Exhibit 10.3

 

Pursuant to 17 CFR 240.24b-2, confidential information (indicated by [***]) has
been omitted from Annex A and has been filed separately with the Securities and
Exchange Commission pursuant to a Confidential Treatment Application filed with
the Commission.

 

Execution Version

 

 

Deutsche Bank [g256551ke01i001.gif]

 

 

 

Deutsche Bank AG, London Branch

 

Winchester house

 

1 Great Winchester St,

 

London EC2N 2DB

 

Telephone: 44 20 7545 8000

 

 

 

c/o Deutsche Bank Securities Inc.

 

60 Wall Street

 

New York, NY 10005

 

Telephone: (212) 250-2500

 

DATE:

 

October 11, 2011

 

 

 

TO:

 

United Therapeutics Corporation

ATTENTION:

 

John Ferrari, Chief Financial Officer and Treasurer

TELEPHONE:

 

(301) 608-9292

FACSIMILE:

 

(301) 608-3049

 

 

 

FROM:

 

Deutsche Bank AG, London Branch

TELEPHONE:

 

44 20 7545 8193

FACSIMILE:

 

44 11 3336 2009

 

 

 

SUBJECT:

 

Equity Derivatives Confirmation

 

 

 

REFERENCE NUMBER(S):

 

457098

 

The purpose of this facsimile agreement (this “Confirmation”) is to confirm the
terms and conditions of the transaction entered into between Deutsche Bank AG,
London Branch (“Deutsche”) and United Therapeutics Corporation (“Counterparty”)
on the Trade Date specified below (the “Transaction”).  This Confirmation
constitutes a “Confirmation” as referred to in the ISDA Master Agreement
specified below.  This Confirmation constitutes the entire agreement and
understanding of the parties with respect to the subject matter and terms of the
Transaction and supersedes all prior or contemporaneous written and oral
communications with respect thereto.

 

DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER OR DEALER UNDER THE U.S.
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  DEUTSCHE BANK SECURITIES INC.
(“AGENT”) HAS ACTED SOLELY AS AGENT IN CONNECTION WITH THE TRANSACTION AND HAS
NO OBLIGATION, BY WAY OF ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH
RESPECT TO THE PERFORMANCE OF EITHER PARTY UNDER THE TRANSACTION.  AS SUCH, ALL
DELIVERY OF FUNDS, ASSETS, NOTICES, DEMANDS AND COMMUNICATIONS OF ANY KIND
RELATING TO THE TRANSACTION BETWEEN DEUTSCHE AND COUNTERPARTY SHALL BE
TRANSMITTED EXCLUSIVELY THROUGH AGENT.  DEUTSCHE BANK AG, LONDON BRANCH IS NOT A
MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).

 

Chairman of the Supervisory Board: Clemens Börsig Management Board: Josef
Ackermann (Chairman), Hugo Bänziger, Jürgen Fitschen, Anshuman Jain, Stefan
Krause, Hermann-Josef Lamberti, Rainer Neske

 

Deutsche Bank AG is authorised under German Banking Law (competent authority:
BaFin – Federal Financial Supervising Authority) and regulated by the Financial
Services Authority for the conduct of UK business; a member of the London Stock
Exchange. Deutsche Bank AG is a joint stock corporation with limited liability
incorporated in the Federal Republic of Germany HRB No. 30 000 District Court of
Frankfurt am Main; Branch Registration in England and Wales BR000005; Registered
address: Winchester House, 1 Great Winchester Street, London EC2N 2DB. Deutsche
Bank Group online: http://www.deutsche-bank.com

 

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The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation.  In the event of any
inconsistency between the Equity Definitions and the terms of this Confirmation,
the terms of this Confirmation shall govern.  For the purposes of the Equity
Definitions, each reference herein to a Note Hedging Unit shall be deemed to be
a reference to a Call or an Option, as context requires.

 

This Confirmation evidences a complete and binding agreement between Deutsche
and Counterparty as to the terms of the Transaction to which this Confirmation
relates.  This Confirmation shall supplement, form a part of, and be subject to
an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement
(the “ISDA Form”) as if Deutsche and Counterparty had executed an agreement in
such form (without any Schedule but with the elections set forth in this
Confirmation).  For the avoidance of doubt, the Transaction shall be the only
transaction under the Agreement.

 

2.              The Transaction shall be considered a Share Option Transaction
for purposes of the Equity Definitions, and shall have the following terms:

 

General:

 

 

 

Trade Date:

October 11, 2011.

 

 

Effective Date:

The closing date for the initial issuance of the Convertible Notes.

 

 

Transaction Style:

As described below under “Procedure for Exercise”.

 

 

Transaction Type:

Note Hedging Units.

 

 

Seller:

Deutsche.

 

 

Buyer:

Counterparty.

 

 

Shares:

The common stock, par value USD 0.01 per share, of Counterparty.

 

 

Convertible Notes:

1.0% Senior Convertible Notes of Counterparty due September 15, 2016, offered
pursuant to the Offering Memorandum dated October 11, 2011 and issued pursuant
to the indenture to be dated on or about October 17, 2011, by and between
Counterparty and The Bank of New York Mellon Trust Company, N.A., as trustee (as
may be amended, modified or supplemented from time to time, but only if such
amendment, modification or supplement is consented to by Deutsche in writing,
the “Indenture”).  Counterparty shall provide Deutsche with a copy of the
executed Indenture on the Effective Date.  In the event of any inconsistency
between the terms defined in the Indenture or defined in the Offering Memorandum
and this Confirmation, this Confirmation shall govern.  For the avoidance of
doubt, references herein to provisions of the Indenture are based on the
description of the Convertible Notes set forth in the Offering Memorandum.  If
any relevant provisions of the Indenture differ in any material respect from
those described in the Offering Memorandum or if any relevant sections of the
Indenture are thereafter changed or added following execution of this
Confirmation, the parties will amend this Confirmation in good faith to preserve
the economic intent of the parties.

 

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Number of Note Hedging Units:

250,000

 

 

Note Hedging Unit Entitlement:

USD1,000 divided by the Strike Price.  Notwithstanding anything to the contrary
herein or in the Agreement (including without limitation the provisions of
Calculation Agent Adjustment), in no event shall the Note Hedging Unit
Entitlement at any time be greater than the “Conversion Rate” (as such term is
defined in the Indenture, as described in the Offering Memorandum under
“Description of Notes — Conversion of Notes — General) at such time.

 

 

Strike Price:

USD 47.69

 

 

Premium:

As set forth in Annex A to this Confirmation.

 

 

Premium Payment Date:

The Effective Date.

 

 

Exchange:

The NASDAQ Global Select Market.

 

 

Related Exchanges:

All Exchanges.

 

 

Calculation Agent:

Deutsche.  The Calculation Agent shall, upon reasonable written request by
Counterparty, provide promptly a written explanation (in a commonly used file
format for the storage and manipulation of financial data) displaying in
reasonable detail the basis of any calculation or adjustment made by it
including, where applicable, a description of the methodology and data applied,
it being understood that the Calculation Agent shall not be obligated to
disclose any proprietary models used by it for such calculation or adjustment.

 

 

Procedure for Exercise:

 

 

 

Potential Exercise Dates:

Each Conversion Date.

 

 

Conversion Date:

Each “Conversion Date” as defined in the Indenture, as described in the Offering
Memorandum under “Description of Notes — Conversion of Notes — General” for
Relevant Convertible Notes (as defined below).

