Form of Letter Agreements



 Exhibit 10.92 

 

					
		  	March 13, 2012
		
	To:	  	Salix Pharmaceuticals, Ltd.
		  	8510 Colonnade Center Drive
		  	Raleigh, NC 27615
		  	Attn:	  	Adam Derbyshire
		  	Telephone:	  	919-862-1025
		  	Facsimile:	  	919-228-4225
			
	From:	  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		  		  	
		
	Re:	  	Base Convertible Bond Hedge Transaction
		  	(Transaction Reference Number:                   )

 Ladies and Gentlemen: 
 The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the
“Transaction”) between                          (“Dealer”) and Salix Pharmaceuticals, Ltd.
(“Counterparty”). This communication constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. 
 1. This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002
ISDA Equity Derivatives Definitions (the “Equity Definitions” and, together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc.
(“ISDA”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern. Certain defined terms used herein have the meanings assigned to them in the Indenture to be
dated as of the closing date for the initial issuance of the Convertible Securities described below between Counterparty and U.S. Bank National Association as trustee (the “Indenture”) relating to the USD600,000,000 principal amount
of 1.50% convertible senior notes due 2019 and any additional principal amount of 1.50% convertible senior notes due 2019 issued pursuant to an exercise of the over-allotment option (the “Convertible Securities”). In the event of
any inconsistency between the terms defined in the Indenture and this Confirmation, this Confirmation shall govern. For the avoidance of doubt, references herein to sections of the Indenture are based on the draft of the Indenture most recently
reviewed by the parties at the time of execution of this Confirmation. If any relevant sections of the Indenture are changed, added or renumbered following execution of this Confirmation but prior to the execution of the Indenture, the parties will
amend this Confirmation in good faith to preserve the economic intent of the parties based on the draft of the Indenture so reviewed. The parties further acknowledge that references to the Indenture herein are references to the Indenture as in
effect on the date of its execution and if the Indenture is amended following its execution, any such amendment will be disregarded for purposes of this Confirmation (other than as provided in Section 8(a) below) unless the parties agree
otherwise in writing. 
 This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the
terms of the Transaction to which this Confirmation relates. This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement (the “ISDA Form”) as if Dealer 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. 

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







 2. The Transaction constitutes a Share Option Transaction for purposes of the Equity
Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows: 
  

			
	General Terms:	  	
		
	 Trade Date:
	  	March 13, 2012
		
	 Effective Date:
	  	The closing date of the initial issuance of the Convertible Securities.
		
	 Option Type:
	  	Call
		
	 Seller:
	  	Dealer
		
	 Buyer:
	  	Counterparty
		
	 Shares:
	  	The common stock of Counterparty, par value USD0.001 per share (Ticker Symbol: “SLXP”).
		
	 Number of Options:
	  	The number of Convertible Securities (other than any “Option Securities” (as defined in the Purchase Agreement as defined below)) in denominations of USD1,000 principal
amount issued by Counterparty on the closing date for the initial issuance of the Convertible Securities.
		
	 Number of Shares:
	  	As of any date, the product of the Number of Options and the Conversion Rate.
		
	 Applicable Percentage:
	  	       %
		
	 Conversion Rate:
	  	As of any date, the “Conversion Rate” (as defined in the Indenture) as of such date, but without regard to any adjustments to the “Conversion Rate” pursuant
to Sections 15.03 or 15.04(i) of the Indenture.
		
	 Premium:
	  	As provided in Annex A to this Confirmation.
		
	 Premium Payment Date:
	  	The Effective Date
		
	 Exchange:
	  	The NASDAQ Global Select Market
		
	 Related Exchange:
	  	All Exchanges
		
	Procedures for Exercise:	  	
		
	 Exercise Dates:
	  	Each Conversion Date.
		
	 Conversion Date:
	  	Each “Conversion Date”, as defined in the Indenture, occurring during the period from and excluding the Trade Date to and including the Expiration Date, for Convertible
Securities, each in denominations of USD1,000 principal amount, that are converted on such “Conversion Date” in accordance with the terms of the Indenture, excluding Convertible Securities (i) with respect to which Counterparty has elected
the “Exchange in Lieu of Conversion” option pursuant to Section 15.11 of the Indenture, and (ii) that have been accepted by the designated financial institution pursuant to Section 15.11 of the Indenture (such Convertible
Securities, other than those excluded as set forth above, the “Relevant Convertible Securities” for such Conversion Date).
		
	 Required Exercise on Conversion Dates:
	  	On each Conversion Date, a number of Options equal to the number of Relevant Convertible Securities for such Conversion Date in denominations of USD1,000 principal amount shall
be automatically exercised.


  
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	 Expiration Date:
	  	The second “Scheduled Trading Day” immediately preceding the “Maturity Date” (each as defined in the Indenture).
		
	 Automatic Exercise:
	  	As provided above under “Required Exercise on Conversion Dates”.
		
