Exhibit 10.1

 

EXCHANGE AGREEMENT
(Unrestricted Stock)

 

___________________ (the “Undersigned”), for itself and on behalf of the
beneficial owners listed on Exhibit A hereto (“Accounts”) for whom the
Undersigned holds contractual and investment authority (each Account, as well as
the Undersigned if it is exchanging Notes (as defined below) hereunder, a
“Holder”), enters into this Exchange Agreement (the “Agreement”) with PDL
BioPharma, Inc. (the “Company”) on February ___, 2014 whereby the Holders will
exchange (the “Exchange”) the Company’s 2.875% Convertible Senior Notes due 2015
(the “Notes”) for shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), and a cash payment.

 

On and subject to the terms and conditions set forth in this Agreement, the
parties hereto agree as follows:

 

Article I:  Exchange of the Notes for Common Stock

 

At the Closing (as defined herein), the Undersigned hereby agrees to cause the
Holders to exchange and deliver to the Company the following Notes, and in
exchange therefor the Company hereby agrees to issue to the Holders the number
of shares of Common Stock described below and to pay in cash the following
amount in consideration for accrued interest on the Notes and as additional
consideration:

 

Principal Amount of Notes to be Exchanged:

 

$

 

 

 

 

(the “Exchanged Notes”)

Number of Shares of Common Stock to be issued in Exchange:

 

 

 

 

 

 

(the “Shares”)

Cash Payment for Accrued Interest and Additional Consideration on Exchanged
Notes:

 

$

 

     

(the “Cash Payment”)

 

The closing of the Exchange (the “Closing”) shall occur, subject to the
continued accuracy of the representations and warranties and compliance with the
covenants contained herein, on a date (the “Closing Date”) no later than five
business days after the date of this Agreement. At the Closing, (a) each Holder
shall deliver or cause to be delivered to the Company all right, title and
interest in and to its Exchanged Notes (and no other consideration) free and
clear of any mortgage, lien, pledge, charge, security interest, encumbrance,
title retention agreement, option, equity or other adverse claim thereto
(collectively, “Liens”), together with any documents of conveyance or transfer
that the Company may deem necessary or desirable to transfer to and confirm in
the Company all right, title and interest in and to the Exchanged Notes free and
clear of any Liens, and (b) the Company shall deliver to each Holder the number
of Shares and the portion of the Cash Payment specified on Exhibit A hereto (or,
if there are no Accounts, the Company shall deliver to the Undersigned, as the
sole Holder, all of the Shares and Cash Payment specified above); provided,
however, that the parties acknowledge that the delivery of the Shares to the
Holders may be delayed due to procedures and mechanics within the system of the
Depository Trust Company or the NASDAQ Global Select Market and that such delay
will not be a default under this Agreement so long as (i) the Company is using
its best efforts to effect the issuance of the Shares, and (ii) such delay is no
longer than five business days after the Closing Date. Simultaneously with or
after the Closing, the Company may issue shares of Common Stock to one or more
other holders of outstanding Notes or to other investors.

 

 
 

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Article II: Covenants, Representations and Warranties of the Holders

 

Each Holder (and, where specified below, the Undersigned) hereby covenants
(solely as to itself) as follows, and makes the following representations and
warranties (solely as to itself), each of which is and shall be true and correct
on the date hereof and at the Closing, to the Company and to RBC Capital
Markets, LLC, and all such covenants, representations and warranties shall
survive the Closing.

 

Section 2.1     Power and Authorization. The Holder is duly organized, validly
existing and in good standing, and has the power, authority and capacity to
execute and deliver this Agreement, to perform its obligations hereunder, and to
consummate the Exchange contemplated hereby. If the Undersigned is executing
this Agreement on behalf of Accounts, (a) the Undersigned has all requisite
discretionary and contractual authority to enter into this Agreement on behalf
of, and bind, each Account, and (b) Exhibit A hereto is a true, correct and
complete list of (i) the name of each Account, (ii) the principal amount of such
Account’s Exchanged Notes, (iii) the number of Shares to be issued to such
Account in respect of its Exchanged Notes, and (iv) the portion of the Cash
Payment to be paid to such Account as the aggregate accrued interest and
additional consideration for its Exchanged Notes.

 

Section 2.2     Valid and Enforceable Agreement; No Violations. This Agreement
has been duly executed and delivered by the Undersigned and the Holder and
constitutes a legal, valid and binding obligation of the Undersigned and the
Holder, enforceable against the Undersigned and the Holder in accordance with
its terms, except that such enforcement may be subject to (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally, and
(b) general principles of equity, whether such enforceability is considered in a
proceeding at law or in equity (the “Enforceability Exceptions”). This Agreement
and consummation of the Exchange will not violate, conflict with or result in a
breach of or default under (i) the Undersigned’s or the Holder’s organizational
documents, (ii) any agreement or instrument to which the Undersigned or the
Holder is a party or by which the Undersigned or the Holder or any of their
respective assets are bound, or (iii) any laws, regulations or governmental or
judicial decrees, injunctions or orders applicable to the Undersigned or the
Holder.