 

 

Required Exercise on Conversion Dates:

On each Conversion Date, a number of Note Hedging Units equal to the number of
Convertible Notes in denominations of USD 1,000 principal amount submitted for
conversion in respect of such Conversion Date in accordance with the terms of
the Indenture (such Convertible Notes, the “Relevant Convertible Notes” for such
Conversion Date) shall be exercised automatically, subject to “Notice of
Exercise” below. 

 

 

Expiration Date:

September 15, 2016

 

 

Multiple Exercise:

Applicable, as provided under “Required Exercise on Conversion Dates”.

 

 

Automatic Exercise:

As provided under “Required Exercise on Conversion Dates”.

 

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Notice of Exercise:

Notwithstanding anything to the contrary in the Equity Definitions, in order to
exercise any Note Hedging Units, Counterparty must notify Deutsche in writing
(and use reasonable efforts to confirm receipt by telephone to either Andrew
Yaeger (telephone: (212) 250-2717) or Faiz Khan (telephone: (212) 250-0668) or
to such other person as Deutsche may indicate in writing to Counterparty) prior
to 5:00 PM, New York City time, on the day that is two Scheduled Trading Days
prior to the first day of the “Conversion Period”, as defined in the Indenture,
as described in the Offering Memorandum under “Description of Notes — Conversion
of Notes — Settlement upon Conversion”, relating to the Relevant Convertible
Notes converted on the Conversion Date relating to the relevant Exercise Date
(the “Notice Deadline”) of (i) the number of Note Hedging Units being exercised
on such Exercise Date, (ii) the scheduled commencement date of the “Conversion
Period” and (iii) the scheduled settlement date under the Indenture for the
Relevant  Convertible Notes converted on the Conversion Date corresponding to
such Exercise Date; provided that in respect of Relevant Convertible Notes with
a Conversion Date during the period (the “Final Conversion Period”) beginning
on, and including the 25th “Scheduled Trading Day”, as defined in the Indenture
(as described in the Offering Memorandum under “Description of Notes —
Conversion of Notes — Conversion upon Satisfaction of Market Price Condition”),
prior to the “Maturity Date”, as provided in the Indenture (as described in the
first paragraph under “Description of Notes — General”), for the Convertible
Notes and ending on the close of business on the second “Scheduled Trading Day”
immediately preceding the “Maturity Date”, the Notice Deadline shall be 5:00 PM,
New York City time, on the “Scheduled Trading Day” immediately preceding the
“Maturity Date” and the contents of such notice shall be as described in clause
(i) above; provided further that notwithstanding the foregoing and except in
respect of a Conversion Date during the Final Conversion Period, such notice
(and the related exercise of Note Hedging Units) shall be effective if given
after the Notice Deadline, but prior to 4:00 PM New York City time, on the fifth
Exchange Business Day following the Notice Deadline, in which event the
Calculation Agent shall have the right to adjust the Convertible Obligation as
appropriate to reflect the additional costs (including, but not limited to,
hedging mismatches and market losses) and expenses incurred by Deutsche in
connection with its hedging activities (including the unwinding of any hedge
position) as a result of Deutsche not having received such notice on or prior to
the Notice Deadline.

 

 

Settlement Terms:

 

 

 

Net Share Settlement:

In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, and subject to “Notice of Exercise” above, in respect of any
Exercise Date occurring on a Conversion Date, Deutsche shall deliver to
Counterparty, on the related Settlement Date, the Settlement Amount.    For the
avoidance of doubt, to the extent Deutsche is obligated to

 

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deliver Shares hereunder, the provisions of Sections 9.8, 9.9, 9.10, 9.11 and
9.12 of the Equity Definitions shall be applicable to any such delivery of
Shares, except that all references in such provisions to “Physical Settlement”
and “Physically-settled” shall be read as references to “Net Share Settlement”
and “Net Share Settled”; and provided 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 Counterparty is the issuer of the Shares.

 

 

Settlement Amount:

A number of Shares equal to the aggregate number of Shares that Counterparty is
obligated to deliver to the holder(s) of the Relevant Convertible Notes
converted on such Conversion Date pursuant to the provisions of the Indenture
described in the Offering Memorandum under “Description of Notes — Conversion of
Notes — Settlement upon Conversion” except that such aggregate number of Shares
shall be determined without taking into consideration any rounding pursuant to
the provisions of the Indenture described in the Offering Memorandum under
“Description of Notes — Conversion of Notes — Settlement upon Conversion” and
shall be rounded down to the nearest whole number and cash shall be delivered in
lieu of fractional Shares, if any, resulting from such rounding (the
“Convertible Obligation”); provided that such obligation shall be determined
excluding any Shares or cash that Counterparty is obligated to deliver to
holder(s) of the Relevant Convertible Notes as a result of any adjustments to
the “Conversion Rate” for the issuance of additional Shares or cash as set forth
in the provisions of the Indenture described in the Offering Memorandum under
“Description of Notes — Adjustment to Conversion Rate upon Conversion upon a
Make Whole Adjustment Event” (a “Fundamental Change Adjustment”) or any
adjustment to the “Conversion Price” for any voluntary adjustment pursuant to
the provisions of the Indenture described in the seventh to last paragraph in
the Offering memorandum under “Description of Notes — Conversion of Notes —
Conversion Price Adjustments” (i.e., the paragraph commencing with “To the
extent permitted by law and any applicable rules of the Nasdaq Global Select
Market…”) (a “Discretionary Adjustment”); provided further that, if such
exercise relates to the conversion of Relevant Convertible Notes in connection
with which holders thereof are entitled to receive additional Shares or cash
pursuant to a Fundamental Change Adjustment, then, notwithstanding the
foregoing, the Settlement Amount shall include such additional Shares or cash,
except that the Settlement Amount shall be capped so that the value of the
Settlement Amount per Note Hedging Unit (with the value of the Shares included
in the Settlement Amount determined by the Calculation Agent using the
volume-weighted average price per share on the last day of the relevant
“Conversion Period”) does not exceed the amount as determined by the Calculation
Agent that would be payable by Seller pursuant to Section 6 of the Agreement if
such Conversion Date were an Early Termination Date resulting from an Additional
Termination Event with respect to which

 

5

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the Transaction (except that, for purposes of determining such amount (x) the
Number of Note Hedging Units shall be deemed to be equal to the number of Note
Hedging Units exercised on such Exercise Date and (y) such amount payable will
be determined as if the section of the Indenture regarding a Fundamental Change
Adjustment were deleted) was the sole Affected Transaction and Counterparty was
the sole Affected Party (determined without regard to provisions under
“Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events” in this Confirmation).  If Counterparty is permitted or
required to exercise discretion under the terms of the Indenture with respect to
any determination, calculation or adjustment relevant to conversion of the
Convertible Notes including, but not limited to, the volume-weighted average
price of the Shares, Counterparty shall consult with Deutsche with respect
thereto prior to making such determination, calculation or adjustment.  For the
avoidance of doubt, if the “Daily Conversion Value”, as defined in the Indenture
(as described in the Offering Memorandum under “Description of Notes —
Conversion of Notes — Settlement upon Conversion”) for each of the “Trading
Days”, as defined in the Indenture (as described in the Offering Memorandum
under “Description of Notes — Conversion of Notes — Conversion upon Satisfaction
of Market Price Condition”), in the relevant “Conversion Period” is less than or
equal to USD 1,000 divided by the number of “Trading Days” in the relevant
“Conversion Period”, Deutsche will have no delivery obligation hereunder.