	 Exercise Notice Deadline:
	  	In respect of any exercise of Options hereunder on any Conversion Date, the “Scheduled Trading Day” prior to the scheduled first “Trading Day” of the relevant
“Cash Settlement Averaging Period” (each as defined in the Indenture) relating to the Convertible Securities converted on the Conversion Date occurring on the relevant Exercise Date; provided that in the case of any exercise of
Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the period starting on and including November 9, 2018 and ending on and including the second “Scheduled Trading
Day” immediately preceding the “Maturity Date” (each as defined in the Indenture) (the “Final Conversion Period”), the Exercise Notice Deadline shall be the “Scheduled Trading Day” (as defined in the
Indenture) immediately following such Conversion Date.
		
	 Notice of Exercise:
	  	Notwithstanding anything to the contrary in the Equity Definitions, Dealer shall have no obligation to make any payment or delivery in respect of any exercise of Options
hereunder unless Counterparty notifies Dealer in writing prior to 4:00 PM, New York City time, on the Exercise Notice Deadline in respect of such exercise, of (i) the number of Options being exercised on the relevant Exercise Date, (ii) the
scheduled settlement date under the Indenture for the Convertible Securities converted on the Conversion Date corresponding to such Exercise Date, (iii) whether such Relevant Convertible Securities will be settled by Counterparty by delivery of
cash, Shares or a combination of cash and Shares and, if such a combination, the “Specified Dollar Amount” (as defined in the Indenture) and (iv) the scheduled first “Trading Day” of the relevant “Cash Settlement Averaging
Period” (each as defined in the Indenture); provided that in the case of any exercise of Options hereunder in connection with the conversion of any Relevant Convertible Securities on any Conversion Date occurring during the Final
Conversion Period, the contents of such notice may be limited to the information called for by clause (i) above. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b)
of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Securities and such election’s affect on the transactions contemplated by this
Confirmation. For the avoidance of doubt, if Counterparty fails to give such notice when due in respect of any exercise of Options hereunder, Dealer’s obligation to make any payment or delivery in respect of such exercise shall be permanently
extinguished, and late notice shall not cure such failure; provided that notwithstanding the foregoing, such notice (and the related exercise of Options) shall be effective if given after the Exercise Notice Deadline, but prior to 4:00 PM New
York City time, on the fifth Exchange Business Day following the Exercise Notice Deadline (or, in the case of Relevant Convertible Securities with a Conversion Date occurring during



  
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		  	the Final Conversion Period, the Exchange Business Day immediately preceding the “Maturity Date” (as defined in the Indenture)), in which event the Calculation Agent
shall have the right to adjust the Delivery Obligation as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection with its hedging activities
(including the unwinding of any hedge position) as a result of Dealer not having received such notice on or prior to the Exercise Notice Deadline.
		
	 Notice of Convertible Security Settlement Method:
	  	Counterparty shall notify Dealer in writing before 4:00 P.M. (New York City time) on the “Scheduled Trading Day” (as defined in the Indenture) immediately prior to the
first day of the Final Conversion Period of the irrevocable election by the Counterparty, in accordance with Section 15.02(b) of the Indenture, of the settlement method and, if applicable, the “Specified Dollar Amount” (as defined in
the Indenture) applicable to Relevant Convertible Securities with a Conversion Date that occurs during the Final Conversion Period. If Counterparty fails timely to provide such notice, Counterparty shall be deemed to have notified Dealer of
combination settlement with a “Specified Dollar Amount” (as defined in the Indenture) of USD1,000 for all conversions occurring during the Final Conversion Period. Counterparty agrees that it shall settle any Relevant Convertible
Securities with a Conversion Date occurring during the Final Conversion Period in the same manner as provided in the Notice of Convertible Security Settlement Method it provides or is deemed to have provided hereunder.
		
	 Dealer’s Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:
	  	To be provided by Dealer.
		
	Settlement Terms:	  	
		
	 Settlement Date:
	  	In respect of an Exercise Date occurring on a Conversion Date, the settlement date for the cash and Shares (if any) to be delivered in respect of the Relevant Convertible
Securities converted on such Conversion Date pursuant to Section 15.02(e) of the Indenture; provided that the Settlement Date will not be prior to the latest of (i) the date one Settlement Cycle following the final day of the relevant
“Cash Settlement Averaging Period”, (ii) the Exchange Business Day immediately following the date on which Counterparty gives notice to Dealer of such Settlement Date prior to 4:00 PM, New York City time and (iii) the Exchange Business Day
immediately following the date Counterparty provides the Notice of Delivery Obligation prior to 4:00 PM, New York City time.
		
