Exhibit 10.3

EXECUTION COPY

Opening Transaction

 

To:

  ViroPharma Incorporated, 397 Eagleview Boulevard, Exton, Pennsylvania 19341

A/C:

  [Insert Account Number]

From:

 

Credit Suisse International

One Cabot Square

London E14 4QJ

England

Re:

  Issuer Warrant Transaction

Ref. No:

  [Insert Reference Number]

Date:

  March 20, 2007

 

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Dear Sir(s):

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between Credit Suisse
International (“Dealer”) represented by Credit Suisse, New York branch (“Agent”)
as its agent, and ViroPharma Incorporated (“Issuer”). This communication
constitutes a “Confirmation” as referred to in the ISDA Master Agreement
specified below.

1. This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex thereto) (the “2000
Definitions”) and the definitions and provisions of the 2002 ISDA Equity
Derivatives Definitions (the “Equity Definitions”, and together with the 2000
Definitions, the “Definitions”), in each case as published by the International
Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any
inconsistency between the 2000 Definitions and the Equity Definitions, the
Equity Definitions will govern. For purposes of the Equity Definitions, each
reference herein to a Warrant shall be deemed to be a reference to a Call Option
or an Option, as context requires.

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.

This Confirmation evidences a complete and binding agreement between Dealer and
Issuer as to the terms of the Transaction to which this Confirmation relates.
This Confirmation shall be subject to an agreement (the “Agreement”) in the form
of the 1992 ISDA Master Agreement as if Dealer and Issuer had executed an
agreement in such form on the date hereof (but without any Schedule except for
(i) the election of Loss and Second Method and US Dollars (“USD”) as the
Termination Currency, (ii) the replacement of the word “third” in the last line
of Section 5(a)(i) with the word “first” and (iii) the election that the “Cross
Default” provisions of Section 5(a)(vi) shall apply to Issuer with a “Threshold
Amount” of USD10 million).

All provisions contained in, or incorporated by reference to, the Agreement will
govern this Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern.

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2. The Transaction is a Warrant Transaction, which shall be considered a Share
Option Transaction for purposes of the Equity Definitions. The terms of the
particular Transaction to which this Confirmation relates are as follows:

General Terms:

 

Trade Date:   March 20, 2007 Effective Date:   March 26, 2007, or such other
date as agreed between the parties, subject to Section 8(k) below Components:  
The Transaction will be divided into individual Components, each with the terms
set forth in this Confirmation, and, in particular, with the Number of Warrants
and Expiration Date set forth in this Confirmation. The payments and deliveries
to be made upon settlement of the Transaction will be determined separately for
each Component as if each Component were a separate Transaction under the
Agreement. Warrant Style:   European Warrant Type:   Call Seller:   Issuer
Buyer:   Dealer Shares:   The Common Stock of Issuer, par value USD0.002 per
share (Ticker Symbol: “VPHM”). Number of Warrants:   For each Component, as
provided in Annex A to this Confirmation. Warrant Entitlement:   One Share per
Warrant Strike Price:   USD24.92 Premium:   USD46,777,500.00 (Premium per
Warrant USD5.23) Premium Payment Date:   The Effective Date Exchange:   The
NASDAQ Stock Market Related Exchange:   All Exchanges

Procedures for Exercise:

 

    In respect of any Component:

 

Expiration Time:   Valuation Time Expiration Date:   As provided in Annex A to
this Confirmation (or, if such date is not a Scheduled Trading Day, the next
following Scheduled Trading Day that is not already an Expiration Date for
another Component); provided that if that date is a Disrupted Day, the
Expiration Date for such Component shall be the first succeeding Scheduled
Trading Day that is not a Disrupted Day and is not or is not deemed to be an
Expiration Date in respect of any other Component of the Transaction hereunder;
and provided further that if the Expiration Date has not occurred pursuant to

 

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    the preceding proviso as of the Final Disruption Date, the Final Disruption
Date
shall be the Expiration Date (irrespective of whether such date is an Expiration
Date in respect of any other Component for the Transaction). “Final Disruption
Date” means September 19, 2017. Notwithstanding the foregoing and anything to
the contrary in the Equity Definitions, if a Market Disruption Event occurs on
any
Expiration Date, the Calculation Agent may determine that such Expiration Date
is a Disrupted Day only in part, in which case the Calculation Agent shall make
adjustments to the number of Warrants for the relevant Component for which such
day shall be the Expiration Date and shall designate the Scheduled Trading Day
determined in the manner described in the immediately preceding sentence as the
Expiration Date for the remaining Warrants for such Component. Section 6.6 of
the Equity Definitions shall not apply to any Valuation Date occurring on an
Expiration Date. Market Disruption Event:   Section 6.3(a) of the Equity
Definitions is hereby amended by deleting the words “during the one hour period
that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in
Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii)
thereof. Automatic Exercise:   Applicable; and means that the Number of Warrants
for the corresponding Expiration Date will be deemed to be automatically
exercised at the Expiration Time on such Expiration Date unless Buyer notifies
Seller (by telephone or in writing) prior to the Expiration Time on such
Expiration Date that it does not wish Automatic Exercise to occur, in which case
Automatic Exercise will not apply to such Expiration Date. Issuer’s Telephone
Number and Telex and/or Facsimile Number and Contact Details for purpose of
Giving Notice:   Attn: Chief Financial Officer   Telephone: (610) 458 7300  
Facsimile: (610) 458 7380   With a copy to:   Attn: General Counsel   Facsimile:
(610) 458 7380

Settlement Terms:

 

    In respect of any Component:

 

Settlement Currency:   USD Net Share Settlement:   On each Settlement Date,
Issuer shall deliver to Dealer a number of Shares equal to the Number of Shares
to be Delivered for such Settlement Date to

 

