Document:

Exhibit 10.1

 

Opening Transaction

 

	
To:
    	
Twilio Inc.
    
	
 
    	
375 Beale Street, Suite 300
    
	
 
    	
San Francisco, CA 94105
    
	
 
    	
 
    
	
A/C:
    	
[Insert Account Number]
    
	
 
    	
 
    
	
From:
    	
[Dealer]
    
	
 
    	
 
    
	
Re:
    	
[Base]1 [Additional]2 Call Option Transaction
    
	
 
    	
 
    
	
Ref.   No:
    	
[Insert Reference Number]
    
	
 
    	
 
    
	
Date:
    	
May [     ], 2018
    

 

Dear Ladies and Gentlemen:

 

The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the call option transaction entered into on the Trade Date specified below (the “Transaction”) between [Dealer] (“Dealer”) and Twilio Inc. (“Counterparty”).  This communication constitutes a “Confirmation” as referred to in the Agreement specified below.

 

1.                                      This Confirmation is subject to, and incorporates, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”).  Certain defined terms used herein have the meanings assigned to them in the Offering Memorandum dated May [  ], 2018 (as so supplemented, the “Offering Memorandum”) relating to the USD 400,000,000 principal amount of [          ]% Convertible Senior Notes due 2023 (the “Base Convertible Securities”) issued by Counterparty (as increased by up to an additional USD 60,000,000 principal amount of [     ]% Convertible Senior Notes due 2023 [that may be]3 issued pursuant to the option to purchase additional convertible securities [exercised on the date hereof]4 (the “Optional Convertible Securities” and, together with the Base Convertible Securities, the “Convertible Securities”)) pursuant to an Indenture [to be] dated May [     ], 2018 between Counterparty and Wilmington Trust, National Association, as trustee (the “Indenture”).  In the event of any inconsistency between the terms defined in 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 that are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein, in each case, 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.  [For the avoidance of doubt, subject to the foregoing, references herein to sections of the Indenture are based on the draft of the Indenture most recently reviewed by the parties at the time of execution of this Confirmation.  If any relevant sections of the Indenture are changed, added or renumbered between the execution of this Confirmation and the execution of the Indenture, the parties will amend this Confirmation in good faith and in a commercially reasonable manner to preserve the economic intent of the parties as evidenced by such draft of the Indenture.  In addition,

 

1                                           Include for base capped call.

 

2                                           Include for additional capped call.

 

3                                           Include for base capped call.

 

4                                           Include for additional capped call.

 

 

subject to the foregoing, the]5 [The]6 parties acknowledge that references to the Indenture herein are references to the Indenture as in effect on the date hereof and if the Indenture is, or the Convertible Securities are, amended, modified or supplemented following the date hereof or the date of their execution, respectively, any such amendment, modification or supplement (other than any amendment, modification or supplement (i) pursuant to Section [14.07]7 of the Indenture, subject to the provisions opposite the caption “Discretionary Adjustments” in Section 2 hereof, or (ii) pursuant to Section [10.01(n)]8 of the Indenture that, as determined by the Calculation Agent in good faith and in a commercially reasonable manner, conforms the Indenture to the description of Convertible Securities in the Offering Memorandum) will be disregarded for purposes of this Confirmation 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.

 

This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement as if Dealer and Counterparty had executed an agreement in such form on the date hereof (but without any Schedule except for (i) the election of US Dollars (“USD”) as the Termination Currency, (ii) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)[, (iii) the election of an executed guarantee of [           ] (“Guarantor”) dated as of the Trade Date in customary form as a Credit Support Document, (iv) the election of Guarantor as Credit Support Provider in relation to Dealer]9 and [v][(iii)] (A) the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Dealer with a “Threshold Amount” of three percent of Dealer’s parent’s shareholders’ equity; provided that “Specified Indebtedness” shall not include obligations in respect of deposits received in the ordinary course of Dealer’s banking business, (B) the phrase “or becoming capable at such time of being declared” shall be deleted from clause (1) of such Section 5(a)(vi) and (C) the following language shall be 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; (y) funds were available to enable the party to make the payment when due; and (z) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”).