 

 

Notice of Delivery Obligation:

No later than the Scheduled Trading Day immediately following the last day of
the relevant “Conversion Period” Counterparty shall give Deutsche notice of the
final number of Shares (and cash in lieu of fractional shares) comprising the
Convertible Obligation; provided that, with respect to any Exercise Date
occurring during the Final Conversion Period, Counterparty may provide Deutsche
with a single notice of an aggregate number of Shares (and cash in lieu of
fractional Shares) comprising the Convertible Obligations for all Exercise Dates
occurring in such period (it being understood, for the avoidance of doubt, that
the requirement of Counterparty to deliver such notice shall not limit
Counterparty’s obligations with respect to Notice of Exercise, as set forth
above, in any way).

 

 

Settlement Date:

In respect of an Exercise Date occurring on a Conversion Date, the settlement
date for the Shares to be delivered under the Relevant Convertible Notes under
the terms of the Indenture; provided that the Settlement Date will not be prior
to the later of (i) the date that is one Settlement Cycle following the final
day of the “Conversion Period”, as defined in the Indenture (as described in the
Offering Memorandum under “Description of Notes — Conversion of Notes —
Settlement Upon Conversion”), and (ii) the Exchange Business Day immediately
following the date on which Counterparty gives notice to Deutsche of such
Settlement Date prior to 5:00 PM, New York City time.

 

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Settlement Currency:

USD.

 

 

Restricted Certificated Shares:

Notwithstanding anything to the contrary in the Equity Definitions, Deutsche
may, in whole or in part, deliver Shares in certificated form representing the
Settlement Amount to Counterparty in lieu of delivery through the Clearance
System.

 

 

Share Adjustments:

 

 

 

Potential Adjustment Events:

Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential
Adjustment Event” means any occurrence of any event or condition, as set forth
in the provisions of the Indenture described in the Offering Memorandum under
“Description of Notes — Conversion of Notes — Conversion Price Adjustment”
(other than a Discretionary Adjustment) that would result in an adjustment to
the Conversion Price of the Convertible Notes; provided that in no event shall
there be any adjustment hereunder as a result of an adjustment to the
“Conversion Rate” or “Conversion Price” pursuant to a Fundamental Change
Adjustment or a Discretionary Adjustment.

 

 

Method of Adjustment:

Calculation Agent Adjustment, which means that, notwithstanding
Section 11.2(c) of the Equity Definitions, upon the occurrence of any Potential
Adjustment Event (other than a Fundamental Change Adjustment or a Discretionary
Adjustment), the Calculation Agent shall make an adjustment to any one or more
of the Strike Price, Number of Note Hedging Units, the Note Hedging Unit
Entitlement and any other variable relevant to the exercise, settlement, payment
or other terms of the Transaction corresponding to the analogous adjustments
made pursuant to the terms of the Indenture in respect of such event.

 

 

Extraordinary Events:

 

 

 

Merger Events:

Notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event”
means the occurrence of any event or condition set forth in the provisions of
the Indenture described in the Offering Memorandum under “Description of Notes —
Conversion of Notes — Adjustment to Conversion Rights upon Certain
Reclassifications, Business Combinations, Asset Sales and Corporate Events”.

 

 

Notice of Merger Consideration:

Upon the occurrence of a Merger Event that causes the Shares to be converted
into or exchanged for more than a single type of consideration (determined based
in part upon the form of election of the holders of Shares), Counterparty shall
promptly (but in any event prior to the effective date of the Merger Event)
notify the Calculation Agent of the weighted average of the kind and amounts of
consideration to be received by the holders of Shares in any Merger Event who
affirmatively make such an election.

 

 

Consequences of Merger Events:

Notwithstanding Section 12.2 of the Equity Definitions, upon the occurrence of a
Merger Event, the Calculation Agent shall make the

 

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corresponding adjustment in respect of any adjustment under the Indenture to any
one or more of the nature of the Shares, the Strike Price, the Number of Note
Hedging Units, the Note Hedging Unit Entitlement and any other variable relevant
to the exercise, settlement, payment or other terms of the Transaction, to the
extent an analogous adjustment is made under the Indenture; provided that such
adjustment shall be made without regard to any adjustment to the Conversion Rate
for the issuance of additional Shares or cash pursuant to a Fundamental Change
Adjustment or an adjustment to the Conversion Price for a Discretionary
Adjustment; and provided further that if, with respect to a Merger Event, the
consideration for the Shares includes (or, at the option of a holder of Shares,
may include) shares (or depositary receipts with respect to shares) of an entity
or person not organized under the laws of the United States, any State thereof
or the District of Columbia, Cancellation and Payment (Calculation Agent
Determination) shall apply.

 

 

Nationalization, Insolvency and 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 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 be deemed to be the Exchange. 
For the avoidance of doubt, the occurrence of any event that is a Merger Event
and would otherwise have been a Delisting will have the consequence specified
for the relevant Merger Event.

 

 

Additional Disruption Events:

 

 

 

Change in Law:

Applicable; provided that (x) Section 12.9(a)(ii) of the Equity Definitions is
hereby amended (i) by the replacement of the word “Shares” with “Hedge
Positions”; (ii) by adding the phrase “announcement or statement of or”
immediately after the phrase “due to the promulgation of or” in the third line
thereof and adding the phrase “formal or informal” before the word
“interpretation” in the same line; (iii) immediately following the word
“Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by the Hedging Party on the Trade Date (unless another manner of
holding, acquiring or disposing of, as applicable, Hedge Positions relating to
such Transaction that is available to Hedging Party would be commercially
reasonable, as reasonably determined by Hedging Party, and is not illegal)”; and
(iv) by adding the words “(including, for the avoidance of doubt and without
limitation, adoption or promulgation of new regulations authorized or mandated
by existing statute)” after the word “regulation” in the second line thereof,
(y) any determination as to whether (A) the adoption of or change in any
applicable law or regulation (including, without limitation, any tax law) or
(B) the promulgation of or any change in or announcement or statement of the
formal or informal interpretation by any court, tribunal or regulatory authority
with

 

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competent jurisdiction of any applicable law or regulation (including any action
taken by a taxing authority), in each case, constitutes a “Change in Law” shall
be made without regard to Section 739 of the Wall Street Transparency and
Accountability Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date and (z) Deutsche may exercise its termination rights with respect to a
“Change in Law” described in clause (Y) of Section 12.9(a)(ii) of the Equity
Definitions only if Deutsche determines, based upon advice of counsel, that it
is generally exercising its right to terminate as a result of such event with
respect to similarly situated counterparties.

 

 

Insolvency Filing:

Applicable

 

 

Hedging Disruption:

Applicable; provided that Section 12.9(a)(v) of the Equity Definitions is hereby
modified by inserting the following sentence at the end of such section: “Such
inability described in phrases (A) or (B) above shall not constitute a “Hedging
Disruption” if such inability results solely from the Hedging Party’s
creditworthiness or financial position, or from particular actions or
transactions undertaken by the Hedging Party with third parties unrelated to the
hedging of the Transaction.”

