Exhibit 10.1


 


 [Dealer]




 


May 14, 2020


To: PetIQ, Inc.

923 S. Bridgeway Place


Eagle, Idaho 83616


Attention: General Counsel


 


Re: Base Call Option Transaction


 


The purpose of this
letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction
entered into between [____] (“Dealer”) and PetIQ, Inc. (“Counterparty”) as of the Trade Date
specified below (the “Transaction”). This letter agreement constitutes a “Confirmation” as referred
to in the ISDA Master Agreement specified below. Each party further agrees that this Confirmation together with the Agreement evidence
a complete binding agreement between Counterparty and Dealer as to the subject matter and terms of the Transaction to which this
Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect thereto.


 


The
definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”),
as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this
Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.
Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated May 14, 2020 (the “Offering
Memorandum”) relating to the 4.00% Convertible Senior Notes due 2026 (as originally issued by Counterparty, the “Convertible
Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty
in an aggregate initial principal amount of USD 125,000,000 (as increased by up to an aggregate principal amount of USD 18,750,000
if and to the extent that the Initial Purchasers (as defined herein) exercise their option to purchase additional Convertible Notes
pursuant to the Purchase Agreement (as defined herein)) pursuant to an Indenture to be dated May 19, 2020 between Counterparty
and Wells Fargo Bank, National Association, as trustee (the “Indenture”). In the event of any inconsistency
between the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern. The
parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth
in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred
to herein will conform to the descriptions thereof in the Offering Memorandum. If any such definitions in the Indenture or any
such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the
Offering Memorandum will govern for purposes of this Confirmation. The parties further acknowledge that the Indenture section numbers
used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such
section numbers are changed in the Indenture as executed, the parties will amend this Confirmation in good faith to preserve the
intent of the parties. Subject to the foregoing, 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 or supplemented following such date (other than any amendment or
supplement (x) pursuant to Section 8.01(I) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture
to the description of the Convertible Notes in the Offering Memorandum or (y) pursuant to Section 5.09 of the Indenture, subject,
in the case of this clause (y), to the second paragraph under “Method of Adjustment” in Section ‎3), any
such amendment or supplement will be disregarded for purposes of this Confirmation (other than as provided in Section ‎9(i)(iii)
below) unless the parties agree otherwise in writing.


 


Each party is hereby
advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.


 






    


    


    

 


1.            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 supplement, form a part of, and be subject to an agreement in the form
of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement
in such form (but without any Schedule except for (i) the election of the laws of the State of New York as the governing law (without
reference to choice of law doctrine), (ii) in respect of Section 5(a)(vi) of the Agreement, the election that the “Cross
Default” provisions shall apply to Dealer with (a) a “Threshold Amount” with respect to Dealer of three percent
of the shareholders’ equity of Dealer’s parent as of the Trade Date, (b) the deletion of the phrase “, or becoming
capable at such time of being declared,” from clause (1) and (c) the following language added to the end thereof: “Notwithstanding
the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (x) the default was caused solely
by error or omission of an administrative or operational nature and (y) funds were available to enable the party to make the payment
when due.”, (iii) the modification that the term “Specified Indebtedness” shall have the meaning specified in
Section 14 of the Agreement, except that such term shall not include obligations in respect of deposits received in the ordinary
course of a party’s banking business, and (iv) the modification that following the payment of the Premium, the condition
precedent in Section 2(a)(iii) of the Agreement with respect to Events of Default or Potential Events of Default (other than an
Event of Default or Potential Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) shall not apply to
a payment or delivery owing by Dealer to Counterparty. In the event of any inconsistency between provisions of the Agreement and
this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates. The parties
hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.


 


2.            The
terms of the particular Transaction to which this Confirmation relates are as follows:


 


General
Terms.


 


	 	Trade Date:	May 14, 2020
	 	 	 
	 	Effective Date:	The closing date of the initial issuance of the Convertible Notes
	 	 	 
	 	Option Style:	“Modified American”, as described under “Procedures for Exercise” below
	 	 	 
	 	Option Type:	Call
	 	 	 
		Buyer:	Counterparty



 


		Seller:	Dealer



 


		Shares:	The Class A common stock of Counterparty, par value USD 0.001 per share (Exchange symbol “PETQ”).
	 	 	 
	 	Number of Options:	125,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero.
	 	 	 
	 	Applicable Percentage:	50%
	 	 	 
	 	Option Entitlement:	A number equal to the product of the Applicable Percentage and 33.7268.
	 	 	 
	 	Strike Price:	USD 29.6500
	 	 	 
	 	Cap Price:	USD 41.5100



 


		Premium:	USD 6,443,750.00
	 	 	 
	 	Premium
Payment Date:	The Effective Date



 


		Exchange:	The NASDAQ Global Select Market
	 	 	 
	 	Related
Exchange(s):	All Exchanges
	 	 	 
	 	Excluded
Provisions:	Section 5.06 and Section 5.07 of the Indenture.



 






    


    


    

 


Procedures
for Exercise.


 





	 	Conversion Date:	With respect to any conversion of a Convertible Note (other than (x) any conversion of Convertible Notes with a Conversion Date occurring prior to the Free Convertibility Date or (y) any conversion of a Convertible Note in respect of which the Holder (as such term is defined in the Indenture) of such Convertible Note would be entitled to an increase in the Conversion Rate pursuant Section 5.07 of the Indenture (any such conversion described in clause (x) or clause (y), an “Early Conversion”), to which the provisions of Section ‎9(i)(i) of this Confirmation shall apply), the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in Section 5.02(A) of the Indenture; provided that if Counterparty has not delivered to Dealer a related Notice of Exercise, then in no event shall a Conversion Date be deemed to occur hereunder (and no Option shall be exercised or deemed to be exercised hereunder) with respect to any surrender of a Convertible Note for conversion in respect of which Counterparty has elected to designate a financial institution for exchange in lieu of conversion of such Convertible Note pursuant to Section 5.08 of the Indenture.
	 	 	 
	 	Free Convertibility Date:	January 15, 2026
	 	 	 
	 	Expiration Time: 	The Valuation Time
	 	 	 
	 	Expiration Date: 	June 1, 2026, subject to earlier exercise.
	 	 	 
	 	Multiple Exercise:	Applicable, as described under “Automatic Exercise” below.
	 	 	 
	 	Automatic Exercise: 	Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date occurring on or after the Free Convertibility Date, in respect of which a “Notice of Conversion” (as defined in the Indenture) that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to the number of Convertible Notes as to which such Conversion Date has occurred shall be deemed to be automatically exercised; provided that such Options shall be exercised or deemed exercised only in accordance with “Notice of Exercise” below.
	 	 	 
	 		Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options.