	 Delivery Obligation:
	  	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 an Exercise Date
occurring on a Conversion Date, Dealer will deliver to Counterparty, on the related Settlement Date, the Applicable Percentage of a number of Shares and/or amount of cash in USD equal to the aggregate number of Shares, if any, that Counterparty
would be obligated to deliver to the holder(s) of the


  
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		  	Relevant Convertible Securities converted on such Conversion Date pursuant to Section 15.02(b) of the Indenture and/or the aggregate amount of cash, if any, in excess of
USD1,000 per Convertible Security (in denominations of USD1,000) that Counterparty would be obligated to deliver to holder(s) pursuant to Section 15.02(b) of the Indenture (except that such aggregate number of Shares shall be determined without
taking into consideration any rounding pursuant to Section 15.02(k) of the Indenture and shall be rounded down to the nearest whole number) and cash in lieu of fractional Shares, if any, resulting from such rounding, if Counterparty had elected
to satisfy its conversion obligation in respect of such Relevant Convertible Securities by the Convertible Security Settlement Method, notwithstanding any different actual election by Counterparty with respect to the settlement of such Convertible
Securities (the “Convertible Obligation”); provided that such obligation shall be determined excluding any Shares and/or cash that Counterparty is obligated to deliver to holder(s) of the Relevant Convertible Securities as a
result of any adjustments to the “Conversion Rate” pursuant to Sections 15.03 or 15.04(i) of the Indenture (and, for the avoidance of doubt, the Delivery Obligation shall not include any interest payment on the Relevant Convertible
Securities that the Counterparty is (or would have been) obligated to deliver to holder(s) of the Relevant Convertible Securities for such Conversion Date); and provided further that if such exercise relates to the conversion of Relevant
Convertible Securities in connection with which holders thereof are entitled to receive additional Shares and/or cash pursuant to the adjustment to the “Conversion Rate” set forth in Section 15.03 of the Indenture, then,
notwithstanding the foregoing, the Delivery Obligation shall include the Applicable Percentage of such additional Shares and/or cash, except that the Delivery Obligation shall be capped so that the value of the Delivery Obligation (with the value of
any Shares included in the Delivery Obligation determined by the Calculation Agent using the VWAP Price on the last “Trading Day” of the relevant “Cash Settlement Averaging Period”) does not exceed the amount as determined by the
Calculation Agent that would be payable by Dealer 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 the Transaction (except that,
for purposes of determining such amount (x) the Number of Options shall be deemed to be equal to the number of Options exercised on such Exercise Date and (y) such amount payable will be determined as if Section 15.03 of the Indenture were
deleted) were the sole Affected Transaction and Counterparty were the sole Affected Party (determined without regard to Section 8(b) of this Confirmation). Notwithstanding the foregoing, and in addition to the cap described in the further proviso to
the preceding sentence, in all events the Delivery Obligation shall be capped so that the value of the Delivery Obligation does not exceed the Applicable Percentage of the value of the Convertible Obligation (with the Convertible Obligation
determined based on the actual settlement method elected by Counterparty with respect to such Relevant Convertible Securities instead of the Convertible Security Settlement Method and with the value of any Shares included
in


  
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		  	either the Delivery Obligation or such Convertible Obligation determined by the Calculation Agent using the VWAP Price on the last “Trading Day” of the relevant
“Cash Settlement Averaging Period”). 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, Counterparty shall consult with Dealer with respect thereto and the Calculation Agent shall make such determination, calculation or adjustment for purposes of the Transaction.
		
	 Convertible Security Settlement Method:
	  	For any Relevant Convertible Securities, if Counterparty has notified Dealer in the related Notice of Exercise (or in the Notice of Convertible Security Settlement Method, as the
case may be) that it has elected to satisfy its conversion obligation in respect of such Relevant Convertible Securities in cash or in a combination of cash and Shares in accordance with Section 15.02(b) of the Indenture (a “Cash
Election”) with a “Specified Dollar Amount” (as defined in the Indenture) of at least USD1,000, the Convertible Security Settlement Method shall be the settlement method actually so elected by Counterparty in respect of such
Relevant Convertible Securities; otherwise, the Convertible Security Settlement Method shall (i) assume Counterparty made a Cash Election with respect to such Relevant Convertible Securities with a “Specified Dollar Amount” (as defined in
the Indenture) of USD1,000 per Relevant Convertible Security and (ii) be calculated as if the relevant “Cash Settlement Averaging Period” (as defined in the Indenture) pursuant to Section 15.02(b) of the Indenture consisted of 80
Trading Days commencing on (x) the third “Trading Day” (as defined in the Indenture) after the Conversion Date for conversions occurring prior to the Final Conversion Period or (y) the 82nd “Scheduled Trading Day” prior to the
“Maturity Date” (each as defined in the Indenture) for conversions occurring during the Final Conversion Period, in each case with the “Daily Conversion Value”, “Daily Measurement Value”, “Daily Settlement
Amount” (each as defined in the Indenture) and related terms adjusted accordingly.
		
