Exhibit 10.4

 

To:   

ViroPharma Incorporated

730 Stockton Drive

Exton, PA 19341

A/C    4375-691755 From:    Wells Fargo Bank, National Association Subject:   
Agreement with respect to Issuer Warrant Transaction Reference No.
OTC032307202-204C Date:    March 19, 2009

This letter agreement (this “Agreement”) relates to the Transaction (the
“Transaction”) entered into between Wells Fargo Bank, National Association
(“Dealer”) and ViroPharma Incorporated (“Counterparty”), pursuant to a letter
agreement dated March 20, 2007 entitled Issuer Warrant Transaction (Transaction
Reference Number: OTC032307202-204C) (the “Confirmation”). Capitalized terms
used herein but not otherwise defined shall have the meanings assigned to them
in the Confirmation.

The purpose of this Agreement is to set forth certain understandings with
respect to the Additional Termination Event set forth in Section 8(j)(i) of the
Confirmation.

1. Agreement. The parties agree that, in the event that the Hedging Party
determines that an Additional Termination Event of the type set forth in
Section 8(j)(i) of the Confirmation has occurred, the Hedging Party shall so
notify the parties hereto (a “Termination Notice”, which notice shall include
the number of affected Warrants), and the provisions of this Section 1 shall
apply in lieu of Sections 6(a), 6(b), 6(c) and 6(d) of the Agreement (as defined
in the Confirmation). The Calculation Agent shall determine Loss using the Daily
Average Price (as defined below) on the Valuation Date (as defined below)
corresponding to the date of the Termination Notice (the “Notice Date”) as the
current Share price input, and Counterparty shall pay the amount of such Loss on
the corresponding Payment Date (as defined below). Promptly following the
determination of such Loss, the Calculation Agent shall deliver to the parties a
notice substantially in the form of Schedule A hereto.

 

Valuation Date:    For each Notice Date, the immediately following Exchange
Business Day. Daily Average Price:    For any Exchange Business Day, as
determined by the Calculation Agent based on the New York Volume Weighted
Average Price per Share for the regular trading session (including any
extensions thereof) of the Exchange on such Exchange Business Day (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 Exchange Business Day, 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
Exchange Business Day, as determined by the Calculation Agent using a volume
weighted method). Exchange:    The NASDAQ Global Select Market

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

Consequences of Disrupted Days:    Notwithstanding anything to the contrary in
this Agreement or the Equity Definitions, if any Valuation Date is a Disrupted
Day, the Calculation Agent may, if appropriate in light of market conditions,
regulatory considerations or otherwise, take any or all of the following
actions: (i) postpone the Valuation Date in accordance with Section 6.6 of the
Equity Definitions or (ii) determine that such Valuation Date is a Disrupted Day
only in part, in which case the Calculation Agent shall (A) determine the Daily
Average Price based on transactions in the Shares on such Valuation Date
effected before the relevant Market Disruption Event occurred and/or after the
relevant Market Disruption Event ended, as applicable, and (B) designate the
immediately following Exchange Business Day as the Valuation Date (with the
provisions of this paragraph applying successively to each such Exchange
Business Day so designated) and determine the Loss using an appropriately
weighted average of the Daily Average Prices on the original Valuation Date and
such designated Valuation Date or Dates. Section 6.6(a) of the Equity
Definitions is hereby amended by replacing the word “shall” in the fifth line
thereof with the word “may,” and by deleting clause (ii) thereof. Any Scheduled
Trading Day on which the Exchange is scheduled to close prior to its normal
close of trading shall be deemed a Disrupted Day in full. 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. Payment Date:    The date one
Settlement Cycle following each Valuation Date.

3. Representations and Warranties.

 

  (a) Each party represents to the other party that:

(i) It is duly organized and validly existing under the laws of the jurisdiction
of its organization or incorporation and, if relevant under such laws, in good
standing.

(ii) It has the power to execute this Agreement and any other documentation
relating to this Agreement to which it is a party, to deliver this Agreement and
any other documentation relating to this Agreement that it is required by this
Agreement to deliver and to perform its obligations under this Agreement and has
taken all necessary action to authorize such execution, delivery and
performance.