 






    


     


    

 





	 	Notice of Exercise:	Notwithstanding anything to the contrary in the Equity Definitions or under “Automatic Exercise” above, in connection with the exercise of any Options relating to Convertible Notes with a Conversion Date occurring on or after the Free Convertibility Date, Counterparty must notify Dealer in writing (which, for the avoidance of doubt, may be by email) before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the Expiration Date specifying the number of such Options that are to be exercised; provided that, notwithstanding the foregoing, such notice (and the related exercise of Options hereunder) shall be effective if given by Counterparty after the applicable notice deadline specified above but prior to 5:00 p.m. (New York City time) on the fifth Exchange Business Day following such notice deadline, in which event the Calculation Agent shall have the right to adjust Dealer’s delivery obligation hereunder, with respect to the exercise of such Options, as appropriate to reflect the additional commercially reasonable costs and losses (limited to losses as a result of hedging mismatches and market losses) and expenses incurred by Dealer or any of its affiliates in connection with its hedging activities with such adjustments made assuming that Dealer maintains commercially reasonable hedge positions (including the unwinding of any hedge position) as a result of its not having received such notice prior to such notice deadline (it being understood that the adjusted delivery obligation described in this proviso can never be less than zero and can never require any payment by Counterparty); provided, further, that if the Relevant Settlement Method for such Options is (x) Net Share Settlement and the Specified Cash Amount (as defined below) is not USD 1,000, (y) Cash Settlement or (z) Combination Settlement, Dealer shall have received a separate notice (the “Notice of Final Settlement Method”) (which, for the avoidance of doubt, may be by email) in respect of all such Convertible Notes before 5:00 p.m. (New York City time) on the Free Convertibility Date specifying (1) the Relevant Settlement Method for such Options, and (2) if the settlement method for the related Convertible Notes is not Settlement in Shares or Settlement in Cash (each as defined below), the fixed amount of cash per Convertible Note that Counterparty has elected to deliver to Holders (as such term is defined in the Indenture) of the related Convertible Notes (the “Specified Cash Amount”). If the Relevant Settlement Method for such Options is other than Net Share Settlement in the Notice of Final Settlement Method, the Notice of Final Settlement Method shall contain a written representation by Counterparty to Dealer that Counterparty is not, on the date of the Notice of Final Settlement Method, in possession of any material non-public information with respect to Counterparty or the Shares.
	 	 	 
	 	Valuation Time:	At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its commercially reasonable discretion.
	 	 	 
	 	Market Disruption Event:	Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following:
	 	 	 
	 		“‘Market Disruption Event’ means, with respect to any date (i) the failure by the principal U.S. national or regional securities exchange on which the Shares are then listed, or, if the Shares are not then listed on a U.S. national or regional securities exchange, the principal other market on which the Shares are then traded, to open for trading during its regular trading session on such date; or (ii) the occurrence or existence, for more than one half hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise) in the Shares or in any options contracts or futures contracts relating to the Shares, and such suspension or limitation occurs or exists at any time before 1:00 p.m., New York City time, on such date.”




 








     


    


    

 


Settlement
Terms.


 





	 	Settlement
Method:	For any Option, Net Share Settlement; provided that if the Relevant Settlement Method set forth below for such
Option is not Net Share Settlement, then the Settlement Method for such Option shall be such Relevant Settlement Method, but only
if Counterparty shall have notified Dealer of the Relevant Settlement Method in the Notice of Final Settlement Method for such
Option.




	 	 	 
	 	Relevant
Settlement Method:	In respect of any Option:
	 	 	 
	 	 	(i)       if
Counterparty has elected, or is deemed to have elected, to settle its conversion obligations in respect of the related Convertible
Note (A) entirely in Shares pursuant to Section 5.03(B)(i)(1) of the Indenture (together with cash in lieu of fractional Shares)
(such settlement method, “Settlement in Shares”), (B) in a combination of cash and Shares pursuant to Section
5.03(B)(i)(3) of the Indenture with a Specified Cash Amount less than USD 1,000 (such settlement method, “Low Cash Combination
Settlement”) or (C) in a combination of cash and Shares pursuant to Section 5.03(B)(i)(3) of the Indenture with a Specified
Cash Amount equal to USD 1,000, then, in each case, the Relevant Settlement Method for such Option shall be Net Share Settlement;




	 	 	 
	 	 	(ii)      if
Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note in a combination of cash
and Shares pursuant to Section 5.03(B)(i)(3) of the Indenture with a Specified Cash Amount greater than USD 1,000, then the Relevant
Settlement Method for such Option shall be Combination Settlement; and




	 	 	 
	 	 	 (iii)     if
Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note entirely in cash pursuant
to Section 5.03(B)(i)(2) of the Indenture (such settlement method, “Settlement in Cash”), then the Relevant
Settlement Method for such Option shall be Cash Settlement.




	 	 	 
	 	Net Share
Settlement:	 If Net Share Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will deliver
to Counterparty, on the relevant Settlement Date for each such Option, a number of Shares (the “Net Share Settlement Amount”)
equal to the sum, for each Valid Day during the Settlement Averaging Period for each such Option, of (i) (a) the Daily Option
Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day, divided by (ii) the number of Valid
Days in the Settlement Averaging Period; provided that in no event shall the Net Share Settlement Amount for any Option
exceed a number of Shares equal to the Applicable Limit for such Option divided by the Applicable Limit Price on the Settlement
Date for such Option.


 









 






    


    


    

 





	 	 	Dealer will
pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Net Share Settlement Amount valued at
the Relevant Price for the last Valid Day of the Settlement Averaging Period.




	 	 	 
	 	Combination
Settlement:	If Combination Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will pay or
deliver, as the case may be, to Counterparty, on the relevant Settlement Date for each such Option:


 






 








		(i)	cash (the “Combination Settlement Cash Amount”) equal to the sum, for each Valid
Day during the Settlement Averaging Period for such Option, of (A) an amount (the “Daily Combination Settlement Cash Amount”)
equal to the lesser of (1) the product of (x) the Applicable Percentage and (y) the Specified Cash Amount minus USD 1,000
and (2) the Daily Option Value, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided
that if the calculation in clause (A) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement
Cash Amount for such Valid Day shall be deemed to be zero; and



 


		(ii)	Shares (the “Combination Settlement Share Amount”) equal to the sum, for each
Valid Day during the Settlement Averaging Period for such Option, of a number of Shares for such Valid Day (the “Daily
Combination Settlement Share Amount”) equal to (A) (1) the Daily Option Value on such Valid Day minus the
Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the Relevant Price on such Valid Day, divided
by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in sub-clause (A)(1)
above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day
shall be deemed to be zero;



 





	 	 	provided
that in no event shall the sum of (x) the Combination Settlement Cash Amount for any Option and (y) the Combination Settlement
Share Amount for such Option multiplied by the Applicable Limit Price on the Settlement Date for such Option, exceed the
Applicable Limit for such Option.




	 	 	 
	 	 	Dealer will
pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Combination Settlement Share Amount valued
at the Relevant Price for the last Valid Day of the Settlement Averaging Period.







 






    


    


    

 





	 	Cash Settlement:	If
Cash Settlement is applicable to any Option exercised or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions,
Dealer will pay to Counterparty, on the relevant Settlement Date for each such Option, an amount of cash (the “Cash Settlement
Amount”) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (i) the Daily
Option Value for such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period; provided
that in no event shall the Cash Settlement Amount for any Option exceed the Applicable Limit for such Option.


 



	 	 	 
	 	Daily Option
Value:	For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid Day, multiplied by (ii) (A) the
lesser of the Relevant Price on such Valid Day and the Cap Price, less (B) the Strike Price on such Valid Day; provided
that if the calculation contained in clause (ii) above results in a negative number, the Daily Option Value for such Valid Day
shall be deemed to be zero. In no event will the Daily Option Value be less than zero.


 



	 	 	 
	 	Applicable
Limit:	For any Option, an amount of cash equal to the Applicable Percentage multiplied by the excess of (i) the aggregate
of (A) the amount of cash, if any, paid to the Holder of the related Convertible Note upon conversion of such Convertible Note
and (B) the number of Shares, if any, delivered to the Holder of the related Convertible Note upon conversion of such Convertible
Note multiplied by the Applicable Limit Price on the Settlement Date for such Option, over (ii) USD 1,000.
	 	 	 
	 	Applicable
Limit Price:	On any day, the opening price as displayed under the heading “Op” on Bloomberg page PETQ <equity>
(or any successor thereto).
	 	 	 
	 	Valid Day:	 A
day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the principal U.S. national
or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or
regional securities exchange, on the principal other market on which the Shares are then traded. If the Shares are not so listed
or traded, “Valid Day” means a Business Day.