 

All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein.  In the event of any inconsistency among this Confirmation, the Equity Definitions, the 2006 Definitions or the Agreement, the following shall prevail in the order of precedence indicated:  (i) this Confirmation; (ii) the Equity Definitions; (iii) the 2006 Definitions; and (iv) the Agreement.  For the avoidance of doubt, except to the extent of an express conflict, the application of any provision of this Confirmation, the Agreement, the Equity Definitions or the 2006 Definitions shall not be construed to exclude or limit any other provision of this Confirmation, the Agreement, the Equity Definitions or the 2006 Definitions.

 

The Transaction hereunder shall be the sole Transaction under the Agreement.  If there exists any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty are parties, the Transaction shall not be considered a Transaction under, or otherwise governed by, such existing or deemed ISDA Master Agreement.

 

5                                           Include for base capped call

 

6                                           Include if Indenture has been executed at time of execution of this Confirmation

 

7                                           Include cross reference to the Indenture section relating to Merger Events.

 

8                                           Include cross reference to Indenture section permitting amendments without holder consent to conform the Indenture to the Description of Notes.

 

9                                           To be included for dealers without a long term debt rating.

 

2

 

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

 

	
General   Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
[          ],   2018
    
	
 
    	
 
    	
 
    
	
Effective Date:
    	
 
    	
The closing date of the [initial]10 issuance of the Convertible Securities   [issued pursuant to the option to purchase additional Convertible Securities   exercised on the date hereof]11.
    
	
 
    	
 
    	
 
    
	
Option Style: 
    	
 
    	
Modified American, as described under “Procedures for Exercise” below.
    
	
 
    	
 
    	
 
    
	
Option Type: 
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The class A Common Stock of Counterparty, par value USD 0.001 (Ticker   Symbol:  “TWLO”).
    
	
 
    	
 
    	
 
    
	
Number of Options:
    	
 
    	
[The number of Base Convertible Securities in denominations of USD   1,000 principal amount issued by Counterparty on the closing date for the   initial issuance of the Convertible Securities.]12    [The number of Optional Convertible Securities in denominations of USD   1,000 principal amount purchased by the Initial Purchasers (as defined in the   Purchase Agreement), at their option pursuant to Section [2] of the   Purchase Agreement (as defined below).]13    For the avoidance of doubt, the Number of Options outstanding shall be   reduced by each exercise of Options hereunder.  In no event will the Number of Options be   less than zero.
    
	
 
    	
 
    	
 
    
	
Applicable Percentage:
    	
 
    	
[  ]%14
    
	
 
    	
 
    	
 
    
	
Option Entitlement:
    	
 
    	
A number equal to the product of the Applicable Percentage and [     ]15
    

 

10                                      Include for base capped call.

 

11                                      Include for additional capped call.

 

12                                      Include for base capped call.

 

13                                      Include for additional capped call.

 

14                                      To be Dealer’s percentage of the overall capped call transaction.

 

15                                      To be the initial “Conversion Rate.”

 

3

 

	
Make-Whole Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate pursuant to Section [14.03]16 of   the Indenture.
    
	
 
    	
 
    	
 
    
	
Discretionary Adjustment:
    	
 
    	
Any adjustment to the Conversion Rate pursuant to   Section [14.04(h)]17 of the Indenture.
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
USD[     ]18
    
	
 
    	
 
    	
 
    
	
Cap Price:
    	
 
    	
USD[     ]
    
	
 
    	
 
    	
 
    
	
Rounding of Strike Price/Cap

Price/Option Entitlement:
    	
 
    	
In connection with any adjustment to the Option Entitlement or Strike   Price, the Option Entitlement or Strike Price, as the case may be, shall be   rounded by the Calculation Agent in accordance with the provisions of the   Indenture relating to rounding of the “Conversion Price” or the “Conversion   Rate”, as applicable (each as defined in the Indenture).  In connection with any adjustment to the   Cap Price hereunder, the Calculation Agent will round the adjusted Cap Price   to the nearest USD 0.0001.
    
	
 
    	
 
    	
 
    
	
Number of Shares:
    	
 
    	
As of any date, a number of Shares equal to the product of the Number   of Options and the Option Entitlement.
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD [     ]
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
The Effective Date
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The New York Stock Exchange
    
	
 
    	
 
    	
 
    
	
Related Exchange:
    	
 
    	
All Exchanges
    
	
 
    	
 
    	
 
    
	
Procedures for Exercise:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Exercise Dates:
    	
 
    	
Each Conversion Date.
    