	 Notice of Delivery Obligation:
	  	No later than the Exchange Business Day immediately following the last day of the relevant “Cash Settlement Averaging Period”, Counterparty shall give Dealer notice of
the aggregate number of Shares and/or amount of cash comprising the Convertible Obligation; provided that, with respect to any Exercise Date occurring during the Final Conversion Period, Counterparty may provide Dealer with a single notice of
an aggregate number of Shares and/or amount of cash 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 or Notice of Convertible Security Settlement Method or Dealer’s obligations with respect to Delivery Obligation, each as set forth above, in any
way).
		
	 Other Applicable Provisions:
	  	To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 1.27, 9.1(c), 9.8, 9.9, 9.10, 9.11 (except
that


  
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		  	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 arising as a result of the fact that Counterparty is the Issuer of the Shares), 9.12 and 10.5 of the Equity Definitions will be applicable as if “Physical
Settlement” applied to the Transaction.
		
	 Restricted Certificated Shares:
	  	Notwithstanding anything to the contrary in the Equity Definitions, Dealer may, in whole or in part, deliver Shares required to be delivered to Counterparty hereunder in
certificated form in lieu of delivery through the Clearance System. With respect to such certificated Shares, the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by deleting the remainder of
the provision after the word “encumbrance” in the fourth line thereof.
		
	Share Adjustments:	  	
		
	 Method of Adjustment:
	  	Notwithstanding Section 11.2 of the Equity Definitions, upon the occurrence of any event or condition set forth in Sections 15.04(a)-(e) of the Indenture that would
result in an adjustment under the terms of the Indenture, the Calculation Agent shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction. Promptly upon the occurrence of any
event that Counterparty reasonably expects would result in an adjustment to the “Conversion Rate” under the terms of the Indenture, Counterparty shall notify the Calculation Agent of such event; and once the adjustments to be made to the
terms of the Indenture and the Convertible Securities in respect of such event have been determined, Counterparty shall promptly notify the Calculation Agent in writing of the details of such adjustments.
		
	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 Section 15.06 of the
Indenture.
		
	 Consequences of Merger Events:
	  	Notwithstanding Sections 12.2 and 12.3 of the Equity Definitions, upon the occurrence of a Merger Event that results in an adjustment under the Indenture, the Calculation Agent
shall make a corresponding adjustment to the terms relevant to the exercise, settlement, payment or other terms of the Transaction; provided that such adjustment shall be made without regard to any adjustment to the “Conversion
Rate” pursuant to Sections 15.03 or 15.04(i) of the Indenture; and provided further that if, with respect to a Merger Event, (i) 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 that is not a corporation organized under the laws of the United States, any State thereof or the District of Columbia or (ii) Counterparty following such Merger Event will not
be a corporation organized under the laws of the United States, any State thereof or the District of Columbia or will not be the Issuer following such Merger Event, and the Calculation Agent determines that (x) treating such shares (or depositary
receipts) as “Reference Property” (as defined in the Indenture) will have a


  
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		  	material adverse effect on Dealer’s rights or obligations in respect of the Transaction, on its Hedging Activities in respect of the Transaction or on the costs (including,
without limitation, due to any increase in tax liability, decrease in tax benefit or other adverse effect on its tax position) of engaging in any of the foregoing and (y) Dealer cannot promptly avoid the occurrence of each such material adverse
effect by (I) transferring or assigning its rights and obligations under this Confirmation and the Agreement pursuant to Section 8(f) or (II) amending the terms of this Confirmation (whether because amendments would not avoid such occurrence or
because Counterparty fails to agree promptly to such amendments), no such adjustment shall be made and Cancellation and Payment (Calculation Agent Determination) shall apply.
		
	 Notice of Merger Consideration:
	  	Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any
form of stockholder election), Counterparty shall reasonably promptly (but, in any event prior to the effective time of such Merger Event) notify the Calculation Agent of (i) the weighted average of the types and amounts of consideration to be
received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (ii) the details of the adjustment to
be made under the Indenture in respect of such Merger Event.
		
	 Nationalization, Insolvency or Delisting:
	  	Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall
also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.
	
	 Additional Disruption Events:

		
	 (a)  Change in Law:
	  	Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (x) 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) adding the words “or any Hedge Positions” after the
word “Shares” in the clause (X) thereof and (z) adding the words “, or holding, acquiring or disposing of Shares or any Hedge Positions relating to,” after the words “obligations under” in clause (Y)
thereof.
		
	 (b)  Failure to Deliver:
	  	Applicable
		
	 (c)  Insolvency Filing:
	  	Applicable


  
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	 (d)  Hedging Disruption:
	  	Applicable; provided that:
		
		  	 (i) Section 12.9(a)(v) of the Equity Definitions is hereby modified by inserting the following two phrases at the end of such
Section:
  
 “For the avoidance of doubt, the term “equity price
risk” shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially
reasonable pricing terms.”; and
  
 (ii) Section 12.9(b)(iii) of the
Equity Definitions is hereby amended by inserting in the third line thereof, after the words “to terminate the Transaction”, the words “or a portion of the Transaction affected by such Hedging Disruption”.