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  the account specified by Dealer and cash in lieu of any fractional Shares
valued at the Relevant Price on the Valuation Date corresponding to such
Settlement Date. If, in the reasonable opinion of Issuer or Dealer based on
advice of counsel, for any reason, the Shares deliverable upon Net Share
Settlement would not be immediately freely transferable by Dealer under Rule
144(k) under the Securities Act of 1933, as amended (the “Securities Act”), then
Dealer may elect to either (x) accept delivery of such Shares notwithstanding
any restriction on transfer or (y) have the provisions set forth in Section 8(b)
below apply.   The Number of Shares to be Delivered shall be delivered by Issuer
to Dealer no later than 12:00 noon (local time in New York City) on the relevant
Settlement Date. Number of Shares to be Delivered:   In respect of any Exercise
Date, subject to the last sentence of Section 9.5 of the Equity Definitions, the
product of (i) the number of Warrants exercised or deemed exercised on such
Exercise Date, (ii) the Warrant Entitlement and (iii) (A) the excess of the VWAP
Price on the Valuation Date occurring on such Exercise Date over the Strike
Price (or, if no such excess, zero) divided by (B) such VWAP Price. VWAP Price:
  For any Valuation Date, the NASDAQ Volume Weighted Average Price per share of
Shares for the regular trading session (including any extensions thereof) of the
Exchange on such Valuation Date (without regard to pre-open or after hours
trading outside of such regular trading session), as published by Bloomberg at
4:15 p.m. New York City time (or 15 minutes following the end of any extension
of the regular trading session) on such Valuation Date, on Bloomberg page
“VPHM.Q <Equity> AQR” (or any successor thereto) (or if such published volume
weighted average price is unavailable or is manifestly incorrect, the market
value of one Share on such Valuation Date, as determined by the Calculation
Agent using a volume weighted method). Other Applicable Provisions:   The
provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Seller is the Issuer of the Shares)
and 9.12 of the Equity Definitions will be applicable, as if “Physical
Settlement” applied to the Transaction.

Adjustment:

 

    In respect of any Component:

 

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Method of Adjustment:   Calculation Agent Adjustment; provided that in respect
of an Extraordinary Dividend, “Calculation Agent Adjustment” shall be as
described in the provision below. Extraordinary Dividend:   Any cash dividend or
distribution on the Shares with an ex dividend date occurring on or after the
Trade Date and on or prior to the Expiration Date.
Extraordinary Dividend Adjustment:   If at any time during the period from and
including the Trade Date, to but excluding the last Expiration Date, an
ex-dividend date for an Extraordinary Dividend occurs, then the Calculation
Agent will make adjustments to the Strike Price, the Number of Warrants, the
Warrant Entitlement and/or any other variable relevant to the exercise,
settlement, payment or other terms of the Transaction to preserve the fair value
of the Transaction to Buyer after taking into account such Extraordinary
Dividend.

Extraordinary Events:

 

Consequences of Merger Events:  

 

(a)   Share-for-Share:   Modified Calculation Agent Adjustment (b)  
Share-for-Other:   Cancellation and Payment (Calculation Agent Determination)
(c)   Share-for-Combined:   Component Adjustment

 

Tender Offer:   Applicable Consequences of Tender Offers:  

 

(a)   Share-for-Share:   Modified Calculation Agent Adjustment (b)  
Share-for-Other:   Modified Calculation Agent Adjustment (c)  
Share-for-Combined:   Modified Calculation Agent Adjustment

 

Modified Calculation   Agent Adjustment:   If, in respect of any Merger Event or
Tender Offer to which Modified Calculation Agent Adjustment applies, the
adjustments to be made in accordance with Section 12.2(e)(i) or Section
12.3(d)(i), as the case may be, of the Equity Definitions would result in Issuer
being different from the issuer of the Shares, then with respect to such Merger
Event or Tender Offer, as a condition precedent to the adjustments contemplated
in Section 12.2(e)(i) or Section 12.3(d)(i), as the case may be, of  

 

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    the Equity Definitions, Issuer and the issuer of the Shares shall, prior to
the
Merger Date or Tender Offer, as the case may be, have entered into such
documentation containing representations, warranties and agreements relating to
securities law and other issues as requested by Buyer that Buyer has determined,
in its reasonable discretion, to be reasonably necessary or appropriate to allow
Buyer to continue as a party to the Transaction, as adjusted under Section
12.2(e)(i) or Section 12.3(d)(i), as the case may be, of the Equity Definitions,
and
to preserve its hedging or hedge unwind activities in connection with the
Transaction in a manner compliant with applicable legal, regulatory or self-
regulatory requirements, or with related policies and procedures applicable to
Buyer, and if such conditions are not met or if the Calculation Agent determines
that no adjustment that it could make under Section 12.2(e)(i) or Section
12.3(d)(i), as the case may be, of the Equity Definitions will produce a
commercially reasonable result, then the consequences set forth in Section
12.2(e)(ii) or Section 12.3(d)(ii), as the case may be, of the Equity
Definitions
shall apply. Reference Markets:   For the avoidance of doubt, and without
limiting the generality of the foregoing provisions, any adjustment effected by
the Calculation Agent pursuant to Section 12.2(e) and/or Section 12.3(d) of the
Equity Definitions may be determined by reference to the adjustment(s) made in
respect of Merger Events or Tender Offers, as the case may be, in the
convertible bond market. Nationalization, Insolvency or Delisting:  
Cancellation and Payment (Calculation Agent Determination); provided that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
shall also constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded or re-quoted on
any of the New York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their respective
successors); if the Shares are immediately re-listed, re-traded or re-quoted on
any such exchange or quotation system, such exchange or quotation system shall
thereafter be deemed to be the Exchange. Additional Disruption Events:

 

(a)   Change in Law:   Applicable (b)   Failure to Deliver:   Applicable (c)  
Insolvency Filing:   Applicable (d)   Hedging Disruption:   Applicable (e)  
Increased Cost of Hedging:   Applicable (f)   Loss of Stock Borrow:   Applicable
  Maximum Stock Loan Rate:   1.00% per annum (g)   Increased Cost of Stock
Borrow:   Applicable   Initial Stock Loan Rate:   0.25% per annum

 

Hedging Party:   Buyer Determining Party:   Buyer

 

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Non-Reliance:   Applicable Agreements and Acknowledgments Regarding Hedging
Activities:   Applicable Additional Acknowledgments:   Applicable

3.         Calculation Agent:

  Dealer.

4.         Account Details:

 

 

   Dealer Payment Instructions:      

The Bank of New York, NY

SWIFT: IRVTUS3N

Bank Routing: 021 000 018

Account Name: Credit Suisse International

Account No.: 890-0360-968

 

     Issuer Payment Instructions:   To be provided by Issuer.