	
 
    	
 
    	
 
    
	
Conversion Date:
    	
 
    	
[With respect to any conversion of a Convertible Security (other than   (x) any conversion of Convertible Securities with a “Conversion Date”   (as defined in the Indenture) occurring prior to the Free Convertibility Date   or (y) any conversion of Convertible Securities in respect of which   holder(s) of such Convertible Securities would be entitled to an   increase in the Conversion Rate pursuant to a Make-Whole Adjustment and the   scheduled settlement date for such conversion would occur prior to June
    

 

16                                      Insert cross references to sections of the Indenture addressing “make whole fundamental change” adjustments to the Conversion Rate.

 

17                                      Insert cross reference to sections of the Indenture permitting discretionary adjustments to the Conversion Rate by Counterparty.

 

18                                      To be the initial “Conversion Price.”

 

4

 

	
 
    	
 
    	
1, 2023 (any such conversion described in clause (x) or clause   (y), an “Early Conversion”), to which the   provisions of Section 8(b)(iii) of this Confirmation shall apply),   the “Conversion Date” (as defined in the Indenture), provided   that, no Conversion Date shall be deemed to have occurred with respect to   Exchanged Securities (such Convertible Securities, other than Exchanged   Securities, the “Relevant Convertible   Securities” for such Conversion Date).]19

 

[With respect to any conversion of a Convertible Security (other than   (x) any conversion of Convertible Securities with a “Conversion Date”   (as defined in the Indenture) occurring prior to the Free Convertibility Date   or (y) any conversion of Convertible Securities in respect of which   holder(s) of such Convertible Securities would be entitled to an   increase in the Conversion Rate pursuant to a Make-Whole Adjustment and the   scheduled settlement date for such conversion would occur prior to   June 1, 2023 (any such conversion described in clause (x) or clause   (y), an “Early Conversion”), to which the   provisions of Section 8(b)(iii) of this Confirmation shall apply),   the “Conversion Date” (as defined in the Indenture) for Convertible   Securities that are not “Relevant Convertible Securities” under (and as   defined in) the confirmation between the parties hereto regarding the Base   Call Option Transaction dated May [  ], 2018 [(Transaction   Ref. No. [  ])] (the “Base Call Option   Transaction Confirmation”), provided that, no Conversion Date   shall be deemed to have occurred with respect to Exchanged Securities (such   Convertible Securities, other than Exchanged Securities, the “Relevant   Convertible Securities” for such Conversion Date).  For the purposes of determining whether any   Convertible Securities will be Relevant Convertible Securities hereunder or “Relevant Convertible Securities” under the Base Call   Option Transaction Confirmation, Convertible Securities that are converted   pursuant to the Indenture shall be allocated first to the Base Call Option   Transaction Confirmation until all Options thereunder are exercised or   terminated.]20
    
	
 
    	
 
    	
 
    
	
Free Convertibility Date:
    	
 
    	
March 1, 2023
    
	
 
    	
 
    	
 
    
	
Exchanged Securities:
    	
 
    	
With respect to any Conversion Date, any Convertible Securities with   respect to which Counterparty makes the election described in   Section 14.1221 of the Indenture and the   financial institution designated by Counterparty accepts such Convertible   Securities in accordance with Section 14.1222 of   the Indenture, as long as Counterparty does not submit a Notice of Exercise   in respect thereof.
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
[The earlier of (i) the last day on which any Convertible   Securities remain outstanding and (ii) June 1, 2023, subject to   earlier exercise.]23
    

 

19                                      Include for base capped call

 

20                                      Include for additional capped call.

 

21                                      Insert cross references to sections of the Indenture providing for exchange in lieu of conversion

 

22                                      Insert cross references to sections of the Indenture providing for exchange in lieu of conversion

 

23                                      Under review by tax advisors to Counterparty.

 

5

 

	
Automatic Exercise on Conversion Dates:
    	
 
    	
Applicable, which means that on each Conversion Date occurring on or   after the Free Convertibility Date, a number of Options equal to the number   of Relevant Convertible Securities for such Conversion Date in denominations   of USD 1,000 principal amount shall be automatically exercised, subject to   “Notice of Exercise” below.
    
	
 
    	
 
    	
 
    
	
Notice Deadline:
    	
 
    	
In respect of any exercise of Options hereunder on any Conversion Date   on or after the Free Convertibility Date, 5:00 P.M., New York City time, on   the “Scheduled Trading Day” (as defined in the Indenture) immediately   preceding the “Maturity Date” (as defined in the Indenture).
    