 

 

Hedging Party:

Deutsche for all applicable Additional Disruption Events

 

 

Determining Party:

Deutsche for all applicable Additional Disruption Events

 

 

Acknowledgements:

 

 

 

Non-Reliance:

Applicable

 

 

Agreements and Acknowledgements

 

Regarding Hedging Activities:

Applicable

 

 

Additional Acknowledgements:

Applicable

 

 

Mutual Representations: Each of Deutsche and Counterparty represents and
warrants to, and agrees with, the other party that:

 

 

(i)                                     Tax Disclosure.  Notwithstanding
anything to the contrary herein, in the Equity Definitions or in the Agreement,
and notwithstanding any express or implied claims of exclusivity or proprietary
rights, the parties (and each of their employees, representatives or other
agents) are authorized to disclose to any and all persons, beginning immediately
upon commencement of their discussions and 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 by either
party to the other relating to such tax treatment and tax structure.

 

 

 

(ii)                                  Commodity Exchange Act.  It is an
“eligible contract participant” within the meaning of the U.S. Commodity
Exchange Act, as amended (the “CEA”).  The Transaction has been subject to
individual negotiation by the parties.  The Transaction has not been executed or
traded on a “trading facility” as defined in the CEA.  It has entered into the
Transaction with the expectation and intent that the

 

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Transaction shall be performed to its termination date.

 

 

 

(iii)                               Securities Act.  It is a “qualified
institutional buyer” as defined in Rule 144A under the U.S. Securities Act of
1933, as amended (the “Securities Act”), or an “accredited investor” as defined
under the Securities Act.

 

 

 

(iv)                              Investment Company Act.  It is a “qualified
purchaser” as defined under the U.S. Investment Company Act of 1940, as amended.

 

 

 

(v)                                 ERISA.  The assets used in the Transaction
(1) are not assets of any “plan” (as such term is defined in Section 4975 of the
U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or
any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S.
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject
to Title I of ERISA, and (2) do not constitute “plan assets” within the meaning
of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101.

 

 

 

(vi)                              Tax Matters.  For purposes of
Section 4(a)(i) and (ii) of the Agreement, (i) Counterparty agrees to deliver to
Deutsche one duly executed and completed United States Internal Revenue Service
Form W-9 (or successor thereto) and (ii) Deutsche agrees to deliver to
Counterparty one duly executed and completed United States Internal Revenue
Form W-8ECI (or successor thereto).

 

 

Counterparty Representations: In addition to the representations and warranties
in the Agreement and those contained elsewhere herein, Counterparty represents,
warrants and acknowledges  (on the Trade Date unless otherwise specified) that:

 

 

(i)                                     Counterparty is not as of the Trade
Date, and shall not be after giving effect to the transactions contemplated
hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S.
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”))
and Counterparty would be able to purchase a number of Shares equal to the
Number of Shares in compliance with the laws of the jurisdiction of
Counterparty’s incorporation or organization.

 

 

 

(ii)                                  Counterparty has the capacity and
authority to invest directly in the Shares underlying the Transaction and has
not entered into the Transaction with the intent to avoid any regulatory
filings.

 

 

 

(iii)                               Counterparty’s 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.

 

 

 

(iv)                              Counterparty’s investments in and liabilities
in respect of the Transaction, which it understands are not readily marketable,
are not disproportionate to its net worth, and Counterparty is able to bear any
loss in connection with the Transaction, including the loss of its entire
investment in the Transaction.

 

 

 

(v)                                 The representations and warranties of
Counterparty set forth in Section 3 of the Agreement and Section 1 of the
Purchase Agreement dated as of October 11, 2011 between Counterparty and
Deutsche Bank Securities Inc. as representative of the initial purchaser thereto
(the “Purchase Agreement”) are true and correct and are hereby deemed to be
repeated to Deutsche as if set forth herein.

 

 

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(vi)          Counterparty understands, agrees and acknowledges that Deutsche
has no obligation or intention to register the Transaction under the Securities
Act, any state securities law or other applicable federal securities law.

 

(vii)         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 U.S. Investment Company Act of 1940, as amended.

 

(viii)        Counterparty understands, agrees and acknowledges that no
obligations of Deutsche to it hereunder shall be entitled to the benefit of
deposit insurance and that such obligations shall not be guaranteed by any
affiliate of Deutsche or any governmental agency.

 

(ix)           (A) Counterparty is acting for its own account, and it has made
its own independent decisions to enter into the Transaction and as to whether
the Transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary, (B) Counterparty is
not relying on any communication (written or oral) of Deutsche or any of its
affiliates as investment advice or as a recommendation to enter into the
Transaction (it being understood that information and explanations related to
the terms and conditions of the Transaction shall not be considered investment
advice or a recommendation to enter into the Transaction) and (C) no
communication (written or oral) received from Deutsche or any of its affiliates
shall be deemed to be an assurance or guarantee as to the expected results of
the Transaction.

 

(x)            Without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that Deutsche is not making any
representations or warranties with respect to the treatment of the Transaction
under ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging,
or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40,
Derivatives and Hedging — Contracts in Entity’s Own Equity (or any successor
issue statements) or under FASB’s Liabilities & Equity Project, or under any
other accounting guidance.

 

(xi)           Counterparty is not entering into the Transaction for the purpose
of (i) creating actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or (ii) raising or
depressing or otherwise manipulating the price of the Shares (or any security
convertible into or exchangeable for the Shares), in either case in violation of
Section 9 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange
Act”).

 

(xii)          Counterparty’s filings under the Securities Act, the Exchange
Act, and other applicable securities laws that are required to be filed have
been filed and, as of the respective dates thereof and as of the date of this
representation, there is no misstatement of material fact contained therein or
omission of a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.

 

(xiii)         Counterparty has not violated any applicable law (including,
without limitation, the Securities Act and the Exchange Act) in any material
respect in connection with the Transaction.

 

(xiv)        The Transaction and any repurchase of the Shares by Counterparty in
connection with the Transaction have been approved by Counterparty’s board of
directors.

 

(xv)         No state or local (including non-U.S. jurisdictions) or non-U.S.
federal law, rule, regulation or regulatory order applicable to the Shares or
the Issuer would give rise to any reporting, consent, registration or other
requirement (including without limitation a requirement to obtain prior approval
from any person or entity) as a result of Deutsche or its affiliates owning or
holding (however defined)

 

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Shares in connection with Deutsche’s hedging of the Transaction.

 

Counterparty Covenants:  In addition to the covenants in the Agreement and those
contained elsewhere herein, Counterparty hereby covenants that:

 

(i)            Counterparty shall promptly provide written notice to Deutsche
upon obtaining knowledge of the occurrence of any event that would constitute an
Event of Default, a Potential Event of Default, a Potential Adjustment Event, a
Merger Event or any other Extraordinary Event; provided, however, that should
Counterparty be in possession of material non-public information regarding
Counterparty, Counterparty shall not communicate such information to Deutsche.

 

(ii)           Counterparty shall deliver to Deutsche an opinion of counsel,
dated as of the Effective Date and reasonably acceptable to Deutsche in form and
substance, with respect to the matters set forth in Section 3(a) of the
Agreement and such other matters as Deutsche may reasonably request, and
containing customary assumptions, qualifications and exceptions reasonably
acceptable to Deutsche.

 

(iii)          Counterparty shall not (a) violate or (b) take any action, or
refrain from taking any action, that in either case could reasonably be expected
to cause Deutsche or any of its affiliates to violate any applicable law
(including, without limitation, the Securities Act and the Exchange Act) in any
material respect in connection with the Transaction.