 

5.    Offices:    The Office of Dealer for the Transaction is:      

Credit Suisse International

One Cabot Square

London E14 4QJ

England

   The Office of Issuer for the Transaction is:      

397 Eagleview Boulevard

Exton, PA 19341

6.    Notices: For purposes of this Confirmation: (a)       Address for notices
or communications to Counterparty:       To:   

ViroPharma Incorporated

397 Eagleview Boulevard

Exton, PA 19341

      Attn:    Chief Financial Officer       Telephone:    (610) 458 7300      
Facsimile:    (610) 458 7380       With a copy to:       Attn:    General
Counsel      

Facsimile:             

   (610) 458 7380 (b)       Address for notices or communications to Dealer:   
   To:   

Credit Suisse, New York branch

Eleven Madison Avenue

New York, NY 10010-3629

      Telephone:    (212) 325 8676 / (212) 538 5306 / (212) 538 1193 / (212) 538
6886       Facsimile:    (212) 325 8173 7.    Representations, Warranties and
Agreements:

 

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(a) In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Issuer represents and warrants to and for the
benefit of, and agrees with, Dealer as follows:

(i) On the Trade Date, (A) none of Issuer and its officers and directors is
aware of any material nonpublic information regarding Issuer or the Shares and
(B) all reports and other documents filed by Issuer with the Securities and
Exchange Commission pursuant to the Exchange Act when considered as a whole
(with the more recent such reports and documents deemed to amend inconsistent
statements contained in any earlier such reports and documents), do not contain
any untrue statement of a material fact or any omission of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading.

(ii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Issuer acknowledges that Dealer is not making any representations or warranties
with respect to the treatment of the Transaction under FASB Statements 128, 133
(as amended), 149 or 150, EITF Issue No. 00-19, 01-6 or 03-6 (or any successor
issue statements) or under any accounting standards including FASB’s
Liabilities & Equity Project.

(iii) Prior to the Trade Date, Issuer shall deliver to Dealer a resolution of
Issuer’s board of directors authorizing the Transaction (including the issuance
of any Convertible Preferred Shares as contemplated in Section 8(e) below) and
such other certificate or certificates as Dealer shall reasonably request.

(iv) Issuer is not entering into this Confirmation to create actual or apparent
trading activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price of the
Shares (or any security convertible into or exchangeable for Shares) or
otherwise in violation of the Exchange Act.

(v) Issuer is not, and after giving effect to the transactions contemplated
hereby will not be, required to register as an “investment company” as such term
is defined in the Investment Company Act of 1940, as amended.

(vi) On the Trade Date and the Premium Payment Date (A) the assets of Issuer at
their fair valuation exceed the liabilities of Issuer, including contingent
liabilities, (B) the capital of Issuer is adequate to conduct the business of
Issuer and (C) Issuer has the ability to pay its debts and obligations as such
debts mature and does not intend to, or does not believe that it will, incur
debt beyond its ability to pay as such debts mature.

(vii) Issuer shall not take any action to decrease the number of Available
Shares below the Capped Number (each as defined below).

(viii) The representations and warranties of Issuer set forth in Section 3 of
the Agreement and Section 1 of the Underwriting Agreement dated as of the Trade
Date between Issuer and Goldman, Sachs & Co., as representative of the
Underwriters party thereto (the “Underwriting Agreement”) are true and correct
as of the Trade Date and the Effective Date and are hereby deemed to be repeated
to Dealer as if set forth herein.

(ix) Issuer understands no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not
be guaranteed by any affiliate of Dealer or any governmental agency.

(x) (A) During the period starting on the first Expiration Date and ending on
the last Expiration Date (the “Settlement Period”), the Shares or securities
that are convertible into, or exchangeable or exercisable for Shares, are not,
and shall not be, subject to a “restricted period,” as such term is defined in
Regulation M under the Exchange Act (“Regulation M”) and (B) Issuer shall not
engage in any “distribution,” as such term is defined in Regulation M, other
than a distribution meeting the requirements of the exceptions set forth in
sections 101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange
Business Day immediately following the Settlement Period.

 

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(xi) During the Settlement Period, neither Issuer nor any “affiliate” or
“affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act
(“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by
means of any cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or
commence any tender offer relating to, any Shares (or an equivalent interest,
including a unit of beneficial interest in a trust or limited partnership or a
depository share) or any security convertible into or exchangeable or
exercisable for Shares, except through Dealer.

(b) Each of Dealer and Issuer agrees and represents that it is an “eligible
contract participant” as defined in Section 1a(12) of the U.S. Commodity
Exchange Act, as amended.

(c) Each of Dealer and Issuer acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of
Section 4(2) thereof. Accordingly, Dealer represents and warrants to Issuer that
(i) it has the financial ability to bear the economic risk of its investment in
the Transaction and is able to bear a total loss of its investment and its
investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction,
including the loss of its entire investment in the Transaction, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated
under the Securities Act, (iii) it is entering into the Transaction for its own
account without a view to the distribution or resale thereof, (iv) the
assignment, transfer or other disposition of the Transaction has not been and
will not be registered under the Securities Act and is restricted under this
Confirmation, the Securities Act and state securities laws, (v) its financial
condition is such that it has no need for liquidity with respect to its
investment in the Transaction and no need to dispose of any portion thereof to
satisfy any existing or contemplated undertaking or indebtedness and is capable
of assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the terms,
conditions and risks of the Transaction.

(d) Each of Dealer and Issuer agrees and acknowledges that Dealer is a
“financial institution,” “swap participant” and “financial participant” within
the meaning of Sections 101(22), 101(53C) and 101(22A) of Title 11 of the United
States Code (the “Bankruptcy Code”). The parties hereto further agree and
acknowledge (A) that this Confirmation is (i) a “securities contract,” as such
term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “settlement payment,” as such term is
defined in Section 741(8) of the Bankruptcy Code, and (ii) a “swap agreement,”
as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect
to which each payment and delivery hereunder is a “transfer,” as such term is
defined in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is
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.

(e) Issuer shall deliver to Dealer an opinion of counsel, dated as of the Trade
Date and reasonably acceptable to Dealer in form and substance, with respect to
the matters set forth in Section 3(a) of the Agreement.

(f) Each party acknowledges and agrees to be bound by the Conduct Rules of the
National Association of Securities Dealers, Inc. applicable to transactions in
options, and further agrees not to violate the position and exercise limits set
forth therein.

8. Other Provisions:

(a) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If Issuer shall owe Buyer any amount pursuant to Sections
12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of
a Tender Offer, a Merger Event, Insolvency or Nationalization in each case, in
which the consideration or proceeds to be paid to holders of Shares consists
solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the
event of an Event of Default in which Issuer is the Defaulting Party or a
Termination Event in which Issuer is the Affected Party, that resulted from an
event or events within Issuer’s control) (a “Payment Obligation”), Issuer shall
have the right, in its sole discretion, to satisfy any such Payment Obligation
by the Share Termination Alternative (as defined below) by giving irrevocable
telephonic notice to Buyer, confirmed in writing within one Scheduled Trading
Day, by 4:00 P.M. New York City time on the Merger Date, Tender Offer Date,

 

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Announcement Date or Early Termination Date, as applicable (“Notice of Share
Termination”). Upon such Notice of Share Termination, the following provisions
shall apply on the Scheduled Trading Day immediately following the Merger Date,
the Tender Offer Date, Announcement Date or Early Termination Date, as
applicable:

 

Share Termination Alternative:

   Applicable and means that Issuer shall deliver to Dealer the Share
Termination Delivery Property on the date on which the Payment Obligation would
otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as applicable (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation.