	 	 	 
	 	Scheduled
Valid
Day:	A
day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange on which the
Shares are then listed or, if the Shares are not then listed on a United States national or regional securities exchange, on
the principal other market on which the Shares are then traded. If the Shares are not so listed or traded, “Scheduled
Valid Day” means a Business Day.
	 	 	 
	 	Business
Day:	 Any day other than a Saturday, a Sunday or any day on which the Federal Reserve Bank of New York is authorized or required
by law or executive order to close or be closed.




	 	 	 
	 	Relevant Price:
	 On any Valid Day, the per Share volume-weighted average price as displayed under the heading“Bloomberg VWAP”
on Bloomberg page PETQ <equity> AQR (or its equivalent successor if such page is not available) in respect of the period
from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted
average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent
in a commercially reasonable manner using, if practicable, a volume-weighted average method). The Relevant Price will be determined
without regard to after-hours trading or any other trading outside of the regular trading session trading hours.













 






    


    


    

 





	 	Settlement
Averaging
Period:	For any Option and regardless of the Settlement Method applicable to such Option, the 40 consecutive Valid Days
commencing on, and including, the 41st Scheduled Valid Day immediately prior to the Expiration Date; provided that if
the Notice of Final Settlement Method for such Option specifies that Settlement in Shares or Low Cash Combination Settlement
applies to the related Convertible Note, the Settlement Averaging Period shall be the 80 consecutive Valid Days commencing
on, and including, the 81st Scheduled Valid Day immediately prior to the Expiration Date.
	 	 	 
	 	Settlement
Date:	For any Option, the second Business Day immediately following the final Valid Day of the Settlement Averaging Period for
such Option.
	 	 	 
	 	Settlement
Currency:	USD




	 	 	 
	 	Other Applicable
Provisions:	The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be applicable, except that
all references in such provisions to “Physically-settled” shall be read as references to “Share Settled”.
 “Share Settled” in relation to any Option means that Net Share Settlement or Combination Settlement is applicable to
that Option.




	 	 	 
	 	Representation
and Agreement:	Notwithstanding anything to the contrary in the Equity Definitions (including, but not limited to, Section 9.11
thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions
and limitations arising from Counterparty’s status as issuer of the Shares under applicable securities laws, (ii) Dealer
may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the Clearance System
and (iii) any Shares delivered to Counterparty may be “restricted securities” (as defined in Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”)).



 


3.            
Additional Terms applicable to the Transaction.


 


Adjustments applicable to the
Transaction:


 





	 	Potential
Adjustment Events:	Notwithstanding Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event” means
an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment
under the Indenture to the “Conversion Rate” or the composition of a “Reference Property Unit” or to any
 “Last Reported Sale Price” , “Daily VWAP,” “Daily Conversion Value”, “Daily Cash Amounts”
or “Daily Share Amounts” (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any
delivery or payment obligation hereunder, and no adjustment shall be made to the terms of the Transaction, on account of (x) any
distribution of cash, property or securities by Counterparty to holders of the Convertible Notes (upon conversion or otherwise)
or (y) any other transaction in which holders of the Convertible Notes are entitled to participate, in each case, in lieu of an
adjustment under the Indenture of the type referred to in the immediately preceding sentence (including, without limitation, pursuant
to the proviso to the first sentence of Section 5.05(A)(iii)(1) of the Indenture or proviso to the first sentence of Section 5.05(A)(iv)
of the Indenture).



 






    


    


    

 





	 	Method
of Adjustment:	Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions, upon
any Potential Adjustment Event, the Calculation Agent shall make a corresponding adjustment to any one or more of the Strike Price,
Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction.




	 	 	 
	 	 	Notwithstanding
the foregoing and “Consequences of Merger Events / Tender Offers” below:



 


		(i)	if the Calculation Agent
in good faith disagrees with any adjustment to the Convertible Notes that involves an exercise of discretion by Counterparty or
its board of directors (including, without limitation, pursuant to Section 5.05(H) of the Indenture, Section 5.09 of the Indenture
or any supplemental indenture entered into thereunder or in connection with any proportional adjustment or the determination of
the fair value of any securities, property, rights or other assets), then in each such case, the Calculation Agent will, in good
faith and in a commercially reasonable manner, determine the adjustment to be made to any one or more of the Strike Price, Number
of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction in a
commercially reasonable manner; provided that, notwithstanding the foregoing, if any Potential Adjustment Event occurs
during the Settlement Averaging Period but no adjustment was made to any Convertible Note under the Indenture because the relevant
Holder (as such term is defined in the Indenture) was deemed to be a record owner of the underlying Shares on the related Conversion
Date, then the Calculation Agent shall make a commercially reasonable adjustment, as determined by it, to the terms hereof in order
to account for such Potential Adjustment Event;



 






    


    


    

 


		(ii)	in connection with any Potential Adjustment Event as a result of an event or condition set forth
in Section 5.05(A)(ii) of the Indenture or Section 5.05(A)(iii)(1) of the Indenture where, in either case, the period for determining
 “Y” (as such term is used in Section 5.05(A)(ii) of the Indenture) or “SP” (as such term is used in Section
5.05(A)(iii)(1) of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition
giving rise to such Potential Adjustment Event, then the Calculation Agent shall, in good faith and in a commercially reasonable
manner, have the right to adjust any variable relevant to the exercise, settlement or payment for the Transaction as appropriate
to reflect the costs (including, but not limited to, hedging mismatches and market losses) and expenses incurred by Dealer in connection
with its hedging activities, with such adjustments made assuming that Dealer maintains commercially reasonable hedge positions,
as a result of such event or condition not having been publicly announced prior to the beginning of such period; and



 


		(iii)	if any Potential Adjustment
Event is declared and (a) the event or condition giving rise to such Potential Adjustment Event is subsequently amended, modified,
cancelled or abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is otherwise not adjusted at the time
or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the “Conversion
Rate” (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted
(each of clauses (a), (b) and (c), a “Potential Adjustment Event Change”) then, in each case, the Calculation
Agent shall, in good faith and in a commercially reasonable manner, have the right to adjust any variable relevant to the exercise,
settlement or payment for the Transaction as appropriate to reflect the costs (including, but not limited to, hedging mismatches
and market losses) and expenses incurred by Dealer in connection with its hedging activities, with such adjustments made assuming
that Dealer maintains commercially reasonable hedge positions, as a result of such Potential Adjustment Event Change.



 


	 	Dilution
Adjustment Provisions:	Sections
5.05(A)(i), (ii), (iii), (iv) and (v) and Section 5.05(H) of the Indenture.



 


Extraordinary Events applicable
to the Transaction:


 





	 	Merger
Events:	Applicable; provided that notwithstanding Section 12.1(b) of the Equity Definitions, a “Merger Event”
means the occurrence of any event or condition set forth in the definition of “Common Stock Change Event” in Section
5.09(A) of the Indenture.



 






    


    


    

 





	 	Tender
Offers:	Applicable; provided that notwithstanding Section 12.1(d) of the Equity Definitions, a “Tender Offer”
means the occurrence of any event or condition set forth in Section 5.05(A)(v) of the Indenture.
	 	 	 