 

Section 2.3     Title to the Exchanged Notes. The Holder is the sole legal and
beneficial owner of the Exchanged Notes set forth opposite its name on Exhibit A
hereto (or, if there are no Accounts, the Undersigned is the sole legal and
beneficial owner of all of the Exchanged Notes). The Holder has good, valid and
marketable title to its Exchanged Notes, free and clear of any Liens (other than
pledges or security interests that the Holder may have created in favor of a
prime broker under and in accordance with its prime brokerage agreement with
such broker). The Holder has not, in whole or in part, except as described in
the preceding sentence, (a) assigned, transferred, hypothecated, pledged,
exchanged or otherwise disposed of any of its Exchanged Notes or its rights in
its Exchanged Notes, or (b) given any person or entity any transfer order, power
of attorney or other authority of any nature whatsoever with respect to its
Exchanged Notes. Upon the Holder’s delivery of its Exchanged Notes to the
Company pursuant to the Exchange, such Exchanged Notes shall be free and clear
of all Liens created by the Holder.

 

Section 2.4     Accredited Investor or Qualified Institutional Buyer. The Holder
is either (i) an “accredited investor” within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
“Securities Act”), or (ii) a “qualified institutional buyer” within the meaning
of Rule 144A promulgated under the Securities Act.

 

Section 2.5     No Affiliate Status. The Holder is not, and has not been during
the consecutive three month period preceding the date hereof, a director,
officer or “affiliate” within the meaning of Rule 144 promulgated under the
Securities Act (an “Affiliate”) of the Company. To its knowledge, the Holder did
not acquire any of the Exchanged Notes, directly or indirectly, from an
Affiliate of the Company.

 

 
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Section 2.6     No Illegal Transactions. Each of the Undersigned and the Holder
has not, directly or indirectly, and no person acting on behalf of or pursuant
to any understanding with it has, disclosed to a third party any information
regarding the Exchange or engaged in any transactions in the securities of the
Company (including, without limitation, any Short Sales (as defined below)
involving any of the Company’s securities) since the time that the Undersigned
was first contacted by either the Company or RBC Capital Markets, LLC or any
other person regarding the Exchange, this Agreement or an investment in the
Common Stock or the Company. Each of the Undersigned and the Holder covenants
that neither it nor any person acting on its behalf or pursuant to any
understanding with it will disclose to a third party any information regarding
the Exchange or engage, directly or indirectly, in any transactions in the
securities of the Company (including Short Sales) prior to the time the
transactions contemplated by this Agreement and the Company’s announcement of
the proposed issuance and sale of approximately $250 million aggregate principle
amount of new convertible senior notes, consistent with the disclosure provided
to the Undersigned (the “New Note Offering”), are publicly disclosed. “Short
Sales” include, without limitation, all “short sales” as defined in Rule 200 of
Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and all types of direct and indirect stock pledges,
forward sale contracts, options, puts, calls, short sales, swaps, derivatives
and similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker-dealers or foreign regulated brokers.
Solely for purposes of this Section 2.6, subject to the Undersigned’s and the
Holder’s compliance with their respective obligations under the U.S. federal
securities laws and the Undersigned’s and the Holder’s respective internal
policies, (a) “Undersigned” and “Holder” shall not be deemed to include any
employees, subsidiaries or affiliates of the Undersigned or the Holder that are
effectively walled off by appropriate “Chinese Wall” information barriers
approved by the Undersigned’s or the Holder's respective legal or compliance
department (and thus have not been privy to any information concerning the
Exchange), and (b) the foregoing representations and covenants of this
Section 2.6 shall not apply to any transaction by or on behalf of an Account
that was effected without the advice or participation of, or such Account’s
receipt of information regarding the Exchange provided by, the Undersigned.

 

Section 2.7     Adequate Information; No Reliance. The Holder acknowledges and
agrees that (a) the Holder has been furnished with all materials it considers
relevant to making an investment decision to enter into the Exchange (including
information regarding the New Note Offering) and has had the opportunity to
review the Company’s filings and submissions with the Securities and Exchange
Commission (the “SEC”), including, without limitation, all information filed or
furnished pursuant to the Exchange Act, (b) the Holder has had a full
opportunity to ask questions of the Company concerning the Company, its
business, operations, financial performance, financial condition and prospects,
and the terms and conditions of the Exchange, (c) the Holder has had the
opportunity to consult with its accounting, tax, financial and legal advisors to
be able to evaluate the risks involved in the Exchange and to make an informed
investment decision with respect to such Exchange, and (d) the Holder is not
relying, and has not relied, upon any statement, advice (whether accounting,
tax, financial, legal or other), representation or warranty made by the Company
or any of its affiliates or representatives including, without limitation, RBC
Capital Markets, LLC, except for (A) the publicly available filings and
submissions made by the Company with the SEC under the Exchange Act, and (B) the
representations and warranties made by the Company in this Agreement.