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 the aggregate amount of
a security therein with an amount of cash equal to the value of such fractional
security based on the values used to calculate the Share Termination Unit Price.

Share Termination Unit Price:

   The value of property contained in one Share Termination Delivery Unit on the
date such Share Termination Delivery Units are to be delivered as Share
Termination Delivery Property, as determined by the Calculation Agent in its
discretion by commercially reasonable means and notified by the Calculation
Agent to Issuer at the time of notification of the Payment Obligation.

Share Termination Delivery Unit:

   In the case of a Termination Event, Event of Default or Delisting, one Share
or, in the case of an Insolvency, Nationalization, Merger Event or Tender Offer,
a Share or a unit consisting of the number or amount of each type of property
received by a holder of one Share (without consideration of any requirement to
pay cash or other consideration in lieu of fractional amounts of any securities)
in such Insolvency, Nationalization, Merger Event or Tender Offer. If such
Insolvency, Nationalization, Merger Event or Tender Offer involves a choice of
consideration to be received by holders, such holder shall be deemed to have
elected to receive the maximum possible amount of cash.

Failure to Deliver:

   Applicable

Other applicable provisions:

   If Share Termination Alternative is applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in
Section 9.11 of the Equity Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations, limitations or
requirements under applicable securities laws as a result of the fact that
Seller is the Issuer of the Shares) and 9.12 of the Equity Definitions will be
applicable as if “Physical Settlement” applied to the Transaction, except that
all references to “Shares” shall be read as references to “Share Termination
Delivery Units”. If, in the reasonable opinion of counsel to Issuer or Dealer,
for any reason, any securities comprising the Share Termination Delivery Units
deliverable pursuant to this Section 8(a) would not be immediately freely
transferable by Dealer under Rule 144(k) under the Securities Act, then Dealer
may elect to either (x) accept delivery of such securities notwithstanding any
restriction on transfer or (y) have the provisions set forth in Section 8(b)
below apply.

 

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(b) Registration/Private Placement Procedures. (i) With respect to the
Transaction, the following provisions shall apply to the extent provided for
above opposite the caption “Net Share Settlement” in Section 2 or in paragraph
(a) of this Section 8. If so applicable, then, at the election of Issuer by
notice to Buyer within one Exchange Business Day after the relevant delivery
obligation arises, but in any event at least one Exchange Business Day prior to
the date on which such delivery obligation is due, either (A) all Shares or
Share Termination Delivery Units, as the case may be, delivered by Issuer to
Buyer shall be, at the time of such delivery, covered by an effective
registration statement of Issuer for immediate resale by Buyer (such
registration statement and the corresponding prospectus (the “Prospectus”)
(including, without limitation, any sections describing the plan of
distribution) in form and content commercially reasonably satisfactory to Buyer)
or (B) Issuer shall deliver additional Shares or Share Termination Delivery
Units, as the case may be, so that the value of such Shares or Share Termination
Delivery Units, as determined by the Calculation Agent to reflect an appropriate
liquidity discount, equals the value of the number of Shares or Share
Termination Delivery Units that would otherwise be deliverable if such Shares or
Share Termination Delivery Units were freely tradeable (without prospectus
delivery) upon receipt by Buyer (such value, the “Freely Tradeable Value”);
provided that, if requested by Dealer, Issuer shall make the election described
in this clause (B) with respect to Shares delivered on all Settlement Dates no
later than one Exchange Business Day prior to the first Expiration Date, and the
applicable procedures described below shall apply to all Shares delivered on the
Settlement Dates on an aggregate basis. (For the avoidance of doubt, as used in
this paragraph (b) only, the term “Issuer” shall mean the issuer of the relevant
securities, as the context shall require.)

(ii) If Issuer makes the election described in clause (b)(i)(A) above:

(A) Buyer (or an affiliate of Buyer designated by Buyer) shall be afforded a
reasonable opportunity to conduct a due diligence investigation with respect to
Issuer that is customary in scope for underwritten offerings of equity
securities and that yields results that are commercially reasonably satisfactory
to Buyer or such affiliate, as the case may be, in its discretion; and

(B) Buyer (or an affiliate of Buyer designated by Buyer) and Issuer shall enter
into an agreement (a “Registration Agreement”) on commercially reasonable terms
in connection with the public resale of such Shares or Share Termination
Delivery Units, as the case may be, by Buyer or such affiliate substantially
similar to underwriting agreements customary for underwritten offerings of
equity securities, in form and substance commercially reasonably satisfactory to
Buyer or such affiliate and Issuer, which Registration Agreement shall include,
without limitation, provisions substantially similar to those contained in such
underwriting agreements relating to the indemnification of, and contribution in
connection with the liability of, Buyer and its affiliates and Issuer, shall
provide for the payment by Issuer of all expenses in connection with such
resale, including all registration costs and all fees and expenses of counsel
for Buyer, and shall provide for the delivery of accountants’ “comfort letters”
to Buyer or such affiliate with respect to the financial statements and certain
financial information contained in or incorporated by reference into the
Prospectus.