	 	Consequences
of Merger Events/	 
	 	 	 
	 	Tender
Offers:	Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions, upon the occurrence of a Merger Event or a
Tender Offer, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any
one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options, Option Entitlement and
any other variable relevant to the exercise, settlement or payment for the Transaction, subject to the second paragraph under “Method
of Adjustment,” to the extent an analogous adjustment is required to be made pursuant to the Indenture in respect of such
Merger Event or Tender Offer (other than with respect to any adjustment to the Cap Price); provided, however, that
such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision; provided
further that if, with respect to a Merger Event or a Tender Offer, (i) the consideration for the Shares includes (or, at the
option of a holder of Shares, may include) shares of an entity or person that is not a corporation or is not organized under the
laws of the United States, any State thereof or the District of Columbia or (ii) the Counterparty to the Transaction following
such Merger Event or Tender Offer will not be a corporation organized under the laws of the United States, any State thereof or
the District of Columbia, then, in either case, Cancellation and Payment (Calculation Agent Determination) may apply at Dealer’s
reasonable election; provided further that, for the avoidance of doubt, adjustments shall be made pursuant to the provisions
set forth above regardless of whether any Merger Event or Tender Offer gives rise to an Early Conversion.
	 	 	 
	 	Consequences
of Announcement Events:	Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the Equity Definitions; provided
that, in respect of an Announcement Event, (x) references to “Tender Offer” shall be replaced by references to “Announcement
Event” and references to “Tender Offer Date” shall be replaced by references to “date of such Announcement
Event”, (y) the phrase “exercise, settlement, payment or any other terms of the Transaction (including, without limitation,
the spread)” shall be replaced with the phrase “Cap Price (provided that in no event shall the Cap Price be less than
the Strike Price)”, and (z) for the avoidance of doubt, the Calculation Agent shall, in good faith and in a commercially
reasonable manner, determine whether the relevant Announcement Event has had an economic effect on the Transaction (and, if so,
shall adjust the Cap Price accordingly) on one or more occasions on or after the date of the Announcement Event up to, and including,
the Expiration Date, any Early Termination Date and/or any other date of cancellation, it being understood that (i) any adjustment
in respect of an Announcement Event shall take into account any earlier adjustment relating to the same Announcement Event and
(ii) in making any adjustment the Calculation Agent shall take into account volatility, liquidity or other factors before and after
such Announcement Event. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions,
to which Article 12 of the Equity Definitions is applicable.



 









    


    


    

 





	 	Announcement
Event:	(i) The public announcement by Issuer, any agent or representative of Issuer, any affiliate or subsidiary of Issuer,
any Valid Third Party Entity or any affiliate of a Valid Third Party Entity, of (x) any transaction or event that, if completed,
would constitute a Merger Event or Tender Offer, (y) any potential acquisition or disposition by Issuer and/or its subsidiaries
where the aggregate consideration exceeds 30% of the market capitalization of Issuer as of the date of such announcement (an “Acquisition
Transaction”) or (z) the intention to enter into a Merger Event or Tender Offer or an Acquisition Transaction, (ii)
the public announcement by Issuer of an intention to solicit or enter into, or to explore strategic alternatives or other similar
undertaking that may include, a Merger Event or Tender Offer or an Acquisition Transaction or (iii) any subsequent public announcement
by any entity of a change to a transaction or intention that is the subject of an announcement of the type described in clause
(i) or (ii) of this sentence (including, without limitation, a new announcement, whether or not by the same party, relating to
such a transaction or intention or the announcement of a withdrawal from, or the abandonment or discontinuation of, such a transaction
or intention), as determined by the Calculation Agent. For the avoidance of doubt, the occurrence of an Announcement Event with
respect to any transaction or intention shall not preclude the occurrence of a later Announcement Event with respect to such transaction
or intention. For purposes of this definition of “Announcement Event,” (A) “Merger Event” shall mean such
term as defined under Section 12.1(b) of the Equity Definitions (but, for the avoidance of doubt, the remainder of the definition
of “Merger Event” in Section 12.1(b) of the Equity Definitions following the definition of “Reverse Merger”
therein shall be disregarded) and (B) “Tender Offer” shall mean such term as defined under Section 12.1(d) of the Equity
Definitions; provided that Section 12.1(d) of the Equity Definitions is hereby amended by replacing “10%” with
 “20%” in the third line thereof.
	 	 	 
	 	Valid Third
Party Entity:	In respect of any transaction, any third party that has a bona fide intent to enter into or consummate such transaction
(it being understood and agreed that in determining whether such third party has such a bona fide intent, the Calculation Agent
may take into consideration the effect of the relevant announcement by such third party (or its agent or representative) on the
Shares and/or options relating to the Shares).



 






    


    


    

 





	 	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 will 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 of the New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or their
respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange.
	 	 	 
	 	Additional
Disruption Events:	 
	 	 	 
	 	Change
in Law:	Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the
phrase “the interpretation” in the third line thereof with the phrase “, or public announcement of, the formal
or informal interpretation”, (ii) replacing the word “Shares” where it appears in clause (X) thereof with the
words “Hedge Position” and (iii) replacing the parenthetical beginning after the word “regulation” in the
second line thereof with the words “(including, for the avoidance of doubt and without limitation, (x) any tax law or (y)
adoption, effectiveness or promulgation of new regulations authorized or mandated by existing statute)”.
	 	 	 
	 	Failure
to Deliver:	Applicable
	 	 	 
	 	Hedging
Disruption:	Applicable; provided that:



 


		(i)	Section 12.9(a)(v) of the Equity Definitions is hereby amended by (a) inserting the following
words at the end of clause (A) thereof: “in the manner contemplated by the Hedging Party on the Trade Date” and (b) 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”.



 





	 	Increased
Cost of Hedging:	Not Applicable
	 	 	 
	 	Hedging
Party:	For all applicable Additional Disruption Events, Dealer.
	 	 	 
	 	Determining
Party:	For all applicable Extraordinary Events, Dealer.



 






    


    


    

 


		Non-Reliance:	Applicable
	 	 	 
	 	Agreements
and Acknowledgments	 
	 	 	 
	 	Regarding
Hedging Activities:	Applicable
	 	 	 
	 	Additional
Acknowledgments:	Applicable
	 	 	 
	 	Hedging
Adjustment:	For the avoidance of doubt, whenever Hedging Party, Determining Party or the Calculation Agent makes an adjustment,
calculation or determination permitted or required to be made pursuant to the terms of this Confirmation or the Equity Definitions
to take into account the effect of any event (other than an adjustment, calculation or determination made by reference to the Indenture),
the Calculation Agent, Determining Party or Hedging Party, as the case may be, shall make such adjustment, calculation or determination
in a commercially reasonable manner and by reference to the effect of such event on Dealer assuming that Dealer maintains a commercially
reasonable hedge position.



 


		4.	Calculation Agent.Dealer; provided that all calculations and determinations
by the Calculation Agent (other than calculations or determinations made by reference to the Indenture) shall be made in good faith
and in a commercially reasonable manner and assuming for such purposes that Dealer is maintaining, establishing and/or unwinding,
as applicable, a commercially reasonable hedge position; provided further that if an Event of Default of the type described
in Section 5(a)(vii) of the Agreement with respect to which Dealer is the sole Defaulting Party occurs, Counterparty shall have
the right to appoint a successor calculation agent which shall be a nationally recognized third-party dealer in over-the-counter
corporate equity derivatives. The Calculation Agent agrees that it will promptly (but in any event within five (5) Exchange Business
Days), upon written notice from Counterparty, provide a statement displaying in reasonable detail the basis for such determination,
adjustment or calculation, as the case may be (including any quotations, market data or information from internal or external sources
used in making such determination, adjustment or calculation, it being understood that the Calculation Agent shall not be required
to disclose any confidential information or proprietary models used by it in connection with such determination, adjustment or
calculation, as the case may be).



 


5.           
Account Details.


 


		(a)	Account for payments to Counterparty:



 


To be provided.


 


Account for delivery of Shares to Counterparty:


 


To be provided.


 


(b)               
Account for payments to Dealer:


 


Bank:


 






    


    


    

 


ABA#: 


F/O: 


A/C:


Ref:


 


Account for delivery of Shares from Dealer:


 


To be provided by Dealer.