	
 
    	
 
    	
 
    
	
Notice of Exercise:
    	
 
    	
Counterparty shall notify Dealer in writing prior to the Notice   Deadline of the number of Relevant Convertible Securities being converted on   the related Conversion Date[; provided, that any “Notice of Exercise”   delivered to Dealer pursuant to the Base Call Option Transaction Confirmation   shall be deemed to be a Notice of Exercise pursuant to this Confirmation and   the terms of such Notice of Exercise shall apply, mutatis mutandis, to this   Confirmation]24.  For the avoidance of doubt,   if Counterparty fails to give such notice when due in respect of any exercise   of Options hereunder with a Conversion Date occurring on or after the Free   Convertibility Date, Automatic Exercise shall apply and the Conversion Date   shall be deemed to be the Notice Deadline.
    
	
 
    	
 
    	
 
    
	
Notice of Final Convertible Security Settlement Method:
    	
 
    	
In addition, Counterparty shall notify Dealer in writing before 5:00   P.M., New York City time, on the “Scheduled Trading Day” (as defined in the   Indenture) immediately preceding the 35th “Scheduled Trading Day” (as defined   in the Indenture) immediately preceding the “Maturity Date” (as defined in   the Indenture) of the settlement method (and, if applicable, the “Specified   Dollar Amount” (as defined in the Indenture)) elected (or deemed to be   elected) with respect to Relevant Convertible Securities with a Conversion   Date occurring on or after the 35th “Scheduled Trading Day” (as defined in   the Indenture) immediately preceding the “Maturity Date” (as defined in the   Indenture) (any such notice, a “Notice of Final   Convertible Security Settlement Method”); provided, that if   Counterparty does not timely deliver the Notice of Final Convertible Security   Settlement Method then the Notice of Final Convertible Security Settlement   Method shall be deemed timely given and the Applicable Settlement Method   shall be a Cash Election with a “Specified Dollar Amount” (as defined in the   Indenture) of USD 1,000.  Counterparty   acknowledges its responsibilities under applicable securities laws, and in   particular Section 9 and Section 10 (b) of the Exchange Act   and the rules and regulations thereunder, in respect of any such   settlement method election as set forth in the proviso in the immediately   preceding sentence.
    
	
 
    	
 
    	
 
    
	
Dealer’s Telephone Number and Telex and/or Facsimile Number and Contact   Details for purpose of Giving Notice:
    	
 
    	
As specified in Section 6(b) below.
    

 

24                                      Include for additional capped call confirmation only.

 

6

 

	
Settlement Terms:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
For any Exercise Date, the date one Settlement Cycle following the   final day of the Cash Settlement Averaging Period; provided   that the Settlement Date shall not be prior to the Exchange Business Day   immediately following the date Counterparty provides the Notice of Delivery   Obligation prior to 5:00 P.M., New York City time.
    
	
 
    	
 
    	
 
    
	
Delivery Obligation:
    	
 
    	