(iii) If Issuer makes the election described in clause (b)(i)(B) above:

(A) Buyer (or an affiliate of Buyer designated by Buyer) and any potential
institutional purchaser of any such Shares or Share Termination Delivery Units,
as the case may be, from Buyer or such affiliate identified by Buyer shall be
afforded a commercially reasonable opportunity to conduct a due diligence
investigation in compliance with applicable law with respect to Issuer customary
in scope for private placements of equity securities (including, without
limitation, the right to have made available to them for inspection all
financial and other records, pertinent corporate documents and other information
reasonably requested by them), subject to execution by such recipients of
customary confidentiality agreements reasonably acceptable to Issuer;

(B) Buyer (or an affiliate of Buyer designated by Buyer) and Issuer shall enter
into an agreement (a “Private Placement Agreement”) on commercially reasonable
terms in connection with the private placement of such Shares or Share
Termination Delivery Units, as the case may be, by Issuer to Buyer or such
affiliate and the private resale of such shares by Buyer or

 

11

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such affiliate, substantially similar to private placement purchase agreements
customary for private placements of equity securities, in form and substance
commercially reasonably satisfactory to Buyer and Issuer, which Private
Placement Agreement shall include, without limitation, provisions substantially
similar to those contained in such private placement purchase agreements
relating to the indemnification of, and contribution in connection with the
liability of, Buyer and its affiliates and Issuer, shall provide for the payment
by Issuer of all expenses in connection with such resale, including all fees and
expenses of counsel for Buyer, shall contain representations, warranties and
agreements of Issuer reasonably necessary or advisable to establish and maintain
the availability of an exemption from the registration requirements of the
Securities Act for such resales, and shall use best efforts to provide for the
delivery of accountants’ “comfort letters” to Buyer or such affiliate with
respect to the financial statements and certain financial information contained
in or incorporated by reference into the offering memorandum prepared for the
resale of such Shares; and

(C) Issuer agrees that any Shares or Share Termination Delivery Units so
delivered to Dealer, (i) may be transferred by and among Dealer and its
affiliates, and Issuer shall effect such transfer without any further action by
Dealer and (ii) after the minimum “holding period” within the meaning of Rule
144(d) under the Securities Act has elapsed with respect to such Shares or any
securities issued by Issuer comprising such Share Termination Delivery Units,
Issuer shall promptly remove, or cause the transfer agent for such Shares or
securities to remove, any legends referring to any such restrictions or
requirements from such Shares or securities upon delivery by Dealer (or such
affiliate of Dealer) to Issuer or such transfer agent of seller’s and broker’s
representation letters customarily delivered by Dealer in connection with
resales of restricted securities pursuant to Rule 144 under the Securities Act,
without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by Dealer (or such
affiliate of Dealer).

(D) Issuer shall not take, or cause to be taken, any action that would make
unavailable either the exemption pursuant to Section 4(2) of the Securities Act
for the sale by Issuer to Dealer (or any affiliate designated by Dealer) of the
Shares or Share Termination Delivery Units, as the case may be, or the exemption
pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of
the Shares or Share Termination Delivery Units, as the case may be, by Dealer
(or any such affiliate of Dealer).

(c) Make-whole Shares. If (x) Issuer elects to deliver Share Termination
Delivery Units pursuant to paragraph (a) of this Section 8 or (y) Issuer makes
the election described in clause (b)(i)(B) of paragraph (b) of this Section 8,
then in either case Dealer or its affiliate may sell (which sale shall be made
in a commercially reasonable manner) such Shares or Share Termination Delivery
Units, as the case may be, during a period (the “Resale Period”) commencing on
the Exchange Business Day following delivery of such Shares or Share Termination
Delivery Units, as the case may be, and ending on the Exchange Business Day on
which Dealer completes the sale of all such Shares or Share Termination Delivery
Units, as the case may be, or a sufficient number of Shares or Share Termination
Delivery Units, as the case may be, so that the realized net proceeds of such
sales exceed the amount of the Payment Obligation (in the case of clause (x), or
in the case that both clause (x) and clause (y) apply) or the Freely Tradeable
Value (in the case that only clause (y) applies)(such amount of the Payment
Obligation or Freely Tradeable Value, as the case may be, the “Required
Proceeds”). If any of such delivered Shares or Share Termination Delivery Units
remain after such realized net proceeds exceed the Required Proceeds, Dealer
shall return such remaining Shares or Share Termination Delivery Units to
Issuer. If the Required Proceeds exceed the realized net proceeds from such
resale, Issuer shall transfer to Dealer by the open of the regular trading
session on the Exchange on the Exchange Trading Day immediately following the
last day of the Resale Period the amount of such excess (the “Additional
Amount”) in cash or in a number of additional Shares (“Make-whole Shares”) in an
amount that, based on the Relevant Price on the last day of the Resale Period
(as if such day was the “Valuation Date” for purposes of computing such Relevant
Price), has a dollar value equal to the Additional Amount. The Resale Period
shall continue to enable the sale of the Make-whole Shares in the manner
contemplated by this Section 8(c). This provision shall be applied successively
until the Additional Amount is equal to zero, subject to Section 8(e).

 

12

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For purposes of the second sentence set forth opposite “Net Share Settlement”
above, the last sentence of Section 8(a), Section 8(b) and Section 8(c), the
term “Shares” shall be deemed to include any Convertible Preferred Shares
delivered pursuant to Section 8(e).

(d) Beneficial Ownership. Notwithstanding anything to the contrary in the
Agreement or this Confirmation, in no event shall Buyer be entitled to receive,
or shall be deemed to receive, any Shares if, immediately upon giving effect to
such receipt of such Shares, (i) the “beneficial ownership” (within the meaning
of Section 13 of the Exchange Act and the rules promulgated thereunder) of
Shares by Buyer or any affiliate of Buyer subject to aggregation with Buyer
under such Section 13 and rules (collectively, “Buyer Group”) would be equal to
or greater than 8.5% or more of the outstanding Shares or (ii) the “Beneficial
Ownership” (as defined in the Rights Agreement by and between Issuer and
Stocktrans, Inc., as Rights Agent, dated September 10, 1998 (the “Rights
Agreement”)) of Buyer, together with all of its Affiliates and Associates (each
as defined in the Rights Agreement) (collectively, the “Rights Agreement Buyer
Group”), would be equal to or greater than 18% of the outstanding Shares. If any
delivery owed to Buyer hereunder is not made, in whole or in part, as a result
of this provision, Issuer’s obligation to make such delivery shall not be
extinguished and Issuer shall make such delivery as promptly as practicable
after, but in no event later than one Exchange Business Day after, Buyer gives
notice to Issuer that such delivery would not result in (i) Buyer Group directly
or indirectly so beneficially owning in excess of 8.5% of the outstanding Shares
or (ii) the Rights Agreement Buyer Group directly or indirectly so Beneficially
Owning in excess of 18% of the outstanding Shares.