 


6.           
Offices.


 


		(a)	The Office of Counterparty for the Transaction is:



 


The Office of Dealer
for the Transaction is:


 


7.           
Notices. 


 


		(a)	Address for notices or communications to Counterparty:



 


PetIQ, Inc.


923 S. Bridgeway
Place


Eagle, Idaho 83616

Attention: General Counsel


 


With a copy to:


 


Winston & Strawn LLP


35 W. Wacker Drive


Chicago, Illinois 60601


Attention: Christina T. Roupas


 


		(b)	Address for notices or communications to Dealer:



 


[____]


Attention: 


Telephone No.:


Email:


 


8.           
Representations and Warranties of Counterparty.


 


Each of the representations and
warranties of Counterparty set forth in Section 1 of the Purchase Agreement (the “Purchase Agreement”) dated
as of May 14, 2020, among Counterparty and Jefferies LLC, as representative of the Initial Purchasers party thereto (the “Initial
Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein. Counterparty
hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:


 


		(a)	Counterparty has all necessary corporate power and authority to execute, deliver and perform its
obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary
corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty
and constitutes its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights
to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.



 






    


    


    

 



 


		(b)	Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations
of Counterparty hereunder will conflict with or result in a breach of (x) the certificate of incorporation or by-laws of Counterparty,
or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency,
or (y) any agreement or instrument filed as an exhibit to Counterparty’s Annual Report on Form 10-K for the year ended December
31, 2019, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument except for
any conflict or breach which would not reasonably be expected to have a material adverse effect.



 


		(c)	To the knowledge of Counterparty, no consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty
of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities
laws; provided that Counterparty makes no representation or warranty regarding any such requirement that is applicable generally
to the ownership of equity securities by Dealer or any of its affiliates solely as a result of it or any of such affiliate being
financial institutions or broker-dealers.



 


		(d)	Counterparty is not and, after consummation of 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.



 


		(e)	Counterparty is an “eligible contract participant” (as such term is defined in Section
1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C)
of the Commodity Exchange Act).



 


		(f)	Each of it and its affiliates is not, on the date hereof, in possession of any material non-public
information with respect to Counterparty or the Shares.



 


		(g)	To the knowledge of Counterparty, no state or local (including any non-U.S. jurisdiction’s)
law, rule, regulation or regulatory order applicable to the Shares 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; provided that Counterparty makes no representation or warranty
regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer or any of its affiliates
solely as a result of it or any of such affiliate being financial institutions or broker-dealers.



 


		(h)	Counterparty (A) is capable of evaluating investment risks independently, both in general and with
regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment
in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer
in writing; and (C) has total assets of at least USD 50 million.



 


		(i)	The assets of Counterparty do not constitute “plan assets” within the meaning of 29
C.F.R. § 2510.3-101 under the Employee Retirement Income Security Act of 1974, as amended.



 


		(j)	On and immediately after the Trade Date and the Premium Payment Date, (A) Counterparty is not “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 (B) Counterparty would be able to purchase the number of Shares with respect to the Transaction in compliance
with the laws of the jurisdiction of Counterparty’s incorporation (including the adequate surplus and capital requirements
of Sections 154 and 160 of the General Corporation Law of the State of Delaware).



 


		(k)	Counterparty (x) represents and warrants that it has not, as of the Trade Date, applied for or
received a loan, loan guarantee, direct loan (as that term is defined in the Coronavirus Aid, Relief and Economic Security Act
(the “CARES Act”)) or other investment, or any financial assistance or relief under any program or facility (collectively
 “Financial Assistance”) that (a) is established under applicable law (whether in existence as of the Trade Date or
subsequently enacted, adopted or amended), including without limitation the CARES Act and the Federal Reserve Act, as amended,
and (b) (i) requires under applicable law (or any regulation, guidance, interpretation or other pronouncement of a governmental
authority with jurisdiction for such program or facility) as a condition of such Financial Assistance, that Counterparty comply
with a requirement not to, or otherwise agree, attest, certify or warrant that it has not, as of the date specified in such condition,
repurchased, or will not repurchase, any equity security of Counterparty, and that it has not, as of the date specified in the
condition, made a capital distribution or will make a capital distribution, or (ii) for which the terms of the Transaction would
cause Counterparty to fail to satisfy any condition for application for or receipt or retention of the Financial Assistance and
(y) acknowledges that entering into the Transaction may limit its ability to receive such loan, loan guarantee, or direct loan.



 








    	 		 



     


    

 


		9.	Other Provisions.



 


		(a)	Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of
the Premium Payment Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation provided that
as the opinion relates to Section 8(b) the agreements or instruments covered thereby shall be limited to certain material agreements
reasonably acceptable to Dealer..



 


		(b)	Repurchase Notices. Counterparty shall, on any day on which Counterparty effects
any repurchase of Shares, promptly give Dealer a written notice (which, for the avoidance of doubt, may be by email) of such repurchase
(a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined
on such day is (i) less than 23.2 million (in the case of the first such notice) or (ii) thereafter more than 1.1 million less
than the number of Shares included in the immediately preceding Repurchase Notice; provided that, with respect to any repurchase
of Shares pursuant to a plan under Rule 10b5-1 under the Exchange Act (as defined below), Counterparty may elect to satisfy such
requirement by promptly giving Dealer written notice of entry into such plan, the maximum number of Shares that may be purchased
thereunder and the approximate dates or periods during which such repurchases may occur (with such maximum number of Shares deemed
repurchased on the date of such notice for purposes of this Section 9(b)). Counterparty agrees to indemnify and hold harmless Dealer
and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each,
an “Indemnified Person”) 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 the Transaction), claims, damages, judgments, liabilities and reasonable and documented out-of-pocket expenses (including reasonable
attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s
failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse,
within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other out-of-pocket 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 Indemnified Person as a result of Counterparty’s failure to provide Dealer with
a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and
Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the reasonable fees
and expenses of such counsel related to such proceeding. Counterparty shall not be liable for any settlement of any proceeding
contemplated by this paragraph that is 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 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 Indemnified Person,
effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding
on terms reasonably satisfactory to such Indemnified Person. Counterparty shall not be liable for any losses, claims, damages or
liabilities (or expenses relating thereto) of any Indemnified Person that result from the bad faith, gross negligence, willful
misconduct or fraud of any Indemnified Person. If the indemnification provided for in this paragraph is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder,
in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities. The remedies provided for in this paragraph ‎(b) are not
exclusive and shall not limit any rights or remedies which may otherwise be available to any 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.



 






    	 		 



     


    

 


		(c)	Regulation M. Counterparty is not on the Trade Date engaged in a distribution, as
such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
of any securities of Counterparty, other than a distribution meeting the requirements of the exception set forth in Rules 101(b)(10)
and 102(b)(7) of Regulation M. Counterparty shall not, until the second Scheduled Trading Day immediately following the Trade Date,
engage in any such distribution.



 


		(d)	No Manipulation. Counterparty is not entering into the Transaction to create actual
or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress
or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.



 


		(e)	Transfer or Assignment.