In lieu of the obligations set forth in Sections 8.1 and 9.1 of the   Equity Definitions, and subject to “Notice of Exercise” above and “Method of   Adjustment”, “Discretionary Adjustments”, “Consequences of Merger   Events/Tender Offers”, “Consequences of Announcement Events” and   Section 8(l) below, in respect of an Exercise Date, Dealer will   deliver to Counterparty on the related Settlement Date (the “Delivery Obligation”), (i) a number of Shares equal   to the product of the Applicable Percentage and the aggregate number of   Shares, if any, that Counterparty would be obligated to deliver to the   holder(s) of the Relevant Convertible Securities for such Conversion   Date pursuant to Section [14.02(a)(iv)]25 of   the Indenture (except that such number of Shares shall be rounded down to the   nearest whole number) and cash in lieu of any fractional Share resulting from   such rounding and/or (ii) the product of the Applicable Percentage and   the aggregate amount of cash, if any, in excess of the principal amount of   the Relevant Convertible Securities that Counterparty would be obligated to   deliver to holder(s) of the Relevant Convertible Securities for such   Conversion Date pursuant to Section [14.02(a)(iv)]26 of   the Indenture, determined, for each of clauses (i) and (ii), by the   Calculation Agent in a commercially reasonable manner by reference to such   Sections of the Indenture as if Counterparty had elected to satisfy its   conversion obligation in respect of such Relevant Convertible Securities by   the Applicable Settlement Method, notwithstanding any different actual   election by Counterparty with respect to the settlement of such Relevant   Convertible Securities; provided that if the “Daily VWAP” (as defined in the   Indenture) for any “Trading Day” (as defined in the Indenture pursuant to the   second proviso in such definition) during the Cash Settlement Averaging   Period is greater than the Cap Price, then clause (b) of the relevant   “Daily Conversion Value” (as defined in the Indenture) for such “Trading Day”   shall be determined as if such “Daily VWAP” for such “Trading Day” were   deemed to equal the Cap Price; provided further that the Delivery Obligation   shall be determined excluding any Shares and/or cash that Counterparty is   obligated to deliver to holder(s) of the Relevant Convertible Securities   as a direct or indirect result of any adjustments to the Conversion Rate   pursuant to a Discretionary Adjustment and any interest payment that Counterparty   is (or would have been) obligated to deliver to holder(s) of the   Relevant Convertible Securities for such Conversion Date.  Notwithstanding the foregoing, if, in   respect of any Exercise Date, (x)(I) the number of Shares included in   the Delivery Obligation multiplied by the Share Obligation Value Price plus   (II) the amount of cash included in the Delivery Obligation, would   otherwise exceed (y) the product of the Applicable Percentage and the 
    

 

25                                      Insert cross references to sections of the Indenture defining the share delivery obligation

 

26                                      Insert cross references to sections of the Indenture defining the cash delivery obligation

 

7

 

	
 
    	
 
    	
relevant Net Convertible Share Obligation Value, such number of Shares   and such amount of cash shall be proportionately reduced to the extent   necessary to eliminate such excess.
    
	
 
    	
 
    	
 
    
	
Applicable Settlement Method:
    	
 
    	
For any Relevant Convertible Securities, if Counterparty has notified   Dealer in the Notice of Final Convertible Security Settlement Method that it   has elected, or is deemed to have elected, to satisfy its conversion   obligation in respect of such Relevant Convertible Securities in cash or in a   combination of cash and Shares in accordance with Section [14.02(a)]27 of   the Indenture (a “Cash Election”) with a “Specified Dollar Amount” (as   defined in the Indenture) of at least USD 1,000, the Applicable Settlement   Method shall be the settlement method actually so elected, or deemed to be   elected, by Counterparty in respect of such Relevant Convertible Securities   (the “Convertible Securities Settlement Method”); otherwise, the Applicable   Settlement Method shall assume Counterparty had made a Cash Election with   respect to such Relevant Convertible Securities (a “Deemed Cash Election”)   with a “Specified Dollar Amount” (as defined in the Indenture) of USD 1,000   per Relevant Convertible Security and the Delivery Obligation shall be   determined by the Calculation Agent pursuant to Section [14.02(a)(iv)(C)]28 of   the Indenture as if the relevant “Observation Period” (as defined in the   Indenture) were the Cash Settlement Averaging Period.
    
	
 
    	
 
    	
 
    
	
Cash Settlement Averaging Period:
    	
 
    	
The 30 “Trading Days” (as defined in the Indenture pursuant to the   second proviso in such definition) commencing on the 31st “Scheduled Trading   Day” (as defined in the Indenture) prior to the “Maturity Date” (as defined   in the Indenture).
    
	
 
    	
 
    	
 
    
	
Notice of Delivery Obligation:
    	
 
    	
No later than the Exchange Business Day immediately following the last   day of the Cash Settlement Averaging Period, Counterparty shall give Dealer   notice of the aggregate number of Shares and/or amount of cash included in   the Total Convertible Share Obligation Value (as defined below) for all   Exercise Dates (it being understood, for the avoidance of doubt, that the   requirement of Counterparty to deliver such notice shall not limit   Counterparty’s obligations with respect to a Notice of Exercise or Notice of   Final Convertible Security Settlement Method, as the case may be, as set   forth above, in any way).
    
	
 
    	
 
    	
 
    
	
Net Convertible Share Obligation Value:
    	
 
    	
With respect to Relevant Convertible Securities as to a Conversion   Date, (i) the Total Convertible Share Obligation Value of such Relevant   Convertible Securities for such Conversion Date minus (ii) the aggregate   principal amount of such Relevant Convertible Securities for such Conversion   Date.
    