 

(iv)          Counterparty shall, on each Potential Exercise Date and on any day
on which Shares may be delivered to Counterparty pursuant to the Transaction,
have the capacity and authority to invest directly in the Shares underlying the
Transaction.

 

(v)           Any repurchase of Shares by Counterparty in connection with the
Transaction will be pursuant to a publicly announced share repurchase program
approved by Counterparty’s board of directors and such repurchase shall be
publicly disclosed in Counterparty’s periodic filings under the Exchange Act and
its financial statements and notes thereto when so required.

 

Miscellaneous:

 

Netting and Set-Off.  The parties hereto agree that the Transaction shall not be
subject to netting or set off with any other transaction, notwithstanding
anything to the contrary contained in the confirmation or other agreement with
respect to any other transaction.

 

Qualified Financial Contracts.  It is the intention of the parties that, in
respect of Counterparty, (a) the Transaction shall constitute a “qualified
financial contract” within the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and
(b) a Non-defaulting Party’s rights under Sections 5 and 6 of the Agreement
constitute rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).

 

Method of Delivery.  Whenever delivery of funds or other assets is required
hereunder by or to Counterparty, such delivery shall be effected through Agent. 
In addition, all notices, demands and communications of any kind relating to the
Transaction between Deutsche and Counterparty shall be transmitted exclusively
through Agent.

 

Staggered Settlement.  Deutsche may, by notice to Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares
deliverable on such Nominal Settlement Date on two or more dates (each, a
“Staggered Settlement Date”) or at two or more times on the Nominal Settlement
Date as follows: (i) in such notice, Deutsche will specify to Counterparty the
related Staggered Settlement Dates (each of which will be on or prior to such
Nominal Settlement Date, but not prior to the beginning of the related

 

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“Conversion Period”) or delivery times and how it will allocate the Shares it is
required to deliver under “Net Share Settlement” above among the Staggered
Settlement Dates or delivery times; and (ii) the aggregate number of Shares that
Deutsche will deliver to Counterparty hereunder on all such Staggered Settlement
Dates and delivery times will equal the number of Shares that Deutsche would
otherwise be required to deliver on such Nominal Settlement Date.

 

Additional Termination Events.  The occurrence of (i) an “Event of Default” with
respect to Counterparty under the terms of the Convertible Notes as set forth in
the provisions of the Indenture described in the Offering Memorandum under
“Description of Notes — Events of Default” with respect to which the Convertible
Notes are declared immediately due and payable under the terms of the Indenture,
(ii) an Amendment Event or (iii) a Repayment Event shall be an Additional
Termination Event with respect to which the Transaction is the sole Affected
Transaction and Counterparty is the sole Affected Party and Deutsche shall be
the party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement; provided that in the case of a Repayment Event
the Transaction shall be subject to termination only in respect of the portion
of the Transaction corresponding to the number of Convertible Notes that cease
to be outstanding in connection with or as a result of such Repayment Event;
provided further that if, ten Scheduled Trading Days after the occurrence of any
Repayment Event, Deutsche has not designated an Early Termination Date in
respect of the applicable portion of the Transaction, Counterparty may designate
an Early Termination Date in respect of such portion of the Transaction.  For
the avoidance of doubt, any such designation by Counterparty shall not alter the
manner of calculation of any termination amount in respect of the terminated
portion of the Transaction or limit the period over which Deutsche may complete
any hedging unwind activity.  Counterparty will provide prompt notice to
Deutsche of the occurrence of any Repayment Event.

 

“Amendment Event” means that Counterparty amends, modifies, supplements or
obtains a waiver with respect to any term of the Indenture or the Convertible
Notes (i) governing the principal amount, coupon, maturity, repurchase
obligation of Counterparty, redemption right of Counterparty, any term relating
to conversion of the Convertible Notes (including changes to the conversion
price, conversion settlement dates or conversion conditions), (ii) which
amendment, modification, supplement or waiver would require consent of the
holders of not less than 100% of the principal amount of the Convertible Notes
to amend or (iii) which amendment, modification, supplement or waiver could
reasonably be expected to have a material adverse effect on this Transaction or
Deutsche’s ability to hedge all or a portion of this Transaction.  For the
avoidance of doubt, Counterparty electing to decrease the Conversion Price
pursuant to a Discretionary Adjustment shall not constitute an Amendment Event.

 

“Repayment Event” means that (A) any Convertible Notes are repurchased (whether
in connection with or as a result of a change of control, howsoever defined, or
for any other reason) by Counterparty or any of its subsidiaries, (B) any
Convertible Notes are delivered to Counterparty or any of its subsidiaries in
exchange for delivery of any property or assets of Counterparty or any of its
subsidiaries (howsoever described), (C) any principal of any of the Convertible
Notes is repaid prior to the final maturity date of the Convertible Notes
(whether following acceleration of the Convertible Notes or otherwise), or
(D) any Convertible Notes are exchanged by or for the benefit of the holders
thereof for any other securities of Counterparty or any of its affiliates (or
any other property, or any combination thereof) pursuant to any exchange offer
or similar transaction; provided that, in the case of clause (B) and clause (D),
conversions of the Convertible Notes pursuant to the terms of the Indenture as
in effect on the date hereof shall not be Repayment Events.

 

Disposition of Hedge Shares.  Counterparty hereby agrees that if, in the good
faith reasonable judgment of Deutsche, the Shares (the “Hedge Shares”) acquired
by Deutsche or any of its affiliates (collectively for the purposes of this
paragraph only, “Deutsche”) for the purpose of hedging its obligations pursuant
to the Transaction cannot be sold in the public market by Deutsche without
registration under the Securities Act, Counterparty shall, at its election:
(i) in order to allow Deutsche to sell the Hedge Shares in a registered
offering, make available to Deutsche an effective registration statement under
the Securities Act to cover the resale of such Hedge Shares and (A) enter into
an agreement, in form and substance reasonably satisfactory to Deutsche,
substantially in the form of an underwriting agreement for a registered
offering, (B) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty reasonably acceptable to
Deutsche, (D) provide other

 

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customary opinions, certificates and closing documents customary in form for
registered offerings of equity securities and (E) afford Deutsche a reasonable
opportunity to conduct a “due diligence” investigation with respect to
Counterparty customary in scope for underwritten offerings of equity securities;
provided, however, that if Deutsche, in its sole reasonable discretion, is not
satisfied with access to due diligence materials, the results of its due
diligence investigation, or the procedures and documentation for the registered
offering referred to above, then clause (ii) or clause (iii) of this paragraph
shall apply at the election of Counterparty; (ii) in order to allow Deutsche to
sell the Hedge Shares in a private placement, enter into a private placement
agreement substantially similar to private placement purchase agreements
customary for private placements of equity securities of similar size, in form
and substance satisfactory to Deutsche, including customary representations,
covenants, blue sky and other governmental filings and/or registrations,
indemnities to Deutsche, due diligence rights (for Deutsche or any designated
buyer of the Hedge Shares from Deutsche), opinions and certificates and such
other documentation as is customary for private placements agreements of similar
size, all reasonably acceptable to Deutsche (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that are
necessary, in its commercially reasonable judgment, to compensate Deutsche for
any discount from the public market price of the Shares incurred on the sale of
Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from
Deutsche at the VWAP Price on such Exchange Business Days, and in the amounts,
requested by Deutsche.  “VWAP Price” means, on any Exchange Business Day, the
per Share volume-weighted average price as displayed under the heading
“Bloomberg VWAP” on Bloomberg page UTHR.Q <equity> AQR (or any successor
thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City
time) on such Exchange Business Day (or if such volume-weighted average price is
unavailable, the market value of one Share on such Exchange Business Day, as
determined by the Calculation Agent using a volume-weighted method).  This
paragraph shall survive the termination, expiration or early unwind of the
Transaction.