(e) Limitations on Settlement by Issuer. Notwithstanding anything herein or in
the Agreement to the contrary, in no event shall Issuer be required to deliver
Shares in connection with the Transaction in excess of 4,800,000 Shares (as such
number may be adjusted from time to time in accordance with the provisions
hereof) (the “Capped Number”). Issuer represents and warrants to Dealer (which
representation and warranty shall be deemed to be repeated on each day that the
Transaction is outstanding) that the Capped Number is equal to or less than the
number of authorized but unissued Shares of the Issuer that are not reserved for
future issuance in connection with transactions in the Shares (other than the
Transaction) on the date of the determination of the Capped Number (such Shares,
the “Available Shares”), and Issuer further agrees that it shall keep available
and not reserved for future issuance for purposes other than settlement of the
Transaction at least 16,584 authorized but unissued shares of preferred stock.
Following the Trade Date, Issuer agrees to use best efforts to obtain approval
from its shareholders (including without limitation, to seek such approval at
its next annual meeting of Shareholders and, if needed, the annual meeting for
each following calendar year) to increase the number of authorized but unissued
Shares such that the number of Available Shares shall be equal to at least two
times the aggregate Number of Shares for all Components. Upon Issuer obtaining
such approval for such an increase, the Capped Number shall automatically
increase to two times the aggregate Number of Shares for all Components. If
Issuer does not succeed in obtaining such approval for such an increase at or
prior to its fourth annual meeting of shareholders following the Trade Date,
then an Additional Termination Event shall occur and be continuing with respect
to which the Transaction (or a portion of the Transaction, at the discretion of
the Calculation Agent) shall be the sole Affected Transaction and Issuer shall
be the sole Affected Party until Issuer succeeds in getting such approval. In
the event Issuer shall not have delivered the full number of Shares otherwise
deliverable as a result of this Section 8(e) (the resulting deficit, the
“Deficit Shares”) and the Capped Number has not been increased pursuant to the
foregoing provisions, Issuer shall, in lieu of delivering the Deficit Shares
otherwise deliverable, on the date the delivery of Deficit Shares would have
been due, deliver a number of Convertible Preferred Shares (as defined below)
equal to the number of Deficit Shares divided by 909 (rounded up to the nearest
whole number, or rounded down with value of the fractional Share payable in
cash, at Issuer’s election). “Convertible Preferred Shares” means a newly
created series of preferred shares of Issuer the terms of which shall be
reasonably acceptable to Dealer including that (1) each shall be convertible,
subject to the Share Issuance Conditions (as defined below) into 1,000 Shares,
(2) such conversion right shall be limited to allow conversion into Shares only
to the extent that (A) Shares are repurchased, acquired or otherwise received by
Issuer or any of its subsidiaries after such delivery date (whether or not in
exchange for cash, fair value or any other consideration), (B) authorized and
unissued Shares reserved for issuance in respect of other transactions prior to
such delivery date which prior to the relevant date become no longer so reserved
and (C) Issuer additionally authorizes any unissued Shares that are not reserved
for other transactions (such conditions as set forth in clauses (A), (B) and
(C) above, collectively, the “Share Issuance Conditions”) and (3) shall

 

13

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require Issuer to immediately notify the holder thereof of the occurrence of any
of the Share Issuance Conditions (including the number of Shares subject to
clause (A), (B) or (C) and the corresponding number of Shares to be delivered)
and promptly deliver such Shares upon conversion thereafter. Issuer shall not in
any event be required to deliver in excess of 16,584 Convertible Preferred
Shares hereunder. If there are any Deficit Shares after the Capped Number has
been increased to two times the aggregate Number of Shares for all Components,
Issuer shall be continually obligated to deliver, from time to time until the
full number of Deficit Shares have been delivered pursuant to this paragraph,
Shares when, and to the extent, that the Share Issuance Conditions allow such
deliveries. Issuer shall immediately notify Dealer of the occurrence of any of
the Share Issuance Conditions (including the number of Shares subject thereto
and the corresponding number of Shares to be delivered or into which Convertible
Preferred Shares have become convertible) and promptly deliver such Shares
thereafter (or, if Convertible Preferred Shares have been delivered, upon
conversion thereof). The Convertible Preferred Shares shall provide for payment
of dividends equal to the aggregate dividends paid on the full number of Shares
into which the Convertible Preferred Shares would be convertible if Issuer had
unlimited authorized and unissued Shares. Except as required by law and as to
matters that would adversely affect the rights of the Convertible Preferred
Shares relative to the Shares, the holders of Convertible Preferred Shares shall
have no voting rights. For the avoidance of doubt, the parties acknowledge that
the Issuer will not be required to pay cash to settle the Transaction by reason
of the fact that it owes Deficit Shares, and any Convertible Preferred Shares
will not be redeemable for, or convertible into, or settled with, cash (except
in the case of a merger or similar event to the extent that holders of Shares
receive cash as consideration or proceeds in such event).

(f) Equity Rights. Buyer acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior
to the claims of common stockholders in the event of Issuer’s bankruptcy. For
the avoidance of doubt, the parties agree that the preceding sentence shall not
apply at any time other than during Issuer’s bankruptcy to any claim arising as
a result of a breach by Issuer of any of its obligations under this Confirmation
or the Agreement. For the avoidance of doubt, the parties acknowledge that this
Confirmation is not secured by any collateral that would otherwise secure the
obligations of Issuer herein under or pursuant to any other agreement.

(g) Agreement in Respect of Termination Amounts. In determining any amounts
payable in respect of the termination or cancellation of the Transaction
pursuant to Section 6 of the Agreement or Article 12 of the Equity Definitions,
the Calculation Agent shall make such determination without regard to
(i) changes to costs of funding, stock loan rates or expected dividends, or
(ii) losses or costs incurred in connection with terminating, liquidating or
re-establishing any hedge related to the Transaction (or any gain resulting from
any of them).

(h) Transfer and Assignment. Buyer may transfer or assign its rights and
obligations hereunder and under the Agreement, in whole or in part, at any time
without the consent of Issuer to any bank or broker-dealer or any affiliate
thereof that in either case regularly enters into over-the-counter equity
derivative transactions.

(i) Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Issuer and each of its employees, representatives,
or other agents may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of the Transaction and all materials
of any kind (including opinions or other tax analyses) that are provided to
Issuer relating to such tax treatment and tax structure.

(j) Designation by Dealer. Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Dealer to purchase, sell,
receive or deliver any Shares or other securities to or from Issuer, Dealer may
designate any of its affiliates to purchase, sell, receive or deliver such
Shares or other securities and otherwise to perform Dealer’s obligations in
respect of the Transaction and any such designee may assume such obligations.
Dealer shall be discharged of its obligations to Issuer to the extent of any
such performance.