(iii) Such execution, delivery and performance do not violate or conflict with
any law applicable to it, any provision of its constitutional documents, any
order or judgment of any court or other agency of government applicable to it or
any of its assets or any contractual restriction binding on or affecting it or
any of its assets.

(iv) All governmental and other consents that are required to have been obtained
by it with respect to this Agreement have been obtained and are in full force
and effect and all conditions of any such consents have been complied with.

(v) Its obligations under this Agreement constitute its legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors’ rights generally and

 

2

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

subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)).

(vi) It is an “eligible contract participant” as defined in Section 1a(12) of
the U.S. Commodity Exchange Act, as amended.

 

  (b) Counterparty represents and warrants to and for the benefit of, and agrees
with, Dealer and Goldman Sachs International (“GS”) as follows:

(i) On the date hereof, (A) none of Counterparty and its officers and directors
is aware of any material nonpublic information regarding Counterparty or the
Shares and (B) all reports and other documents filed by Counterparty with the
Securities and Exchange Commission pursuant to the 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,
Counterparty acknowledges that neither Dealer nor GS is making any
representations or warranties with respect to the treatment of this Agreement
under FASB Statements 128, 133, 149 or 150, EITF Issue No. 00-19 (or any
successor issue statements) or under FASB’s Liabilities & Equity Project.

(iii) Prior to the date hereof, Counterparty shall deliver to Dealer and GS a
resolution of Counterparty’s board of directors authorizing this Agreement and
such other certificate or certificates as either Dealer or GS shall reasonably
request.

(iv) Counterparty is not entering into this Agreement 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) Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended.

(vi) On the date hereof and on each Payment Date (A) the assets of Counterparty
at their fair valuation exceed the liabilities of Counterparty, including
contingent liabilities, (B) the capital of Counterparty is adequate to conduct
the business of Counterparty and (C) Counterparty 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) Counterparty understands no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not
be guaranteed by any affiliate of Dealer or any governmental agency.

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

 

  (c) Counterparty acknowledges that:

(i) In connection with this Agreement, GS and its affiliates may buy or sell
Shares or other securities or buy or sell options or futures contracts or enter
into swaps or other derivative securities in order to adjust or unwind its hedge
position with respect to the Transaction.

 

3

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

(ii) GS and Dealer and their respective affiliates may also be active in the
market for the Shares other than in connection with activities in relation to
this Agreement or the Transaction.

(iii) GS and Dealer shall make their own determination as to whether, when or in
what manner any hedging or market activities in Counterparty’s securities shall
be conducted and shall do so in a manner that they deem appropriate to hedge
their respective price and market risk with respect to the Daily Average Price.

(iv) Any market activities of GS and Dealer and their respective affiliates with
respect to the Shares may affect the market price and volatility of the Shares,
as well as the Daily Average Price, in a manner that may be adverse to
Counterparty.

(v) This Agreement relates to the Transaction; GS and Dealer may purchase shares
for their own accounts at an average price that may be greater than, or less
than, the Daily Average Price.

4. Termination of this Agreement. This Agreement shall terminate upon the
earlier of (i) the Business Day following the election by either Dealer or
Counterparty to terminate this Agreement by providing written notice to the
other party and (ii) March 26, 2009, except that (a) the obligation to pay the
Loss related to any Notice Date occurring on or prior to the date of termination
of this Agreement shall survive the termination of this Agreement until such
payment is made and (b) the representations and warranties set forth above in
Section 2 of this Agreement shall survive the termination of this Agreement
without limitation.

5. No Netting and Set-off. Each party waives any and all rights it may have to
set-off delivery or payment obligations it owes to the other party under this
Agreement against any delivery or payment obligations owed to it by the other
party, whether arising under the this Agreement, under any other agreement
between parties hereto, by operation of law or otherwise.

6. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if all of the
signatures thereto and hereto were upon the same instrument.

7. Third Party Beneficiary. GS shall be the third party beneficiary of
Counterparty’s representations, warranties, agreements, indemnities and other
obligations hereunder and will have a right to directly enforce those
obligations against Counterparty.