 

Status of Claims in Bankruptcy.  Deutsche acknowledges and agrees that this
Confirmation is not intended to convey to Deutsche rights with respect to the
Transaction that are senior to the claims of common stockholders in any U.S.
bankruptcy proceedings of Counterparty; provided that nothing herein shall limit
or shall be deemed to limit Deutsche’s right to pursue remedies in the event of
a breach by Counterparty of its obligations and agreements with respect to the
Transaction either outside of a bankruptcy proceeding or (subject only to the
limitation on seniority in the preceding clause) within a bankruptcy proceeding;
provided, further, that nothing herein shall limit or shall be deemed to limit
Deutsche’s rights in respect of any transactions other than the Transaction.

 

No Collateral.  Notwithstanding any provision of this Confirmation, the
Agreement, Equity Definitions, or any other agreement between the parties to the
contrary, the obligations of Counterparty under the Transaction are not secured
by any collateral.

 

Securities Contract; Swap Agreement.  The parties hereto agree and acknowledge
that Deutsche is a “financial institution,” “swap participant” and “financial
participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of
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 or in connection herewith is a “termination value,” “payment
amount” or “other transfer obligation” within the meaning of Section 362 of the
Bankruptcy Code and a “settlement payment” or a “transfer” within the meaning of
Section 546 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 or in connection herewith is a “termination
value,” a “payment amount” or “other transfer obligation” within the meaning of
Section 362 of the Bankruptcy Code and a “transfer” within the meaning of
Section 546 of the Bankruptcy Code, and (B) that Deutsche is entitled to the
protections afforded by, among other sections, Section 362(b)(6), 362(b)(17),
362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the
Bankruptcy Code.

 

Repurchase Notices.  On any day Counterparty effects any repurchase of Shares
(including pursuant to the Share buy-back program publicly disclosed on
October 11, 2011 in which Counterparty’s board of directors approved the
buy-back of Shares worth not more than USD300,000,000 during the period ending
October 3, 2013), Counterparty shall promptly give Deutsche a written notice of
such repurchase (a “Repurchase Notice”)

 

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if, following such repurchase, the Unit Equity Percentage as determined on such
day is (a) equal to or greater than 11% and (b) greater by 0.5% or more than the
Unit Equity Percentage included in the immediately preceding Repurchase Notice
(or, in the case of the first such Repurchase Notice, greater by 0.5% or more
than the Unit Equity Percentage as of the date hereof).  The “Unit Equity
Percentage” as of any day is the fraction, expressed as a percentage, (i) the
numerator of which is the product of the number of Note Hedging Units and the
Note Hedging Unit Entitlement, and (ii) the denominator of which is the number
of Shares outstanding on such day.  Counterparty agrees to indemnify and hold
harmless Deutsche and its affiliates and their respective officers, directors,
employees, advisors, agents and controlling persons (each, a “Section 16
Indemnified Person”) from and against any and all losses (including losses
relating to Deutsche’s hedging activities as a consequence of becoming, or of
the risk of becoming, a Section 16 “insider”, including without limitation, any
forbearance from hedging activities or cessation of hedging activities and any
losses in connection therewith with respect to the Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable attorney’s
fees), joint or several, to which a Section 16 Indemnified Person may become
subject, as a result of Counterparty’s failure to provide Deutsche with a
Repurchase Notice on the day and in the manner specified in this paragraph, and
to reimburse, upon written request, each of such Section 16 Indemnified Persons
for any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence in
connection with or defending any of the foregoing.  If any suit, action,
proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against the Section 16 Indemnified Person,
such Section 16 Indemnified Person shall promptly notify Counterparty in
writing, and Counterparty, upon request of the Section 16 Indemnified Person,
shall retain counsel reasonably satisfactory to the Section 16 Indemnified
Person to represent the Section 16 Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding.  Counterparty shall be
relieved from liability to the extent that the Section 16 Indemnified Person
fails promptly to notify Counterparty of any action commenced against it in
respect of which indemnity may be sought hereunder; provided that failure to
notify Counterparty (x) shall not relieve Counterparty from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
(y) shall not, in any event, relieve Counterparty from any liability that it may
have otherwise than on account of this indemnity agreement.  Counterparty shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, Counterparty agrees to indemnify any Section 16 Indemnified
Person from and against any loss or liability by reason of such settlement or
judgment.  Counterparty shall not, without the prior written consent of the
Section 16 Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Section 16 Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Section 16 Indemnified Person, unless such settlement includes an
unconditional release of such Section 16 Indemnified Person from all liability
on claims that are the subject matter of such proceeding on terms reasonably
satisfactory to such Section 16 Indemnified Person.  If the indemnification
provided for in this paragraph is unavailable to a Section 16 Indemnified Person
or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Counterparty, in lieu of indemnifying such Section 16
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Section 16 Indemnified Person as a result of such losses, claims, damages
or liabilities.  The remedies provided for in this paragraph are not exclusive
and shall not limit any rights or remedies that may otherwise be available to
any Section 16 Indemnified Person at law or in equity.  The indemnity and
contribution agreements contained in this paragraph shall remain operative and
in full force and effect regardless of the termination of the Transaction.

 

Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events.  If one party owes the other party any amount in
connection with the Transaction pursuant to Sections 12.2, 12.3 (and
“Consequences of Merger Events” above), 12.6, 12.7 or 12.9 of the Equity
Definitions (except in the case of an Extraordinary Event in which the
consideration or proceeds to be paid to holders of Shares as a result of such
event consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement
(except in the case of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected
Party, other than (x) an Event of Default of the type described in
Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination
Event of the type described in Section 5(b)(i), (ii), (iii), (iv), (v) or
(vi) of the Agreement that in the case of either (x) or (y) resulted from an
event or events outside Counterparty’s control) (if owed by Counterparty, a
“Counterparty Payment Obligation” and if owed by Deutsche, a “Deutsche Payment
Obligation”), Counterparty shall have the right, in its sole discretion, to
satisfy any such

 

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Counterparty Payment Obligation or to require Deutsche to satisfy any such
Deutsche Payment Obligation by delivery of Termination Delivery Units (as
defined below) by giving irrevocable telephonic notice to Deutsche, confirmed in
writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and
4:00 p.m. New York time on the Early Termination Date or other date the
transaction is terminated, as applicable (“Notice of Termination Delivery”). 
Within a commercially reasonable period of time following receipt of a Notice of
Termination Delivery, Counterparty shall deliver to Deutsche a number of
Termination Delivery Units having a cash value equal to the amount of such
Counterparty Payment Obligation or Deutsche shall deliver to Counterparty a
number of Termination Delivery Units having a cash value equal to the amount of
such Deutsche Payment Obligation (such number of Termination Delivery Units to
be delivered to be determined by the Calculation Agent as the number of whole
Termination Delivery Units that could be sold over a commercially reasonable
period of time to generate proceeds (or purchased over a commercially reasonable
period of time with an amount, as applicable) equal to the cash equivalent of
such payment obligation).  In the case of a Counterparty Payment Obligation, the
parties agree to enter into customary and commercially reasonable documentation
relating to the registered or exempt resale of such Termination Delivery Units. 
If the provisions set forth in this paragraph are applicable, the provisions of
Sections 9.8, 9.9, 9.10, 9.11 (modified as described above) and 9.12 of the
Equity Definitions shall be applicable, except that all references to “Shares”
shall be read as references to “Termination Delivery Units.”