(k) Additional Termination Events. The occurrence of any of the following shall
constitute an Additional Termination Event with respect to which the Transaction
shall be the sole Affected Transaction and Issuer shall be the sole Affected
Party; provided that with respect to any Additional Termination Event, Dealer
may choose to treat part of the Transaction as the sole Affected Transaction,

 

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and, upon the termination of the Affected Transaction, a Transaction with terms
identical to those set forth herein except with a Number of Warrants equal to
the unaffected number of Warrants shall be treated for all purposes as the
Transaction, which shall remain in full force and effect:

(i) within the period commencing on the Trade Date and ending on the second
anniversary of the Premium Payment Date, Buyer reasonably determines that it is
advisable to terminate a portion of the Transaction so that Buyer’s related
hedging activities will comply with applicable securities laws, rules or
regulations;

(ii) any Person (as defined below) acquires beneficial ownership (determined in
accordance with Rule 13d-3 under the Exchange Act), directly or indirectly,
through a purchase, merger or other acquisition transaction or series of
transactions, of Shares entitling the Person to exercise 50% or more of the
total voting power of all shares of Issuer’s capital stock entitled to vote
generally in elections of directors, other than an acquisition by Issuer, any of
Issuer’s subsidiaries or any of Issuer’s employee benefit plans;

(iii) Issuer (x) merges or consolidates with or into any other Person, other
than a subsidiary of Issuer, another Person merges with or into Issuer, or
Issuer conveys, sells, transfers or leases all or substantially all of its
assets to another Person or (y) engages in any recapitalization,
reclassification or other transaction in which all or substantially all Shares
are exchanged for or converted into cash, securities or other property, in each
case, other than any merger or consolidation:

 

  (A) that does not result in a reclassification, conversion, exchange or
cancellation of the outstanding Shares;

 

  (B) pursuant to which the consideration received by holders of Shares
immediately prior to the transaction entitles such holders to exercise, directly
or indirectly, 50% or more of the voting power of all shares of capital stock
entitled to vote generally in the election of directors of either (x) the
continuing or surviving corporation or (y) a corporation that directly or
indirectly owns 100% of the capital stock of such continuing or surviving
corporation, in either case, immediately after such transaction;

 

  (C) which is effected solely to change Issuer’s jurisdiction of incorporation
and results in a reclassification, conversion or exchange of the outstanding
Shares solely into shares of common stock of the surviving entity; or

(iv) at any time Issuer’s Continuing Directors (as defined below) do not
constitute a majority of Issuer’s board of directors (or, if applicable, a
successor Person to Issuer).

Notwithstanding the foregoing, a transaction set forth in clause (ii), (iii) or
(iv) above will not constitute an Additional Termination Event if at least 90%
of the consideration paid for the Shares (excluding cash payments for fractional
shares and cash payments made pursuant to dissenters’ appraisal rights and cash
dividends) in such merger or consolidation or such other transaction otherwise
constituting an Additional Termination Event under clause (iii) above consists
of shares of capital stock or American Depositary Receipts in respect of shares
of capital stock traded on any of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (or
any of their respective successors) (or will be so traded or quoted immediately
following the completion of the merger or consolidation or such other
transaction) (“Listed Shares”).

“Person” includes any syndicate or group that would be deemed to be a “person”
under Section 13(d)(3) of the Exchange Act.

“Continuing Directors” means (i) individuals who on the date hereof constituted
Issuer’s board of directors and (ii) any new directors whose election to
Issuer’s board of directors or whose nomination for election by Issuer’s
stockholders was approved by at least a majority of Issuer’s directors then
still in office

 

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(or a duly constituted committee thereof), either who were directors on the date
hereof or whose election or nomination for election was previously so approved.

(l) Effectiveness. If, prior to the Effective Date, Buyer reasonably determines
that it is advisable to cancel the Transaction because of concerns that Buyer’s
related hedging activities could be viewed as not complying with applicable
securities laws, rules or regulations, the Transaction shall be cancelled and
shall not become effective, and neither party shall have any obligation to the
other party in respect of the Transaction.

(m) Extension of Settlement. Dealer may divide any Component into additional
Components and designate the Expiration Date and the Number of Warrants for each
such Component if Dealer determines, in its reasonable discretion, that such
further division is necessary or advisable to preserve Dealer’s hedging activity
hereunder in light of existing liquidity conditions or to enable Dealer to
effect purchases of Shares in connection with its hedging activity hereunder in
a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer,
be in compliance with applicable legal and regulatory requirements.

(n) Waiver of Trial by Jury. EACH OF ISSUER AND DEALER HEREBY IRREVOCABLY WAIVES
(ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF
ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS AFFILIATES OR ISSUER
OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

(o) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE).

(p) No Set-off. The provisions of Section 2(c) of the Agreement shall not apply
to the Transaction. Each party waives any and all rights it may have to set-off
delivery or payment obligations it owes to the other party under the Transaction
against any delivery or payment obligations owed to it by the other party,
whether arising under the Agreement, under any other agreement between parties
hereto, by operation of law or otherwise.

(q) Amendment. If the Underwriters party to the Underwriting Agreement exercise
their right to purchase additional convertible notes as set forth therein, then,
at the discretion of Issuer, Issuer may elect that Dealer and Issuer will either
enter into a new confirmation evidencing additional warrants to be issued by
Issuer to Dealer or amend this Confirmation to evidence such additional warrants
(in each case on pricing terms acceptable to Dealer and Issuer) (such additional
confirmation or amendment to this Confirmation to provide for the payment by
Dealer to Issuer of the additional premium related thereto in an amount to be
agreed between the parties).

(r) Counterparts. This Confirmation may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

(s) Lock Up. Prior to the first anniversary of the Trade Date, if the
Underwriters party to the Underwriting Agreement exercise their right to
purchase additional convertible notes set forth therein and Issuer does not
elect to issue the maximum number of Additional Warrants as provided in
paragraph (o) above, Issuer shall not issue or enter into any warrant, a call
option, a variable forward or other derivative linked to the Shares
(collectively, “Warrants”), whether cash settled and/or physically settled
and/or net share settled, without a prior written consent of Dealer which shall
not be unreasonably withheld, unless such Warrants are issued (i) pursuant to
any present or future employee, director or consultant benefit plan or program
of Issuer or any hedging arrangements in respect thereof, (ii) to all Issuer’s
stockholders as a free distribution or a distribution for less than the fair
market value of such Warrants (as determined by the Calculation Agent), (iii) as
part of mandatorily convertible units in a bona fide capital raising transaction

 

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unrelated to the convertible notes sold pursuant to the Purchase Agreement, or
(iv) as part of a bona fide Share repurchase transaction unrelated to the
convertible notes sold pursuant to the Purchase Agreement. “Additional Warrants”
shall equal to the product of (i) the Warrant Entitlement, (ii) the initial
conversion rate of the convertible notes and (iii) the aggregate principal
amount of the additional convertible notes purchased by the Underwriters divided
by USD1,000.