		
	 (e)  Increased Cost of Hedging:
	  	Applicable
		
	 Hedging Party:
	  	For all applicable Potential Adjustment Events and Extraordinary Events, Dealer
		
	 Determining Party:
	  	For all applicable Extraordinary Events, Dealer
		
	 Non-Reliance:
	  	Applicable
		
	 Agreements and Acknowledgments Regarding Hedging Activities:
	  	Applicable
		
	 Additional Acknowledgments:
	  	Applicable
		
	 3.    Calculation Agent:
	  	Dealer. Following any determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty, the Calculation Agent will use its reasonable
efforts to promptly (but in any event within three Scheduled Trading Days) provide to Counterparty, by e-mail to the e-mail address provided by Counterparty in such written request, a report (in a commonly used file format for the storage and
manipulation of financial data without disclosing Dealer’s proprietary models) displaying in reasonable detail the basis for such determination or calculation, as the case may be.
		
	 4.    Account Details:
	  	
		
	   Dealer Payment Instructions:
	  	
		  	
		  	
		  	
		  	
		  	
		
	   Counterparty Payment Instructions:
	  	To be provided by Counterparty.
		
	 5.    Offices:
	  	
	
	   The Office of Dealer for the Transaction is: New
York


  

			
	
		  	
		  	
		  	


  
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	  The Office of Counterparty for the Transaction is: Not
applicable



			
	
	 6.    Notices: For purposes of this Confirmation:

	
	   Address for notices or communications to
Counterparty:


  

			
	To:	  	Salix Pharmaceutical, Ltd.
		  	8510 Colonnade Center Drive
		  	Raleigh, NC 27615
	Attn:	  	Adam Derbyshire
	Telephone:	  	919-862-1025
	Facsimile:	  	919-228-4225

  

			
	   Address for notices or communications to
Dealer:


  

			
	To:	  	
		  	
		  	
		  	
	Attn:	  	
	Telephone:	  	
	Facsimile:	  	

 7.    Representations, Warranties and Agreements: 

(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and
warrants to and for the benefit of, and agrees with, Dealer as follows: 
 (i) On the Trade Date, and as of the
date of any election by Counterparty of the Share Termination Alternative under (and as defined in) Section 8(b) below, (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 Securities Exchange Act of 1934, as amended (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) Except for the repurchase of Shares for up to USD 75 million, as described in the Offering Memorandum for the Convertible Securities, on the Trade Date, neither Counterparty nor any
“affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other
derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer; provided that the foregoing shall not limit Counterparty’s ability, pursuant to any plan (as
defined in Rule 10b-18) of Counterparty, to re-acquire Shares in connection with any equity transaction related to such plan or limit Counterparty’s ability to withhold Shares to cover tax liabilities associated with such equity transactions or
otherwise restrict Counterparty’s ability to repurchase Shares under privately negotiated transactions with any of its employees, officers, directors or affiliates, so long as any re-acquisition, withholding or repurchase does not constitute a
“Rule 10b-18 purchase” (as defined in Rule 10b-18). 
 (iii) Without limiting the generality of
Section 13.1 of the Equity Definitions, Counterparty acknowledges that Dealer is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting
standards including 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. 

  
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 (iv) Without limiting the generality of Section 3(a)(iii) of the
Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act. 
 (v) Prior to the
Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request. 

(vi) Counterparty is not entering into this Confirmation or making any election hereunder or under the Convertible
Securities 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. 
 (vii) Counterparty is not, and after
giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. 

(viii) On each of the Trade Date and the Premium Payment Date, Counterparty is not, or will not be, “insolvent”
(as such term is defined under 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 the Number of Shares hereunder in compliance
with the laws of the jurisdiction of its incorporation. 
 (ix) Issuer is not aware of any state, local
(including non-U.S. jurisdictions) or non-U.S. federal law, rule, regulation or regulatory order applicable to the Shares that 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 Dealer or its affiliates owning or holding (however defined) Shares. 
 (x) The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 1 of the Purchase Agreement dated as of March 13, 2012, between the Counterparty
and Merrill Lynch, Pierce, Fenner & Smith Incorporated as representative of the Initial Purchasers party thereto (the “Purchase Agreement”) are true and correct and are hereby deemed to be repeated to Dealer as if set forth
herein. 
 (xi) 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. 