 

“Termination Delivery Unit” means (a) in the case of a Termination Event, an
Event of Default or an Extraordinary Event (other than an Insolvency,
Nationalization or Merger Event), one Share or (b) in the case of an Insolvency,
Nationalization or Merger Event, 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 or Merger Event. 
If a Termination Delivery Unit consists of property other than cash or New
Shares and Counterparty provides irrevocable written notice to the Calculation
Agent on or prior to the Closing Date that it elects to deliver (or receive)
cash, New Shares or a combination thereof (in such proportion as Counterparty
designates) in lieu of such other property, the Calculation Agent shall replace
such property with cash, New Shares or a combination thereof as components of a
Termination Delivery Unit in such amounts, as determined by the Calculation
Agent in its discretion by commercially reasonable means, as shall have a value
equal to the value of the property so replaced.  If such Insolvency,
Nationalization or Merger Event 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.

 

Rule 10b-18.  Except as disclosed to Deutsche in writing prior to the date on
which the offering of the Convertible Notes was first announced, Counterparty
represents and warrants to Deutsche that it has not made any purchases of blocks
by or for itself or any of its Affiliated Purchasers pursuant to the one block
purchase per week exception in Rule 10b-18(b)(4) under the Exchange Act during
each of the four calendar weeks preceding, and during the week of, such date
(“Rule 10b-18 purchase,” “blocks” and “Affiliated Purchaser” each as defined in
Rule 10b-18 under the Exchange Act).  Counterparty agrees and acknowledges that
it shall not, and shall cause its affiliates and Affiliated Purchasers not to,
directly or indirectly (including by means of a derivative instrument) enter
into any transaction to purchase any Shares during the period beginning on such
date and ending on the day on which Deutsche has informed Counterparty in
writing that it has completed all purchases of Shares or other transactions to
hedge initially its exposure to the Transaction, except as provided in the
Accelerated Share Repurchase transaction entered into between the parties on the
date hereof.

 

Regulation M.  Counterparty was not on the date on which the offering of the
Convertible Notes was first announced, has not since such date and prior to the
date hereof, and is not on the date hereof, engaged in a distribution, as such
term is used in Regulation M under the Exchange Act, of any securities of
Counterparty, other than a distribution meeting the requirements of the
exception set forth in Sections 101(b)(10) and 102(b)(7) of Regulation M under
the Exchange Act.  Counterparty shall not, until the day on which Deutsche has
informed Counterparty in writing that it has completed all purchases of Shares
or other transactions to hedge initially its exposure to the Transaction, engage
in any such distribution.

 

No Material Non-Public Information.  On each day (i) during the period beginning
on the day on which the offering of the Convertible Notes was first announced
and ending on the Effective Date and (ii) on which

 

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Counterparty designates an Early Termination Date pursuant to “Additional
Termination Events” above, Counterparty represents and warrants to Deutsche that
it is not aware of any material nonpublic information concerning itself or the
Shares.

 

Right to Extend.  Deutsche may postpone any Potential Exercise Date or postpone
or extend any other date of valuation or delivery with respect to some or all of
the relevant Note Hedging Units (in which event the Calculation Agent shall make
appropriate adjustments to the Settlement Amount for such Note Hedging Units),
if Deutsche determines, in its reasonable discretion (in the case of clause
(ii) below, based on the advice of counsel), that such extension is reasonably
necessary or appropriate to (i) preserve Deutsche’s hedging or hedge unwind
activity hereunder in light of existing liquidity conditions or (ii) enable
Deutsche to effect purchases of Shares in connection with its hedging, hedge
unwind or settlement activity hereunder in a manner that would, if Deutsche were
the Issuer or an affiliated purchaser of the Issuer, be in compliance with
applicable legal, regulatory or self-regulatory requirements, or with related
policies and procedures applicable to Deutsche (provided that such requirements,
policies or procedures are generally applicable in similar situations and
applied to the Transaction in a non-discriminatory manner).

 

Transfer or Assignment.  Counterparty may not transfer any of its rights or
obligations under the Transaction without the prior written consent of
Deutsche.  Deutsche may transfer or assign (1) all or a portion of its Note
Hedging Units hereunder at any time to any affiliate of Deutsche or (2) the
Terminated Portion under the conditions and pursuant to the provisions set forth
in the immediately following paragraph to any other recognized dealer in
transactions such as the Transaction, in each case with a rating (or whose
guarantor has a rating) for its long term, unsecured and unsubordinated
indebtedness of A+ or better by Standard & Poor’s Ratings Services or its
successor (“S&P”), or A1 or better by Moody’s Investors Service, Inc. or its
successor (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at
least an equivalent rating or better by a substitute agency rating mutually
agreed by Counterparty and Deutsche, without the consent of Counterparty;
provided that in the case of clause (1), Counterparty will not, as a result of
such transfer and/or assignment, be required under the Agreement or this
Confirmation to (x) pay to the transferee or assignee an amount greater than the
amount that it would have been required to pay to Deutsche in the absence of
such transfer or assignment or (y) receive from the transferee or assignee an
amount less than the amount that Counterparty would have received from Deutsche
in the absence of such transfer or assignment, in each case based on the
circumstances in effect on the date of such transfer.  Deutsche shall provide
Counterparty with written notice of any such transfer or assignment.

 

If, as determined in Deutsche’s sole reasonable discretion based on advice of
counsel, (a) at any time (1) the Equity Percentage exceeds 8.5% or (2) Deutsche,
Deutsche Group (as defined below) or any person whose ownership position would
be aggregated with that of Deutsche or Deutsche Group (Deutsche, Deutsche Group
or any such person, a “Deutsche Person”) under Section 203 of the Delaware
General Corporation Law (the “DGCL Takeover Statute”) or other federal, state or
local (including non-U.S.) laws, regulations or regulatory orders applicable to
ownership of Shares (“Applicable Laws”), owns, beneficially owns, constructively
owns, controls, holds the power to vote or otherwise meets a relevant definition
of ownership, or could be reasonably viewed as meeting any of the foregoing, in
excess of a number of Shares equal to (x) the number of Shares that would give
rise to reporting, registration, filing or notification obligations or other
requirements (including obtaining prior approval by a state, federal or non-U.S.
regulator) of a Deutsche Person under Applicable Laws (including, without
limitation, “interested shareholder” or “acquiring Person” status under the DGCL
Takeover Statute) and with respect to which such requirements have not been met
or the relevant approval has not been received minus (y) 1% of the number of
Shares outstanding on the date of determination (either such condition described
in clause (1) or (2), an “Excess Ownership Position”), and (b) Deutsche is
unable, after commercially reasonable efforts, to effect a transfer or
assignment on pricing and terms and within a time period reasonably acceptable
to it of all or a portion of this Transaction pursuant to the preceding
paragraph such that an Excess Ownership Position no longer exists, Deutsche may
designate any Scheduled Trading Day as an Early Termination Date with respect to
a portion (the “Terminated Portion”) of this Transaction, such that an Excess
Ownership Position no longer exists following such partial termination;
provided, however, that Deutsche agrees to use commercially reasonable efforts
to establish and maintain its Hedge Positions in a manner that will not cause an
Excess Ownership Position to arise.  In the event that Deutsche so designates an
Early Termination Date with respect to a portion of this Transaction, a payment
shall be made pursuant to Section 6 of the