 


		(i)	Counterparty shall have the right to transfer or assign its rights and obligations hereunder with
respect to all, but not less than all, of the Options hereunder (such Options, the “Transfer Options”); provided
that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to
the following conditions:



 


		(A)	With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification
obligations pursuant to Section ‎9(b) or any obligations under Section ‎9(n) or ‎9(s) of this Confirmation;



 


		(B)	Any Transfer Options shall only be transferred or assigned to a third party that is a United States
person (as defined in the Internal Revenue Code of 1986, as amended (the “Code”));



 


		(C)	Such transfer or assignment shall be effected
on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect
to compliance with applicable securities laws in a manner that, in the reasonable judgment of Dealer,
will not expose Dealer to material risks under applicable securities
laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by such
third party and Counterparty, as are requested and reasonably satisfactory to Dealer;



 


		(D)	Dealer will not, as a result of such transfer
and assignment, (x) be required to pay the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the
Agreement greater than an amount that Dealer would have been required
to pay to Counterparty in the absence of such transfer and assignment or (y) receive from the transferee or assignee an amount
(taking into account any additional amounts paid under Section 2(d)(i)(4) of the Agreement) that is less than the amount that Dealer
would have received from Counterparty in the absence of such transfer or assignment;



 


		(E)	An Event of Default, Potential Event of Default or Termination Event will not occur as a result
of such transfer and assignment;



 


		(F)	Without limiting the generality of clause
 ‎(B), the transferee or assignee shall make such Payee Tax Representations and provide such tax documentation as may be reasonably
requested by Dealer to permit Dealer to
determine that results described in clauses ‎(D) and ‎(E) will not occur upon or after such transfer and assignment; and



 






    	 		 



     


    

 


		(G)	Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel
fees, incurred by Dealer in connection with such transfer or assignment.



 


		(ii)	Dealer may transfer or assign its rights or obligations under the Transaction (A) in whole and
not in part, without Counterparty’s consent, to any affiliate of Dealer (1) that has a long-term issuer rating that is equal
to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will
be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer
or Dealer’s parent, as applicable, or (B) in whole or in part, with Counterparty’s consent (such consent not to be
unreasonably withheld or delayed), to any other third party financial institution that is a recognized dealer in the market for
U.S. corporate equity derivatives and that has a long-term issuer rating equal to or better than the lesser of (1) the credit rating
of Dealer or Dealer’s parent at the time of the transfer or assignment and (2) A- by Standard and Poor’s Rating Group,
Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc. or its successor (“Moody’s”)
or, if either S&P or Moody’s ceases to issue such long-term issuer rating, at least an equivalent rating or better by
a substitute rating agency mutually agreed by Counterparty and Dealer; provided that, in the case of any transfer or assignment
described in clause (A) or (B) above, (I) such a transfer or assignment shall not occur unless an Event of Default, Potential Event
of Default or Termination Event is not then continuing or will not occur as a result of such transfer and assignment; and (II)
at the time of such transfer or assignment either (i) each Dealer and the transferee or assignee in any such transfer or assignment
is a “dealer in securities” within the meaning of Section 475(c)(1) of the Code or (ii) the transfer or assignment
does not result in a deemed exchange by Counterparty within the meaning of Section 1001 of the Code. In addition, (A) the transferee
or assignee shall agree that following such transfer or assignment, Counterparty will not (x) receive from the transferee or assignee
on any payment date or delivery date (after accounting for amounts paid by the transferee or assignee under Section 2(d)(i)(4)
of the Agreement as well as any withholding or deduction of Tax from the payment or delivery) an amount or a number of Shares,
as applicable, lower than the amount or the number of Shares, as applicable, that Dealer would have been required to pay or deliver
to Counterparty in the absence of such transfer or assignment or (y) be required to pay such assignee or transferee on any payment
date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Counterparty would have been required to pay
to Dealer in the absence of such transfer or assignment and (B) the transferee or assignee shall make such Payee Tax Representations
and shall provide such tax documentation as may be reasonably requested by Counterparty to permit Counterparty to make any necessary
determinations pursuant to clause (A) of this proviso. If at any time at which (A) the Section 16 Percentage exceeds 8.0%, (B)
the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such
condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using
its commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably
acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists (after
giving effect to such transfer or assignment and any resulting change in Dealer’s commercially reasonable Hedge Positions),
then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the
 “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists (after
giving effect to such transfer or assignment and any resulting change in Dealer’s commercially reasonable Hedge Positions).
In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall
be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction
having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion,
(2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the
sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section ‎9(l) shall apply to any amount that
is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party). The “Section
16 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 the
Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange
Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the
Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of
which is the number of Shares outstanding on such day. The “Option Equity Percentage” as of any day is the fraction,
expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement
and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the
denominator of which is the number of Shares outstanding. The “Share Amount” as of any day is the number of
Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person,
a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts
of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns,
beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership
under any Applicable Restriction, as determined by Dealer in its reasonable discretion. The “Applicable Share Limit”
means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations
(except for any filing requirements on Form 13F, Schedule 13D or Schedule 13G under the Exchange Act, in each case, as in effect
on the Trade Date) or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or
could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable
discretion, minus (B) 1% of the number of Shares outstanding.



 






    	 		 



     


    

 


		(iii)	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, or make or receive any payment in cash, to or from
Counterparty, Dealer may designate any of its affiliates (each, a “Dealer Designated Affiliate”) to purchase,
sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform
Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations; provided, that
such Dealer Designated Affiliate shall comply with the provisions of the Transaction in the same manner as Dealer would have been
required to comply. Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.



 


		(f)	Staggered Settlement. If upon advice of counsel with respect to applicable legal
and regulatory requirements, including any requirements relating to Dealer’s commercially reasonable hedging activities hereunder,
Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or
all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, 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,
but in no event more than the fewest number of dates required as determined by the Calculation Agent in its sole discretion (each,
a “Staggered Settlement Date”) as follows:



 


		(i)	in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (each
of which shall occur on or prior to such Nominal Settlement Date) and the number of Shares that it will deliver on each Staggered
Settlement Date;



 


		(ii)	the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered
Settlement Dates will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement
Date; and



 






    	 		 



     


    

 


		(iii)	if the Net Share Settlement terms or the Combination Settlement terms set forth above were to apply
on the Nominal Settlement Date, then the Net Share Settlement terms or the Combination Settlement terms, as the case may be, will
apply on each Staggered Settlement Date, except that the Shares otherwise deliverable on such Nominal Settlement Date will be allocated
among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause ‎(i) above.



 


		(g)	[Reserved]



 


		(h)	[Reserved].



 


		(i)	Additional Termination Events.



 


		(i)	Notwithstanding anything to the contrary in this Confirmation, upon any Early Conversion in respect
of which a Notice of Conversion (as such term is defined in the Indenture) that is effective as to Counterparty has been delivered
by the relevant converting Holder (as such term is defined in the Indenture):



 


		(A)	Counterparty
shall, within five Scheduled Trading Days of the Conversion Date for such Early Conversion, provide written notice (an “Early
Conversion Notice”) to Dealer specifying the number of
Convertible Notes surrendered for conversion on such Conversion Date (such Convertible Notes, the “Affected Convertible
Notes”), and the giving of such Early Conversion Notice shall constitute an Additional Termination Event as provided
in this clause ‎(i);



 


		(B)	upon receipt
of any such Early Conversion Notice, Dealer shall designate an
Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be no earlier than the settlement date for
the conversion of the relevant Affected Convertible Notes) with respect to the portion of the Transaction corresponding to a number
of Options (the “Affected Number of Options”) equal to the lesser of (x) the number of Affected Convertible
Notes and (y) the Number of Options as of the Conversion Date for such Early Conversion;



 


		(C)	no amount shall be payable by Counterparty in respect thereof and any payment by Dealer hereunder
with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (x) an Early Termination Date
had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the
Affected Number of Options, (y) Counterparty were the sole Affected Party with respect to such Additional Termination Event and
(z) the terminated portion of the Transaction were the sole Affected Transaction; provided that the amount payable with
respect to such termination shall not be greater than (1) the Applicable Percentage, multiplied by (2) the Affected Number
of Options, multiplied by (3) (x) the sum of (i) the amount of cash paid (if any) to the Holder (as such term is defined
in the Indenture) of an Affected Convertible Note upon conversion of such Affected Convertible Note and (ii) the number of Shares
delivered (if any) to the Holder (as such term is defined in the Indenture) of an Affected Convertible Note upon conversion of
such Affected Convertible Note, multiplied by the Applicable Limit Price on the settlement date for the conversion of such
Affected Convertible Note, minus (y) USD 1,000;