(b) Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in the U.S.
Commodity Exchange Act, as amended. 
 (c) Each of Dealer and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and warrants to Dealer
that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D
as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has
not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws. 
 (d) Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22),
101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge that it is the intent of the parties that (A) 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,” 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,” “payment amount” or “other transfer obligation” within the meaning of Section 362
of the Bankruptcy Code and a “transfer,” as such term is defined in Section 101(54) of the Bankruptcy Code and a “payment or 

  
 11 









 
other transfer of property” within the meaning of Sections 362 and 546 of the Bankruptcy Code, (B) the Agreement is a “master netting agreement” and each of the parties
thereto is a “master netting agreement participant”, each as defined in the Bankruptcy Code, (C) a party’s right to liquidate a Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the
Agreement with respect to the other party to constitute a “contractual right ... to cause the liquidation, termination or acceleration” of the Transaction as described in the Bankruptcy Code and (D) Dealer is entitled to the
protections afforded by, among other sections, Sections 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. 
 (e) Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Effective Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in
Section 3(a) of the Agreement and such other matters as Dealer may reasonably request. 
 8. Other Provisions:

 (a) Additional Termination Events. The occurrence of (i) an “Event of Default” with respect to
Counterparty under the terms of the Convertible Securities as set forth in Section 7.01 of the Indenture or (ii) an Amendment 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 Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement. 

“Amendment Event” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in
respect of any term of the Indenture or the Convertible Securities governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible
Securities (including changes to the conversion price, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Securities to amend,
in each case without the consent of Dealer (such consent not to be unreasonably withheld or delayed). 
 (b) Alternative
Calculations and Payment on Early Termination and on Certain Extraordinary Events. If Dealer shall owe Counterparty any amount pursuant to “Consequences of Merger Events” above or Sections 12.6, 12.7 or 12.9 of the Equity Definitions
or pursuant to Section 6(d)(ii) of the Agreement (a “Payment Obligation”), Counterparty shall have the right, in its sole discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination Alternative
(as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 9:30 A.M. New York City time on the relevant merger date, Announcement Date, Early Termination Date or date of
cancellation or termination in respect of an Extraordinary Event, as applicable (“Notice of Share Termination”); provided that if Counterparty does not elect to require Dealer to satisfy its Payment Obligation by the Share
Termination Alternative, Dealer shall have the right, in its sole discretion, to elect to satisfy its Payment Obligation by the Share Termination Alternative, notwithstanding Counterparty’s failure to elect or election to the contrary; and
provided further that Counterparty shall not have the right to so elect (but, for the avoidance of doubt, Dealer shall have the right to so elect) in the event of (i) an Insolvency, a Nationalization or a Merger Event, in each case, in
which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party, which
Event of Default or Termination Event resulted from an event or events within Counterparty’s control. Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled Trading Day immediately following the relevant
merger date, Announcement Date, Early Termination Date or date of cancellation or termination in respect of an Extraordinary Event, as applicable: 
  

			
	 Share Termination Alternative:
	  	Applicable and means that Dealer shall deliver to Counterparty the Share Termination Delivery Property on the date on which the Payment Obligation would otherwise be due pursuant to
“Consequences of Merger Events” above, Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, or such later date as the Calculation Agent may reasonably determine (the “Share Termination
Payment Date”), in satisfaction of the Payment Obligation.
		
	 Share Termination Delivery Property:
	  	A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation
Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of the aggregate amount of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate
the Share Termination Unit Price.


  
 12 










			
		
	 Share Termination Unit Price:
	  	The value of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property,
as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation.
		
	 Share Termination Delivery Unit:
	  	In the case of a Termination Event, Event of Default, Delisting or Additional Disruption Event, one Share or, in the case of an Insolvency, Nationalization or Merger Event, one
Share or a unit consisting of the number or amount of each type of property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such
Insolvency, Nationalization or Merger Event, as applicable. 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.
		
	 Failure to Deliver:
	  	Applicable
		
	 Other applicable provisions:
	  	If Share Termination Alternative is applicable, the provisions of Sections 1.27, 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in
Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that
Counterparty is the issuer of the Shares or any portion of the Share Termination Delivery Units) and 10.5 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction, except that all references to
“Shares” shall be read as references to “Share Termination Delivery Units.”

 (c) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable
judgment of Dealer, any Shares (the “Hedge Shares”) acquired by Dealer or any of its affiliates (Dealer and its affiliates collectively for the purposes of this Section 8(c) only, “Dealer”) for the purpose of
hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a
registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance satisfactory to Dealer, substantially in
the form of an underwriting agreement for a registered offering of equity securities of similar size, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities of similar size,
(C) provide disclosure opinions of Wyrick Robbins Yates & Ponton LLP or other nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing
documents customary in form for registered offerings of equity securities of similar size and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for
underwritten offerings of equity securities of similar size; provided, however, that if Dealer, in its reasonable judgment, 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 Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares
in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance satisfactory to Dealer,
including customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates
and such other documentation as is customary for private placements agreements for private placements of equity securities of similar size, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the
terms of the Transaction that are necessary, in its reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge
Shares from Dealer at the VWAP Price on such Exchange Business Days, and in the amounts, requested by Dealer. “VWAP Price” means, on any Exchange Business Day, the per Share volume-weighted average price as displayed under the
heading “Bloomberg VWAP” on Bloomberg 

  
 13 









 
page “SLXP.Q <equity> VAP” (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 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). 