 

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Agreement as if (i) an Early Termination Date had been designated in respect of
a Transaction having terms identical to this Transaction and a Number of Note
Hedging Units equal to the Terminated Portion, (ii) Counterparty shall be the
sole Affected Party with respect to such partial termination and (iii) such
Transaction shall be the only Terminated Transaction (and, for the avoidance of
doubt, the provisions set forth under the caption “Alternative Calculations and
Payment on Early Termination and on Certain Extraordinary Events” shall apply to
any amount that is payable by Deutsche to Counterparty pursuant to this
sentence).  The “Equity Percentage” as of any day is the fraction, expressed as
a percentage, (A) the numerator of which is the number of Shares that Deutsche
and any of its affiliates subject to aggregation with Deutsche for purposes of
the “beneficial ownership” test under Section 13 of the Exchange Act and all
persons who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act) with Deutsche (collectively, “Deutsche Group”) “beneficially own”
(within the meaning of Section 13 of the Exchange Act) without duplication on
such day (or to the extent that the equivalent calculation under Section 16 of
the Exchange Act and the rules and regulations thereunder results in a higher
number, such number) and (B) the denominator of which is the number of Shares
outstanding on such day.

 

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

 

Matters Related to Agent.  Each party agrees and acknowledges that (i) Agent
acts solely as agent on a disclosed basis with respect to the Transaction, and
(ii) Agent has no obligation, by guaranty, endorsement or otherwise, with
respect to the obligations of either Counterparty or Deutsche hereunder, either
with respect to the delivery of cash or Shares, either at the beginning or the
end of the Transaction.  In this regard, each of Counterparty and Deutsche
acknowledges and agrees to look solely to the other for performance hereunder,
and not to Agent.

 

Severability; Illegality.  If compliance by either party with any provision of
the Transaction would be unenforceable or illegal, (a) the parties shall
negotiate in good faith to resolve such unenforceability or illegality in a
manner that preserves the economic benefits of the transactions contemplated
hereby and (b) the other provisions of the Transaction shall not be invalidated,
but shall remain in full force and effect.

 

Waiver of Jury Trial.   EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING RELATING TO THE TRANSACTION.  EACH PARTY (I) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH A
SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(II) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HAVE BEEN INDUCED TO ENTER INTO
THE TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS PROVIDED HEREIN.

 

Early Unwind.  In the event the sale of the initial issuance of the Convertible
Notes is not consummated with the initial purchaser thereof for any reason by
the close of business in New York on October 17, 2011 (or such later date as
agreed upon by the parties) (October 17, 2011 or such later date as agreed upon
being the “Early Unwind Date”), the Transaction shall automatically terminate
(the “Early Unwind”) on the Early Unwind Date and (a) the Transaction and all of
the respective rights and obligations of Deutsche and Counterparty under the
Transaction shall be cancelled and terminated and (b) each party shall be
released and discharged by the other party from and agrees not to make any claim
against the other party with respect to any obligations or liabilities of the
other party arising out of and to be performed in connection with the
Transaction either prior to, on or after the Early Unwind Date.  Deutsche and
Counterparty represent and acknowledge to the other that, upon an Early Unwind,
all obligations with respect to the Transaction shall be deemed fully and
finally discharged.

 

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Limitations on Settlement by Counterparty.  Notwithstanding anything herein or
in the Agreement to the contrary, in no event shall Counterparty be required to
deliver Shares in connection with the Transaction in excess of 500,000 Shares
(the “Maximum Delivery Amount”).  Counterparty represents and warrants (which
shall be deemed to be repeated on each day that the Transaction is outstanding)
that the Maximum Delivery Amount is equal to or less than the number of
authorized but unissued Shares of Counterparty 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 Maximum Delivery Amount
(such Shares, the “Available Shares”).  In the event Counterparty shall not have
delivered the full number of Shares otherwise deliverable as a result of this
paragraph (the resulting deficit, the “Deficit Shares”), Counterparty 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 (i) Shares are repurchased, acquired or otherwise received
by Counterparty or any of its subsidiaries after the Trade Date (whether or not
in exchange for cash, fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of other transactions prior
to such date which prior to the relevant date become no longer so reserved and
(iii) Counterparty additionally authorizes any unissued Shares that are not
reserved for other transactions.  Counterparty shall immediately notify Deutsche
of the occurrence of any of the foregoing events (including the number of Shares
subject to clause (i), (ii) or (iii) and the corresponding number of Shares to
be delivered) and promptly deliver such Shares thereafter. Notwithstanding the
provisions of Section 5(a)(ii) of the Agreement, in the event of a failure by
Counterparty to comply with the agreement set forth in this provision, there
shall be no grace period for remedy of such failure.

 

Governing law:     The law of the State of New York.

 

Contact information. For purposes of the Agreement (unless otherwise specified
in the Agreement), the addresses for notice to the parties shall be:

 

(a) Counterparty

 

United Therapeutics Corporation

1040 Spring St.
Silver Spring, MD 20910
Attention: John Ferrari, Chief Financial Officer and Treasurer
Fax:  (301) 608-3049

 

(b) Deutsche

Deutsche Bank AG, London Branch

c/o Deutsche Bank Securities Inc.

60 Wall Street
New York, NY 10005

 

Attention:              Andrew Yaeger

Faiz Khan

 

Telephone:            (212) 250-2717

(212) 250-0668

 

Email:                      andrew.yaeger@db.com

faiz.khan@db.com

 

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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.

 

Counterparty hereby agrees to check this Confirmation and to confirm that the
foregoing correctly sets forth the terms of the Transaction by signing in the
space provided below and returning to Deutsche a facsimile of the fully-executed
Confirmation to Deutsche at 44 113 336 2009.  Originals shall be provided for
your execution upon your request.

 

We are very pleased to have executed the Transaction with you and we look
forward to completing other transactions with you in the near future.

 

Very truly yours,

 

DEUTSCHE BANK AG, LONDON BRANCH

 

 

By:

/s/ Michael Sanderson

 

 

 

Name:

Michael Sanderson

 

 

 

Title:

Managing Director

 

 

 

 

 

 

 

By:

/s/ Lars Kestner

 

 

 

Name:

Lars Kestner

 

 

 

Title:

Managing Director

 

 

 

DEUTSCHE BANK SECURITIES INC.,

acting solely as Agent in connection with this Transaction

 

 

By:

/s/ Michael Sanderson

 

 

Name:

Michael Sanderson

 

 

Title:

Managing Director

 

 

 

 

By:

/s/ Lars Kestner

 

 

Name:

Lars Kestner

 

 

Title:

Managing Director

 

 

Counterparty hereby agrees to, accepts and confirms the terms of the foregoing
as of the Trade Date.

 

UNITED THERAPEUTICS CORPORATION

 

By:

/s/ John Ferrari

 

 

 

Name:

John Ferrari

 

 

 

Title:

CFO

 

 

 

[Signature Page to Note Hedge]

 

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ANNEX A

 

The Premium for the Transaction is set forth below:

 

Premium:

 

[***]

 

A-1

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