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

10. Arbitration

 

  a. All parties to this Agreement are giving up the right to sue each other in
court, including the right to a trial by jury, except as provided by the rules
of the arbitration forum in which a claim is filed.

 

  b. Arbitration awards are generally final and binding; a party’s ability to
have a court reverse or modify an arbitration award is very limited.

 

  c. The ability of the parties to obtain documents, witness statements and
other discovery is generally more limited in arbitration than in court
proceedings.

 

  d. The arbitrators do not have to explain the reason(s) for their award.

 

  e. The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry, unless Counterparty is
a member of the organization sponsoring the arbitration facility, in which case
all arbitrators may be affiliated with the securities industry.

 

  f. The rules of some arbitration forums may impose time limits for bringing a
claim in arbitration. In some cases, a claim that is ineligible for arbitration
may be brought in court.

 

  g. The rules of the arbitration forum in which the claim is filed, and any
amendments thereto, shall be incorporated into this Agreement

 

4

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

  h. Counterparty agrees that any and all controversies that may arise between
Counterparty and Dealer, including, but not limited to, those arising out of or
relating to this Agreement or the Transaction hereunder, shall be determined by
arbitration conducted before The New York Stock Exchange, Inc. (“NYSE”) or NASD
Dispute Resolution (“NASD-DR”), or, if the NYSE and NASD-DR decline to hear the
matter, before the American Arbitration Association, in accordance with their
arbitration rules then in force. The award of the arbitrator shall be final, and
judgment upon the award rendered may be entered in any court, state or federal,
having jurisdiction.

 

  i. No person shall bring a putative or certified class action to arbitration,
nor seek to enforce any pre-dispute arbitration agreement against any person who
has initiated in court a putative class action or who is a member of a putative
class who has not opted out of the class with respect to any claims encompassed
by the putative class action until: (i) the class certification is denied;
(ii) the class is decertified; or (iii) Counterparty is excluded from the class
by the court.

 

  j. Such forbearance to enforce an agreement to arbitrate shall not constitute
a waiver of any rights under this Agreement except to the extent stated herein.

 

5

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

Counterparty hereby agrees (a) to check this Agreement carefully and immediately
upon receipt so that errors or discrepancies can be promptly identified and
rectified and (b) 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 this Agreement, by manually signing this Agreement
or this page hereof as evidence of agreement to such terms and providing the
other information required herein and immediately returning an executed copy to
Wells Fargo Bank, National Association, Facsimile No. (415) 646-9208, with a
copy to Goldman Sachs International, Equity Derivatives Documentation
Department, Facsimile No. (212) 428-1980/83.

Yours faithfully,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION By:  

/s/ Simon Bevan

Name:   Simon Bevan Title:   Authorized Signatory

 

Agreed and Accepted By: VIROPHARMA INCORPORATED By:  

/s/ Vincent J. Milano

Name:   Vincent J. Milano Title:   President and CEO

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

SCHEDULE A

CALCULATION AGENT’S NOTICE

 

To:   

ViroPharma Incorporated

730 Stockton Drive

Exton, PA 19341

A/C:    4375-691755 From:    Goldman Sachs International, as Calculation Agent
Re:    Agreement with respect to the Issuer Warrant Transaction Ref. No.
OTC032307202-204C Date:    [    ]

 

 

Reference is hereby made to the Agreement (the “Agreement With Respect to Issuer
Warrants”) dated as of March 19, 2009 between Wells Fargo and ViroPharma
Incorporated (the “Issuer”) relating to the Issuer Warrant Transaction (Ref. No.
OTC032307202-204C).

Any capitalized terms used herein but not defined shall have the meanings set
forth in the Agreement With Respect to Issuer Warrants.

On the Notice Date specified below, the Hedging Party notified Counterparty of
the occurrence of an Additional Termination Event of the type described in
Section 8(j)(i) of the Confirmation. The Calculation Agent hereby notifies the
parties of the following terms under, and as defined in, the Agreement With
Respect to Issuer Warrants, relating to such Notice Date:

 

Notice Date: Number of Affected Warrants: Valuation Date: Daily Average Price
for Valuation Date: Loss:

 

Yours sincerely, GOLDMAN SACHS INTERNATIONAL By:  

 

Authorized Signatory