	
 
    	
 
    	
 
    
	
Total Convertible Share Obligation Value:
    	
 
    	
With respect to Relevant Convertible Securities with respect to a   Conversion Date, (i) (A) the number of Shares equal to the   aggregate number of Shares that Counterparty is obligated to deliver to the 
    

 

27                                      Include as applicable.

 

28                                      Include for additional capped call.

 

8

 

	
 
    	
 
    	
holder(s) of Relevant Convertible Securities for such Conversion   Date pursuant to the Indenture multiplied by (B) the Share Obligation   Value Price plus (ii) an amount of cash equal to the aggregate amount of   cash that Counterparty is obligated to deliver to the holder(s) of   Relevant Convertible Securities for such Conversion Date pursuant to the   Indenture (including, for the avoidance of doubt, any cash payable by   Counterparty in lieu of fractional Shares); provided that the Total   Convertible Share Obligation Value shall be determined excluding any Shares   and/or cash that Counterparty is obligated to deliver to holder(s) of   the Relevant Convertible Securities as a direct or indirect result of any   adjustments to the Conversion Rate pursuant to a Discretionary Adjustment and   any interest payment that Counterparty is (or would have been) obligated to   deliver to holder(s) of the Relevant Convertible Securities for such   Conversion Date.
    
	
 
    	
 
    	
 
    
	
Share Obligation Value Price:
    	
 
    	
The opening price as displayed under the heading “Op” on Bloomberg   page “TWLO.N <Equity>“ (or its equivalent successor if such   page is not available) on the applicable Settlement Date or other date   of delivery.
    
	
 
    	
 
    	
 
    
	
Other Applicable Provisions:
    	
 
    	
To the extent Dealer is obligated to deliver Shares hereunder, the   provisions of Sections 9.8, 9.9 and 9.11 of the Equity Definitions will be   applicable as if “Physical Settlement” applied to the Transaction; provided   that the Representation and Agreement contained in Section 9.11 of the   Equity Definitions shall be modified by excluding any representations therein   relating to restrictions, obligations, limitations or requirements under   applicable securities laws that exist as a result of the fact that   Counterparty is the issuer of the Shares.
    
	
 
    	
 
    	
 
    
	
Restricted Certificated Shares:
    	
 
    	
Notwithstanding anything to the contrary in the Equity Definitions,   Dealer may, in whole or in part, deliver Shares required to be delivered to   Counterparty hereunder in certificated form in lieu of delivery through the Clearance   System.  With respect to such   certificated Shares, the Representation and Agreement contained in   Section 9.11 of the Equity Definitions shall be modified by deleting the   remainder of the provision after the word “encumbrance” in the fourth line thereof.
    
	
 
    	
 
    	
 
    
	
Adjustments:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Notwithstanding Section 11.2 of the Equity Definitions, upon the   occurrence of any event or condition set forth in the Dilution Adjustment   Provisions (a “Potential Adjustment Event”) that requires an adjustment under   the Indenture, the Calculation Agent shall, in good faith and in a   commercially reasonable manner, make a corresponding adjustment in respect of   any one or more of the Strike Price, the Number of Options, the Option   Entitlement and any other term relevant to the exercise, settlement or   payment of the Transaction, to the extent an analogous adjustment is required   under the Indenture, subject to “Discretionary Adjustments” below.  Immediately upon the occurrence of any   Potential Adjustment Event, Counterparty shall notify the Calculation Agent   of such Potential Adjustment Event.
    

 

9

 

	
 
    	
 
    	
Notwithstanding anything to the contrary herein or in the Equity   Definitions:

 

(i) in connection with any Potential Adjustment Event as a result   of an event or condition set forth in Section [14.04(b)]29 of   the Indenture or Section [14.04(c)]30 of   the Indenture where, in either case, the period for determining “Y” (as such   term is used in Section [14.04(b)]31 of   the Indenture) or “SPO” (as such term is used in Section [14.04(c)]32 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 reasonable costs (including, but not limited to, hedging mismatches and   market losses) and commercially reasonable out-of-pocket expenses incurred by   Dealer in connection with its commercially reasonable hedging activities as a   result of such event or condition not having been publicly announced prior to   the beginning of such period; and

 

(ii) 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   reasonable costs (including, but not limited to, hedging mismatches and   market losses) and commercially reasonable out-of-pocket expenses incurred by   Dealer in connection with its commercially reasonable hedging activities as a   result of such Potential Adjustment Event Change.