(t) Role of Agent. Credit Suisse, New York branch, in its capacity as Agent will
be responsible for (A) effecting this Transaction, (B) issuing all required
confirmations and statements to Dealer and Issuer, (C) maintaining books and
records relating to this Transaction in accordance with its standard practices
and procedures and in accordance with applicable law and (D) unless otherwise
requested by Issuer, receiving, delivering, and safeguarding Issuer’s funds and
any securities in connection with this Transaction, in accordance with its
standard practices and procedures and in accordance with applicable law.

 

  (i) Agent is acting in connection with this Transaction solely in its capacity
as Agent for Dealer and Issuer pursuant to instructions from Dealer and Issuer.
Agent shall have no responsibility or personal liability to Dealer or Issuer
arising from any failure by Dealer or Issuer to pay or perform any obligations
hereunder, or to monitor or enforce compliance by Dealer or Issuer with any
obligation hereunder, including, without limitation, any obligations to maintain
collateral. Each of Dealer and Issuer agrees to proceed solely against the other
to collect or recover any securities or monies owing to it in connection with or
as a result of this Transaction. Agent shall otherwise have no liability in
respect of this Transaction, except for its gross negligence or willful
misconduct in performing its duties as Agent.

 

  (ii) Any and all notices, demands, or communications of any kind relating to
this Transaction between Dealer and Issuer shall be transmitted exclusively
through Agent at the following address:

Credit Suisse, New York branch

Eleven Madison Avenue

New York, NY 10010-3629

For payments and deliveries:

Facsimile No.: (212) 325 8175

Telephone No.: (212) 325 8678 / (212) 325 3213

For all other communications:

Facsimile No.: (212) 325 8173

Telephone No.: (212) 325 8676 / (212) 538 5306 / (212) 538 1193 / (212) 538 6886

 

  (iii) The date and time of the Transaction evidenced hereby will be furnished
by the Agent to Dealer and Issuer upon written request.

 

  (iv) The Agent will furnish to Issuer upon written request a statement as to
the source and amount of any remuneration received or to be received by the
Agent in connection with the Transaction evidenced hereby.

 

  (v) Dealer and Issuer each represents and agrees (A) that this Transaction is
not unsuitable for it in the light of such party’s financial situation,
investment objectives and needs and (B) that it is entering into this
Transaction in reliance upon such tax, accounting, regulatory, legal and
financial advice as it deems necessary and not upon any view expressed by the
other or the Agent.

 

  (vi) Dealer is regulated by The Securities and Futures Authority and has
entered into this Transaction as principal. The time at which this Transaction
was executed will be notified to Issuer (through the Agent) on request.

 

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Issuer hereby agrees (a) to check this Confirmation carefully and immediately
upon receipt so that errors or discrepancies can be promptly identified and
rectified and (b) to confirm that the foregoing (in the exact form provided by
Dealer) correctly sets forth the terms of the agreement between Dealer and
Issuer with respect to the Transaction, by manually signing this Confirmation or
this page hereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy to
Credit Suisse, New York branch, Eleven Madison Avenue, New York, NY 10010-3629,
Facsimile No. (212) 325-8173.

 

Yours faithfully, CREDIT SUISSE INTERNATIONAL By:  

/s/ Sayedur Khan

  Name:   Sayedur Khan   Title:   By:  

/s/ Laura Muir

  Name:   Laura Muir   Title:   CREDIT SUISSE, NEW YORK BRANCH,
    AS AGENT FOR CREDIT SUISSE
    INTERNATIONAL By:  

/s/ Yolanda Perez-Wilson

  Name:   Yolanda Perez-Wilson   Title:   Assistant Vice President By:  

/s/ Melissa Garcia

  Name:   Melissa Garcia   Title:   Assistant Vice President

 

Agreed and Accepted By: VIROPHARMA INCORPORATED By:  

/s/ Michel de Rosen

  Name:   Michel de Rosen   Title:   President and CEO

 

18

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Annex A

For each Component of the Transaction, the Number of Warrants and Expiration
Date is set forth below.

 

Component Number

 

Number of Warrants

 

Expiration Date

1

  149,062   June 13, 2017

2

  149,062   June 14, 2017

3

  149,062   June 15, 2017

4

  149,062   June 16, 2017

5

  149,062   June 19, 2017

6

  149,062   June 20, 2017

7

  149,062   June 21, 2017

8

  149,062   June 22, 2017

9

  149,062   June 23, 2017

10

  149,062   June 26, 2017

11

  149,062   June 27, 2017

12

  149,062   June 28, 2017

13

  149,062   June 29, 2017

14

  149,062   June 30, 2017

15

  149,062   July 3, 2017

16

  149,062   July 5, 2017

17

  149,062   July 6, 2017

18

  149,062   July 7, 2017

19

  149,062   July 10, 2017

20

  149,062   July 11, 2017

21

  149,062   July 12, 2017

22

  149,062   July 13, 2017

23

  149,062   July 14, 2017

24

  149,062   July 17, 2017

25

  149,062   July 18, 2017

26

  149,062   July 19, 2017

27

  149,062   July 20, 2017

28

  149,062   July 21, 2017

29

  149,062   July 24, 2017

30

  149,062   July 25, 2017

31

  149,062   July 26, 2017

32

  149,062   July 27, 2017

33

  149,062   July 28, 2017

34

  149,062   July 31, 2017

35

  149,062   August 1, 2017

36

  149,062   August 2, 2017

37

  149,062   August 3, 2017

38

  149,062   August 4, 2017

39

  149,062   August 7, 2017

40

  149,062   August 8, 2017

41

  149,062   August 9, 2017

42

  149,062   August 10, 2017

43

  149,062   August 11, 2017

44

  149,062   August 14, 2017

45

  149,062   August 15, 2017

46

  149,062   August 16, 2017

47

  149,062   August 17, 2017

48

  149,062   August 18, 2017

49

  149,062   August 21, 2017

50

  149,062   August 22, 2017

51

  149,062   August 23, 2017

 

19

--------------------------------------------------------------------------------

52

  149,062   August 24, 2017

53

  149,062   August 25, 2017

54

  149,062   August 28, 2017

55

  149,062   August 29, 2017

56

  149,062   August 30, 2017

57

  149,062   August 31, 2017

58

  149,062   September 1, 2017

59

  149,062   September 5, 2017

60

  149,058   September 6, 2017

 

20