 


		(D)	for the avoidance of doubt,
                                         in determining the amount payable in respect of such Affected Transaction pursuant to
                                         Section 6 of the Agreement, the Calculation Agent shall assume that (x) the relevant
                                         Early Conversion and any conversions, adjustments, agreements, payments, deliveries or
                                         acquisitions by or on behalf of Counterparty leading thereto had not occurred, (y) no
                                         adjustments to the Conversion Rate have occurred pursuant to any Excluded Provision and
                                         (z) the corresponding Convertible Notes remain outstanding; and



 






     


     


    

 


		(E)	the Transaction shall remain in full force and effect, except that, as of the Conversion Date for
such Early Conversion, the Number of Options shall be reduced by the Affected Number of Options.



 


		(ii)	Notwithstanding anything to the contrary in this Confirmation, the occurrence of an event of default
with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 7.01 of the Indenture, which
event of default has resulted in the Convertible Notes becoming due and payable under the terms thereof, shall constitute an Additional
Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall
be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction, (C) Dealer shall be the party
entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and (D) no amount shall be payable by
Counterparty as a result thereof and any amount payable by Dealer in respect thereof shall be determined pursuant to Section 6
of the Agreement.



 


		(iii)	Notwithstanding anything to the contrary in this Confirmation, the occurrence of an Amendment Event
shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination
Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction,
(C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and (D)
no amount shall be payable by Counterparty as a result thereof and any amount payable by Dealer in respect thereof shall be determined
pursuant to Section 6 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 Notes 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 rate, conversion rate adjustment provisions, 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
Notes to amend (other than, in each case, any amendment or supplement (v) pursuant to Section 8.01(B) of the Indenture, (w) pursuant
to Section 8.01(I) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of
Convertible Notes in the Offering Memorandum, (x) pursuant to Section 8.01(G) of the Indenture, (y) pursuant to Section 5.09 of
the Indenture or (z) pursuant to Section 8.01(A) of the Indenture that, as determined by Calculation Agent, cures any ambiguity,
omission, defect or inconsistency in the Indenture or in the Convertible Notes), in each case, without the consent of Dealer.



 






     


     


    

 


		(iv)	Within five Business Days promptly following any Repayment Event (as defined below), Counterparty
shall notify Dealer of such Repayment Event, in each case, including the number of Convertible Notes subject to such Repayment
Event (any such notice, a “Repayment Notice”). Notwithstanding anything to the contrary in this Confirmation,
the receipt by Dealer from Counterparty of any Repayment Notice shall constitute an Additional Termination Event as provided in
this Section 9(i)(iv). Upon receipt of any such Repayment Notice, Dealer shall promptly designate an Exchange Business Day following
receipt of such Repayment Notice (which in no event shall be earlier than the related settlement date for the relevant Repayment
Event) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Repayment
Options”) equal to the lesser of (A) the number of such Convertible Notes specified in such Repayment Notice and (B)
the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options
shall be reduced by the number of Repayment Options. No amount shall be payable by Counterparty as a result thereof and any amount
payable by Dealer with respect to such termination (the “Repayment Unwind Payment”) shall be calculated pursuant
to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms
identical to the Transaction and a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected
Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected
Transaction; provided that, in the event of a Repayment Event pursuant to Section 4.02 of the Indenture or Section 4.03
of the Indenture, the Repayment Unwind Payment shall not be greater than (x) the number of Repayment Options multiplied by (y)
the product of (A) the Applicable Percentage and (B) the excess, if any, of (I) the amount paid by the Counterparty per Convertible
Note pursuant to the relevant sections of the Indenture over (II) USD 1,000. “Repayment Event” means that (i)
any Convertible Notes are repurchased (whether pursuant to Section 4.02 of the Indenture or Section 4.03 of the Indenture or otherwise)
by Counterparty or any of its subsidiaries (including in connection with, or as a result of, a Fundamental Change (as defined in
the Indenture), a tender offer, exchange offer or similar transaction or for any other reason), (ii) any Convertible Notes are
delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever
described), (iii) any principal of any of the Convertible Notes is repaid in full prior to the final maturity date of the Convertible
Notes (other than upon acceleration of the Convertible Notes pursuant to Section 7.02 of the Indenture), or (iv) any Convertible
Notes are exchanged by or for the benefit of the “Holders” (as such term is defined in the Indenture) 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. For the avoidance of doubt, any conversion of Convertible Notes (whether into cash, Shares, a combination
of cash and Shares or any “Reference Property” (as defined in the Indenture)) pursuant to the terms of the Indenture
shall not constitute a Repayment Event. Counterparty acknowledges and agrees that if an Additional Termination Event has occurred
under this Section 9(i)(iv), then any related Convertible Notes subject to a Repayment Event will be deemed to be cancelled and
disregarded and no longer outstanding for all purposes hereunder.



 


		(j)	Amendments to Equity Definitions.



 


		(i)	Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a
diluting or concentrative” and replacing them with the words “a material” and adding the phrase “or the
Options” at the end of the sentence.



 


		(ii)	Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) inserting “(1)”
immediately following the word “means” in the first line thereof and (2) inserting immediately prior to the semi-colon
at the end of subsection (B) thereof the following words: “or (2) the occurrence of any of the events specified in Section
5(a)(vii)(1) through (9) of the ISDA Master Agreement with respect to that Issuer”.



 


		(iii)	Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party
may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice
to Counterparty” in the first sentence of such section.



 


		(iv)	Section 12.9(b)(vi) of the Equity Definitions is hereby amended by (1) adding the word “or”
immediately before subsection “(B)”, (2) deleting the comma at the end of subsection (A), (3) deleting subsection (C)
in its entirety, (4) deleting the word “or” immediately preceding subsection (C) and (5) replacing the words “either
party” in the last sentence of such Section with “Dealer”.



 


		(k)	Setoff. Obligations under the Transaction shall not be set off by either party against
any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between
the parties hereto, by operation of law or otherwise.



 






     


     


    

 


		(l)	Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.
If (a) 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 or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except
as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists
solely of cash, (ii) an Announcement Event, Merger Event or Tender Offer that is within Counterparty’s control, or (iii)
an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected
Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or
a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events
outside Counterparty’s control), and if Dealer would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement
or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”),
then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty
gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m.
(New York City time) on the date of the Announcement Event, Merger Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that
the Share Termination Alternative shall not apply, (b) Counterparty remakes the representation set forth in Section ‎8(f) as
of the date of such election and (c) Dealer agrees, in its commercially reasonable discretion, to such election, in which case
the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement,
as the case may be, shall apply.



 


	 	Share Termination Alternative: 	If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment.
	 	 	 
	 	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 a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.
	 	 	 
	 	Share Termination Unit Price: 	The value to Dealer of property contained in one Share Termination Delivery Unit, 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. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of Share Termination Delivery Property.
	 	 	 
	 	Share Termination Delivery Unit: 	One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange 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 Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.



 






     


     


    

 


	 	Failure to Deliver: 	Applicable
	 	 	 
	 	Other applicable provisions: 	If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that Share Termination Alternative is applicable to the Transaction.




 


		(m)	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 either 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.