(d) Amendment to Equity Definitions. The following amendment shall be made to the Equity Definitions: 

Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the
word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) at Dealer’s
option, the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA 2002 Master Agreement with respect to that Issuer, provided that the period for dismissal, discharge, stay or restraint therein
shall be increased from within 15 days to within 60 days.” 
 (e) Repurchase and Conversion Rate Adjustment Notices.
Counterparty shall, at least 10 Scheduled Trading Days prior to effecting any repurchase of Shares or consummating or otherwise executing or engaging in any transaction or event other than a stock split, reverse stock split or a stock dividend (a
“Conversion Rate Adjustment Event”) that would lead to an increase in the Conversion Rate (as such term is defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a
“Repurchase Notice”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage as determined on the date of such Repurchase Notice is (i) greater than 7.5% and (ii) greater by 0.5% than the
Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof), and, if such repurchase or Conversion Rate Adjustment Event,
or the intention to effect the same, would constitute material non-public information with respect to Counterparty or the Shares, Counterparty shall make public disclosure thereof at or prior to delivery of such Repurchase Notice. The
“Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Applicable Percentage of the Number of Shares, and the denominator of which is the number of Shares outstanding on such day.
In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective
directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses (including losses relating to Dealer’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 this Transaction), claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the
Exchange Act or any federal, state or local (including non-U.S.) law, regulation or regulatory order, relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient
to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition,
Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or
settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on
behalf of Counterparty. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the
benefit of any permitted assignee of Dealer. 
 (f) Transfer and Assignment. Either party may transfer any of its rights
or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed. For the avoidance of doubt, (A) Dealer may condition its consent on any of the
following, without limitation: (i) the receipt by Dealer of opinions and documents reasonably satisfactory to Dealer in connection with such assignment, (ii) such assignment being effected on terms reasonably satisfactory to Dealer with
respect to any legal and regulatory requirements relevant to Dealer, and (iii) Counterparty continuing to be obligated to provide notices hereunder relating to the Convertible Securities and continuing to be obligated with respect to
“Disposition of Hedge Shares” and “Repurchase and Conversion Rate Adjustment Notices” above and (B) Counterparty may condition its consent on, without limitation, whether such transfer or assignment would, in the sole
discretion of Counterparty, result in the termination of the Transaction, or otherwise result in adverse consequences to Counterparty, for U.S. federal income tax purposes. In addition, Dealer may transfer or assign without any consent of the
Counterparty its rights and obligations hereunder and 

  
 14 









 
under the Agreement, in whole or in part, to (i) any of its affiliates, (ii) any entities sponsored or organized by, or on behalf of or for the benefit of Dealer or (iii) any
person that is (or whose guarantor is) of credit quality equivalent to Dealer; provided that Dealer shall provide Counterparty with five Scheduled Trading Days’ prior notice of such assignment. At any time at which any Excess Ownership
Position or a Hedging Disruption exists, if Dealer, in its discretion, is unable to effect a transfer or assignment to a third party in accordance with the requirements set forth above after using its commercially reasonable efforts on pricing terms
and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position or a Hedging Disruption, as the case may be, no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect
to a portion (the “Terminated Portion”) of the Transaction, such that such Excess Ownership Position or Hedging Disruption, as the case may be, no longer exists. In the event that Dealer so designates an Early Termination Date with
respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a
Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such portion of the Transaction shall be the only
Terminated Transaction. “Excess Ownership Position” means any of the following: (i) the Equity Percentage exceeds 9.0%, (ii) Dealer or any “affiliate” or “associate” of Dealer would own in excess of 13%
of the outstanding Shares for purposes of Section 203 of the Delaware General Corporation Law or (iii) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under any federal, state or local (including non-U.S.) laws, regulations, regulatory orders or organizational documents or contracts of Counterparty that are, in each
case, 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 in excess of a number of Shares equal
to (x) the number of Shares that would give rise to reporting or registration obligations or other requirements (including obtaining prior approval by a local, state, federal or non-U.S. regulator) of a Dealer Person, or could result in an
adverse effect on a Dealer Person, under Applicable Laws, as determined by Dealer in its reasonable discretion, and with respect to which such requirements have not been met or the relevant approval has not been received or that would give rise to
any consequences under the constitutive documents of Counterparty or any contract or agreement to which Counterparty is a party, in each case minus (y) 1% of the number of Shares outstanding on the date of determination. 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 Dealer and any of its affiliates or any other person subject to aggregation with Dealer, for
purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13) of which Dealer is or may be deemed to be a part (Dealer and any such affiliates,
persons and groups, collectively, “Dealer Group”) beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that, as a result of a change in law, regulation or
interpretation after the date hereof, 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. 
 (g) Staggered Settlement. Dealer may, by notice to Counterparty on or prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares 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, Dealer 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 relevant “Cash Settlement Averaging Period”) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery
Obligation” (above) among the Staggered Settlement Dates or delivery times; and 
 (ii) the aggregate number
of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date. 