 

Article III: Covenants, Representations and Warranties of the Company

 

The Company hereby covenants as follows, and makes the following representations
and warranties, each of which is and shall be true and correct on the date
hereof and at the Closing, to the Holders and RBC Capital Markets, LLC, and all
such covenants, representations and warranties shall survive the Closing.

 

Section 3.1     Power and Authorization. The Company is duly incorporated,
validly existing and in good standing under the laws of its state of
incorporation, and has the power, authority and capacity to execute and deliver
this Agreement, to perform its obligations hereunder, and to consummate the
Exchange contemplated hereby.

 

Section 3.2     Valid and Enforceable Agreement; No Violations. This Agreement
has been duly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to the
Enforceability Exceptions. This Agreement and consummation of the Exchange will
not violate, conflict with or result in a breach of or default under (i) the
Company’s charter, bylaws or other organizational documents, (ii) any agreement
or instrument to which the Company is a party or by which the Company or any of
its assets are bound, or (iii) any laws, regulations or governmental or judicial
decrees, injunctions or orders applicable to the Company.

 

 
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Section 3.3     Valid Issuance of the Common Stock. The Shares (a) are duly
authorized and, upon their issuance pursuant to the Exchange against delivery of
the Exchanged Notes, will be validly issued, fully paid and non-assessable,
(b) will not, at the Closing, be subject to any preemptive, participation,
rights of first refusal or other similar rights, and (c) assuming the accuracy
of each Holder’s representations and warranties hereunder, (i) will be issued in
the Exchange exempt from the registration requirements of the Securities Act
pursuant to Section 4(a)(2) of the Securities Act, (ii) will, at the Closing, be
free of any restrictions on resale by such Holder pursuant to Rule 144
promulgated under the Securities Act, and (iii) will be issued in compliance
with all applicable state and federal laws concerning the issuance of the
Shares. Subject to the accuracy of the representations and warranties of each
Holder hereunder, the Company will take all actions, including, without
limitation, the issuance by its legal counsel of any reasonably necessary legal
opinions, necessary to issue Shares that are freely tradable on each national
securities exchange on which the Common Stock is then listed without restriction
and without restrictive legends.

 

Section 3.4     Listing. When issued in the Exchange, the Shares shall be listed
on each national securities exchange upon which the Common Stock is then listed.

 

Section 3.5     Disclosure. On or before the first business day following the
date of this Agreement, the Company shall issue a publicly available press
release or file with the SEC a Current Report on Form 8-K disclosing all
material terms of the Exchange and the New Note Offering (to the extent not
previously publicly disclosed).

 

Article IV: Miscellaneous

 

Section 4.1     Entire Agreement. This Agreement and any documents and
agreements executed in connection with the Exchange embody the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof and supersede all prior and contemporaneous oral or written agreements,
representations, warranties, contracts, correspondence, conversations, memoranda
and understandings between or among the parties or any of their agents,
representatives or affiliates relative to such subject matter, including,
without limitation, any term sheets, emails or draft documents.

 

Section 4.2     Construction. References in the singular shall include the
plural, and vice versa, unless the context otherwise requires. References in the
masculine shall include the feminine and neuter, and vice versa, unless the
context otherwise requires. Headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meanings of the
provisions hereof. Neither party, nor its respective counsel, shall be deemed
the drafter of this Agreement for purposes of construing the provisions of this
Agreement, and all language in all parts of this Agreement shall be construed in
accordance with its fair meaning, and not strictly for or against either party.

 

Section 4.3     Governing Law. This Agreement shall in all respects be construed
in accordance with and governed by the substantive laws of the State of New
York, without reference to its choice of law rules.

 

Section 4.4     Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. Any counterpart or other signature
hereon delivered by facsimile shall be deemed for all purposes as constituting
good and valid execution and delivery of this Agreement by such party.

 

Section 4.5     Dealer Manager’s Reliance. RBC Capital Markets, LLC, acting as
the dealer manager in the Exchange, is entitled to rely on the representations
and warranties made by the Company and the Holder under this Agreement.

 

Signature Page Follows

 

 
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.

 

 

“UNDERSIGNED”:

 

“Company”:

                   

PDL BioPharma, Inc.

 

(in its capacities described in the first paragraph hereof)

                   

By:

   

By:

               

Name:

 

 

Name:

 

 

 

 

 

 

 

 

Title:

 

 

Title:

 

 

 

 

SIGNATURE PAGE TO EXCHANGE AGREEMENT

PDL BIOPHARMA, INC.

 

 
 

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EXHIBIT A

Exchanging Beneficial Owners

 

 

Name of
Beneficial Owner

Principal Amount of

Exchanged Notes

Number of Shares of

Common Stock

Portion of
Cash Payment

                                                                               

 

 

EXHIBIT A TO EXCHANGE AGREEMENT

PDL BIOPHARMA, INC.