 

For the avoidance of doubt, Dealer shall not have any payment or   delivery obligation hereunder in respect of, 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 the holders of Convertible   Securities (upon conversion or otherwise) or (y) any other transaction   in which holders of Convertible Securities are entitled to participate, in   each case, in lieu of an adjustment under the Indenture in 
    

 

29                                      Include cross reference to section of the Indenture providing for an adjustment to the Conversion Rate in connection with a below market rights, options or warrants offering

 

30                                      Include cross reference to section of the Indenture providing for an adjustment to the Conversion Rate in connection with the distributions of Distributed Property

 

31                                      Include cross reference to section of the Indenture providing for an adjustment to the Conversion Rate in connection with a below market rights, options or warrants offering

 

32                                      Include cross reference to section of the Indenture providing for an adjustment to the Conversion Rate in connection with the distributions of Distributed Property

 

10

 

	
 
    	
 
    	
respect of a Potential Adjustment Event (including, without   limitation, under the fifth sentence of Section [14.04(c)] of the   Indenture or the fourth sentence of Section [14.04(d)] of the   Indenture).33
    
	
 
    	
 
    	
 
    
	
Dilution Adjustment Provisions:
    	
 
    	
Sections [14.04(a), (b), (c), (d) and (e)]34 and   Section [14.05]35 of the Indenture
    
	
 
    	
 
    	
 
    
	
Discretionary Adjustments:
    	
 
    	
Notwithstanding anything to the contrary herein or in the Equity   Definitions, if the Calculation Agent in good faith disagrees with any   adjustment under the Indenture that is the basis of any adjustment hereunder   and that involves an exercise of discretion by Counterparty, its board of   directors or a committee of its board of directors (including, without   limitation, pursuant to Section [14.05]36 of   the Indenture or pursuant to Section [14.07]37 of   the Indenture or any supplemental indenture entered into thereunder or in   connection with the determination of the fair value of any securities,   property, rights or other assets), then the Calculation Agent will determine   the corresponding 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 of or under the Transaction in good   faith and in a commercially reasonable manner consistent with the methodology   set forth in the Indenture.  In   addition, notwithstanding the foregoing, if any Potential Adjustment Event   occurs during the Cash Settlement Averaging Period but no adjustment was made   to any Convertible Security under the Indenture because the relevant holder   of such Convertible Security was deemed to be a record owner of the   underlying Shares on the related Conversion Date, then the Calculation Agent   shall, in good faith and in a commercially reasonable manner, make an   adjustment, consistent with the methodology set forth in the Indenture as   determined by it, to the terms hereof in order to account for such Potential   Adjustment Event.  For the avoidance of   doubt, the Delivery Obligation shall be calculated on the basis of such   adjustments by the Calculation Agent.
    

 

33                                      Include references to provisions of the Indenture providing for pass through of cash or distributed property in lieu of conversion rate adjustments.

 

34                                      Include references to provisions of the Indenture providing for pass through of cash or distributed property in lieu of conversion rate adjustments.

 

35                                      Include cross references to specific paragraphs of the section of the Indenture containing anti-dilution adjustments to the Conversion Rate

 

36                                      Include reference to provision of Indenture providing for adjustments by board of directors in the case of adjustment events that occur during an averaging period

 

37                                      Include reference to Merger Event provision

 

11

 

	
Extraordinary Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Merger Events:
    	
 
    	
Notwithstanding Section 12.1(b) of the Equity Definitions,   “Merger Event” shall have the meaning set forth in Section [14.07]38 of   the Indenture.
    