(h) Right to Extend. Dealer may postpone any Exercise Date or Settlement Date or any other date of valuation or delivery by Dealer
with respect to some or all of the relevant Options (in which event the Calculation Agent shall make appropriate adjustments to the Delivery Obligation), such postponement or extension not to exceed 40 Scheduled Trading Days in the aggregate, if
Dealer determines, in its reasonable discretion, that such extension is reasonably necessary or appropriate to (i) preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market,
the stock loan market or any other relevant market or (ii) to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an
affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer. 

  
 15 









 (i) Adjustments. For the avoidance of doubt, whenever the Calculation Agent is called
upon to make an adjustment pursuant to the terms of this Confirmation or the Definitions to take into account the effect of an event, the Calculation Agent shall make such adjustment by reference to the effect of such event on the Hedging Party,
assuming that the Hedging Party maintains a commercially reasonable hedge position. 
 (j) Disclosure. Effective from the
date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure. 
 (k) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities
to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may
assume such obligations. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance. 

(l) No Netting and Set-off. Each party waives any and all rights it may have to set off obligations arising under the
Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise. 
 (m) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders
in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty’s bankruptcy to any claim arising as a result of a breach by
Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that this Confirmation is not secured by any collateral that would otherwise secure the obligations of Counterparty
herein under or pursuant to any other agreement. 
 (n) Early Unwind. In the event the sale by Counterparty of the
Convertible Securities is not consummated with the initial purchasers pursuant to the Purchase Agreement for any reason by the close of business in New York on March 16, 2012 (or such later date as agreed upon by the parties, which in no event
shall be later than ten business days after March 16, 2012) (March 16, 2012 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early
Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled and terminated and (ii) if such Early Unwind is the result of a breach by Counterparty under the
Purchase Agreement, Counterparty shall pay to Dealer an amount in cash equal to the aggregate amount of costs and expenses relating to the unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses incurred
in reselling any Shares purchased by Dealer or its affiliates in connection with such hedging activities). In lieu of delivering cash to Dealer pursuant to the immediately preceding sentence, Counterparty may elect to deliver to Dealer a number of
Shares with a value, as determined by the Calculation Agent, equal to such amount of cash and, in which event, the parties shall enter into customary and commercially reasonable documentation relating to the registered or exempt resale of such
Shares. Following such termination, cancellation and payment or delivery, 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
either party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date. Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and following the payment or
delivery referred to above, all obligations with respect to the Transaction shall be deemed fully and finally discharged. 
 (o)
Special Provisions for Counterparty Payments. The parties hereby agree that, notwithstanding anything to the contrary herein or in the Agreement or the Equity Definitions, so long as Counterparty has paid the Premium to Dealer on the Premium
Payment Date and except as provided in “Early Unwind” above, in the event that an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction and, as a
result, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or Counterparty owes Dealer a Cancellation Amount pursuant to Article 12 of the Equity Definitions, such amount shall be deemed to be zero.

 (p) Limitations on Settlement by Counterparty. Notwithstanding anything herein or in the Agreement to the contrary, in
no event shall Counterparty be required to deliver an aggregate number of Shares in connection with this Transaction in excess of two million Shares, subject to adjustment from time to time as a result of actions of


  
 16 









 
Counterparty or events within Counterparty’s control and in accordance with the provisions of this Confirmation and the Equity Definitions (as incorporated and modified herein). In the event
Counterparty, as a result of this Section 8(p), shall not have delivered the full number of Shares that it would otherwise be obligated to deliver (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 or (iii) Counterparty additionally authorizes any unissued Shares that are not reserved for other transactions. Counterparty shall immediately notify Dealer of the occurrence of any of the
foregoing events (including the number of Shares subject to each of clauses (i), (ii) and (iii) and the corresponding number of Shares to be delivered) and promptly deliver such Shares thereafter. 

(q) Wall Street Transparency and Accountability Act of 2010. The parties hereby agree that none of (v) Section 739 of
the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), (w) any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, (x) the enactment
of WSTAA or any regulation under the WSTAA, (y) any requirement under WSTAA nor (z) an amendment made by WSTAA, shall limit or otherwise impair either party’s rights to terminate, renegotiate, modify, amend or supplement this
Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement
(including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position or Illegality (as defined in the Agreement)). 

(r) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR
ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF. 
 (s) Governing Law; Jurisdiction. THIS
CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.


  
 17 









 Counterparty hereby agrees (a) to check this Confirmation carefully and immediately
upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty
with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to us. 

 

			
	Yours faithfully,
	
	
		
	By:	 	  

		 	Name:
		 	Title:


  

			
	Agreed and Accepted By:
	
	SALIX PHARMACEUTICALS, LTD.
		
	By:	 	  

		 	Name:
		 	Title:








 Annex A 
 Premium:            USD 

  
 A-1