 


		(n)	Registration. Counterparty hereby agrees that if, in the good faith reasonable judgment
of Dealer, based on the advice of counsel, the Shares (“Hedge Shares”) acquired by 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, either (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 and enter into an agreement, in
form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary
offering; provided, however, that if Dealer, 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
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 and industry, in form and substance
commercially reasonably satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of
the Transaction that are necessary, in its good faith, commercially reasonable judgment, to compensate Dealer for any commercially
reasonable 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 then-current market price on such Exchange Business Days, and in the amounts
and at such time(s), commercially reasonably requested by Dealer.



 


		(o)	Tax 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.



 






     


     


    

 


		(p)	Right to Extend. Dealer may postpone or add, in whole or in part, any Valid Day or
Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to
some or all of the Options hereunder, if Dealer reasonably determines, in its commercially reasonable judgment (in the case of
clause (i) below) or based on the advice of counsel (in the case of clause (ii) below), that such action is reasonably necessary
or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing
liquidity conditions (but only if there is a material decrease in liquidity relative to Dealer’s expectations on the Trade
Date) or (ii) to enable Dealer to effect transactions with respect to Shares in connection with its commercially reasonable 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; provided that such policies and procedures have been adopted by Dealer in good faith and
are generally applicable in similar situations and applied in a non-discriminatory manner; provided further that no such
date of valuation, payment or delivery may be postponed or added more than 40 “VWAP Trading Days” (as defined in the
Indenture) after the original date of valuation, payment or delivery, as the case may be.



 


		(q)	Status of Claims in Bankruptcy. Dealer acknowledges and agrees that this Confirmation
is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to the claims of
common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty; provided that nothing herein
shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its
obligations and agreements with respect to the Transaction; provided, further that nothing herein shall limit or
shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.



 


		(r)	Securities Contract; Swap Agreement. The parties hereto intend for (i) the Transaction
to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code, and the parties
hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555
and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the 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”
as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute
a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.



 


		(s)	Notice of Certain Other Events. Counterparty covenants and agrees that:



 


		(i)	Promptly as reasonably practicable following the public announcement of the results of any election
by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer
written notice of the weighted average of the types and amounts of consideration received by holders of Shares upon consummation
of such Merger Event (the date of such notification, the “Consideration Notification Date”); provided
that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and



 


		(ii)	(A) Counterparty shall give Dealer commercially reasonable advance (but in no event less than one
Exchange Business Day) written notice of the section or sections of the Indenture and, if applicable, the formula therein, pursuant
to which any adjustment will be made to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or
Tender Offer and (B) promptly following any such adjustment, Counterparty shall give Dealer written notice of the details of such
adjustment.



 


		(t)	Wall Street Transparency and Accountability Act. In connection with Section 739 of
the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither
the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall
limit or otherwise impair either party’s otherwise applicable 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)).



 






     


     


    

 


		(u)	Agreements and Acknowledgments Regarding Hedging. Counterparty understands, acknowledges
and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other
securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its
hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other
than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether,
when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner
that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities
of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant
Prices, each in a manner that may be adverse to Counterparty.



 


		(v)	Early Unwind. In the event the sale of the “Initial Securities” (as defined
in the Purchase Agreement) is not consummated or the “Closing” (as defined in the Purchase Agreement) does not occur
with respect to such sale for any reason on or before June 30, 2020, or Counterparty fails to deliver to Dealer opinions of counsel
as required pursuant to Section ‎9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such
later date as agreed upon by the parties (June 30, 2020 or the Premium Payment Date or such later date, as applicable, 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 under the Transaction
shall be cancelled and terminated and the Premium shall be returned to Counterparty less reasonable costs of Dealer and (ii) 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 or after the Early Unwind Date. Each of Dealer and Counterparty represents and acknowledges to the other that upon an
Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.



 


		(w)	Payment by Counterparty. In the event that, following payment of the Premium, (i)
an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event
of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty
owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, pursuant to Section
12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount
shall be deemed to be zero.



 


		(x)	Other Adjustments Pursuant to the Equity Definitions. Notwithstanding anything to
the contrary in this Confirmation, solely for the purpose of adjusting the Cap Price, the terms “Potential Adjustment Event,”
 “Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions
(as amended by Section ‎9(j)(i) or, if applicable, by the definition of “Announcement Event”, and provided that
for purposes of the foregoing (1) Section 12.1(d) of the Equity Definitions shall be amended by replacing the words “voting
shares of the Issuer” in the fourth line thereof with the word “Shares” and (2) Section 12.1(e) of the Equity
Definitions is hereby amended by replacing the words “voting shares” in the first line thereof with the word “Shares”),
and upon the occurrence of a Merger Date, the occurrence of a Tender Offer Date, or declaration by Counterparty of the terms of
any Potential Adjustment Event, respectively, as such terms are defined in the Equity Definitions, the Calculation Agent may, in
its commercially reasonable discretion, adjust the Cap Price to preserve the fair value of the Options to Dealer; provided that
in no event shall the Cap Price be less than the Strike Price.



 


		(y)	Conduct Rules. Each party acknowledges and agrees to be bound by the Conduct Rules
of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the
position and exercise limits set forth therein.



 


		(z)	Risk Disclosure Statement. Counterparty represents and warrants that it has received,
read and understands the OTC Options Risk Disclosure Statement provided by Dealer and a copy of the most recent disclosure pamphlet
prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.



 






     


     


    

 


		(aa)	Tax Matters.



 


		(i)	Payee Tax Representations. For the purpose of Section 3(f) of the Agreement, each
party makes the representations:



 


		(A)	Counterparty is a corporation created or organized in the United States or under the laws of the
United States. It is “exempt” within the meaning of Treasury Regulation section 1.6049-4(c) from information reporting
on U.S. Internal Revenue Service Form 1099 and backup withholding.



 


		(B)	[____]



 


		(ii)	Tax Forms. For the purpose of Section
4(a)(i) of the Agreement:



 


		(A)	Counterparty shall provide Dealer with a valid and duly executed U.S. Internal Revenue Service
Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation, (ii) promptly upon reasonable
demand by Dealer and (iii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete
or incorrect.



 


		(B)	Dealer shall provide Counterparty with a valid and duly executed U.S. Internal Revenue Service
Form W-9 or applicable Form W-8, or any successor thereto, (i) on or before the date of execution of this Confirmation, (ii) promptly
upon reasonable demand by Counterparty and (iii) promptly upon learning that any such tax form previously provided by Dealer has
become obsolete or incorrect.



 


		(iii)	Foreign Account Tax Compliance Act. “Indemnifiable Tax”, as defined in Section
14 of the Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through
1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to
Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental
agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”).
For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law
for the purposes of Section 2(d) of the Agreement.



 


		(iv)	Section 871(m) Protocol. Dealer and Counterparty hereby agree that the Agreement shall be
treated as a Covered Master Agreement (as that term is defined in the 2015 Section 871(m) Protocol published by the International
Swaps and Derivatives Association, Inc. on November 2, 2015, as may be amended or modified from time to time (the “2015
Section 871(m) Protocol”)) and the Agreement shall be deemed to have been amended in accordance with the modifications
specified in the Attachment to the 2015 Section 871(m) Protocol. If there is any inconsistency between this provision and a provision
in any other agreement executed between the parties, this provision shall prevail unless such other agreement expressly overrides
the provisions of the 2015 Section 871(m) Protocol.



 






     


     


    

 


Please confirm that
the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to Dealer.


 


Very truly yours,


 


	 	[___]
	 	 
	 	 
	 	By:	          
	 	Authorized Signatory
	 	Name:





 






     


     


    

 


Accepted and confirmed

as of the Trade Date:


 


	PetIQ, Inc.	 
	 	 
	 	 
	By:	                        	 
	Authorized Signatory	 
	Name: