided that if Counterparty does not validly request Dealer to satisfy its Payment Obligation by the Share Termination Alternative, Dealer shall have the right, in its sole discretion, to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s election to the contrary. |
| Share Termination Alternative: |
Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the 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 (the “Share Termination Payment Date”), in satisfaction of the 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. |
| The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by |
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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 the purchase price paid in connection with the purchase of Share Termination Delivery Property.
| One Share or, if a Merger Event has occurred and a corresponding adjustment to this Transaction has been made, a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such 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, 9.11, 9.12 and 10.5 (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 this Transaction means that Share Termination Alternative is applicable to this Transaction. |
| (m) | 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 this 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 this Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein. |
| (n) | Registration. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on the advice of outside counsel, any Shares (“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to this Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, 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 reasonably 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 security offerings of its size, in form and substance reasonably satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of this 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 |
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| private placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, reasonably requested by Dealer. |
| (o) | 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. |
| (p) | 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 determines, in its discretion, based on the advise of counsel, that such action is advisable to preserve Dealer’s hedging or hedge unwind activity hereunder or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer. |
| (q) | Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to the claims of common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty; 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 Counterparty of its obligations and agreements with respect to the Transaction; 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. |
| (r) | 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. |
| (s) | 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 consolidation, merger and binding share exchange to which Counterparty is a party, or any sale of all or substantially all of Counterparty’s assets, in each case pursuant to which the Shares will be converted into cash, securities or other property, 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 transaction or 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 transaction or 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. |
| (t) | Early Unwind. In the event the sale of the “Underwritten Securities” (as defined in the Purchase Agreement (the “Purchase Agreement”) dated as of the Trade Date between Counterparty and X.X. Xxxxxx Securities Inc. and Xxxxxxx, Sachs & Co. as representatives of the several Initial Purchasers party thereto) is not consummated with the Initial Purchasers for any reason, other than |
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| in cases involving a breach of the Purchase Agreement by Dealer or its affiliate, or Counterparty fails to deliver to Dealer the opinions of counsel as required pursuant to Section 9(a), in each case 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 in connection with the Transaction either prior to or after the Early Unwind Date; provided that Counterparty shall purchase from Dealer on the Early Unwind Date all Shares purchased by Dealer or one or more of its affiliates in connection with the Transaction at the then prevailing market price. Each of Dealer and Counterparty represent and acknowledge to the other that, subject to the proviso included in this Section 9(t), upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged. |
| (u) | Payment by Counterparty. 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, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, 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. |
| (v) | Guarantee. All the obligations of Dealer hereunder shall be unconditionally guaranteed in favor of the Counterparty by The Xxxxxxx Xxxxx Group, Inc. (“GS Group”) under the guarantee filed as Exhibit 10.45 to GS Group’s Form 10-K filed with the Securities Exchange Commission on February 7, 2006, which shall constitute a Credit Support Document under the Agreement. The GS Group shall be designated as a Credit Support Provider in relation to Dealer. |
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Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Xxxxxxx, Sachs & Co., Equity Derivatives Documentation Department, Facsimile No. (000) 000-0000/83.
| Yours faithfully, | ||
| Xxxxxxx, Xxxxx & Co. | ||
| By: | /s/ Xxxxxxxx Xxxxxxx | |
| Name: | Xxxxxxxx Xxxxxxx | |
| Title: | Vice President | |
Accepted and confirmed
as of the Trade Date:
| Gilead Sciences, Inc. | ||
| By: |
/s/ Xxxxx Xxxxxxxxxx | |
| Name: |
Xxxxx Xxxxxxxxxx | |
| Title: |
Senior Vice President and Chief Financial Officer | |
[Signature Page to Base Call Option Transaction (2016)]