	
 
    	
 
    	
 
    
	
Consequences of Merger Events/Tender Offers:
    	
 
    	
Notwithstanding Section 12.2 of the Equity Definitions, upon the   occurrence of a Merger Event, the Calculation Agent, acting in good faith and   commercially reasonably, shall make a corresponding adjustment in respect of   any adjustment under the Indenture to any one or more of the nature of the   Shares, the Number of Options, the Option Entitlement, composition of the   “Shares” hereunder and any other variable relevant to the exercise,   settlement or payment for the Transaction, to the extent an analogous   adjustment is required under Section [14.07]39 of   the Indenture in respect of such Merger Event, as determined in good faith   and in a commercially reasonable manner by the Calculation Agent by reference   to such Section, subject to “Discretionary Adjustments” above; provided that   such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to a Make-Whole Adjustment or a Discretionary   Adjustment; provided further that in respect of any election by the holders   of Shares with respect to the consideration due upon consummation of any   Merger Event, the Calculation Agent shall have the right to adjust any   variable relevant to the exercise, settlement or payment for the Transaction   as appropriate to compensate Dealer for any losses (including, without   limitation, market losses customary for transactions similar to the   Transaction with counterparties similar to Counterparty) solely as a result   of any mismatch on its Hedge Position, assuming Dealer maintains a   commercially reasonable Hedge Position, and the type and amount of   consideration actually paid or issued to the holders of Shares in respect of   such Merger Event; and 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) securities issued by   an entity that is not a corporation 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, will not be a   corporation organized under the laws of the United States, any State thereof   or the District of Columbia or will not be the Issuer, Dealer may elect in   its commercially reasonable discretion that Cancellation and Payment   (Calculation Agent Determination) shall apply.  For the avoidance of doubt, adjustments   shall be made pursuant to the provisions set forth above regardless of   whether any Merger Event gives rise to an Early Conversion.  For purposes of this paragraph, “Tender   Offer” means the occurrence of any event or condition set forth in   Section [14.04(e)]40 of the Indenture.
    
	
 
    	
 
    	
 
    
	
Notice of Merger Consideration:
    	
 
    	
Upon the occurrence of a Merger Event, Counterparty shall reasonably   promptly (but in any event prior to consummation of such Merger Event) notify   the Calculation Agent of, in the case of a Merger Event 
    

 

38                                      Include cross reference to sections of the Indenture setting forth the list of merger and similar events

 

39                                      Include cross reference to sections of the Indenture setting forth the list of merger and similar events

 

40                                      Include cross reference to sections of the Indenture describing the consequences of above market tender offers

 

12

 

	
 
    	
 
    	
that causes the Shares to be converted into the right to receive more   than a single type of consideration (determined based in part upon any form   of stockholder election), the weighted average of the types and amounts of   consideration actually received by holders of Shares upon consummation of   such Merger Event.
    
	
 
    	
 
    	
 
    
	
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 the words “whether within a   commercially reasonable (as determined by the Calculation Agent) period of   time prior to or after the Announcement Event” shall be inserted prior to the   word “which” in the seventh line, 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 (the terms of which include, among other terms, the   Strike Price and Cap Price), and, if so, shall adjust the Cap Price   accordingly to take into account such economic effect 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 any adjustment in respect of   an Announcement Event shall take into account any earlier adjustment relating   to the same 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   subsidiary of Issuer, any affiliate of Issuer, any agent of Issuer or a   relevant and credible third entity of (x) any transaction or event that,   if completed, would constitute a Merger Event or Tender Offer, (y) any potential   acquisition by Issuer and/or its subsidiaries where the aggregate   consideration exceeds 25% of the market capitalization of Issuer as of the   date of such announcement (a “Transformative Transaction”) or (z) the   intention to enter into a Merger Event or Tender Offer or a Transformative   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 a Transformative   Transaction or (iii) any subsequent public announcement by Issuer, any   subsidiary of Issuer, any affiliate of Issuer, any agent of Issuer or a   relevant and credible third 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.  The parties hereto   agree and acknowledge that for purposes of this “Announcement Event”   definition, in determining 
    

 

13

 

	
 
    	
 
    	
whether a third party is relevant and credible, the Calculation Agent   may take into consideration the effect of the relevant announcement by such   third party on the Shares and/or options relating to the Shares (and, for the   avoidance of doubt, if the Calculation Agent determines, in its commercially   reasonable discretion, the effect thereof on the Shares and/or options   relating to the Shares is material, such third party shall be deemed to be   relevant and credible).  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.
    
	
 
    	
 
    	
 
    
	
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 Shares are not   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors); if the Shares are immediately re-listed,   re-traded or re-quoted on any such exchange or quotation system, such   exchange or quotation system shall thereafter be deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional Termination Event(s):
    	
 
    	
Notwithstanding anything to the contrary in the Equity Definitions,   if, as a result of an Extraordinary Event, the Transaction would be cancelled   or terminated (whether in whole or in part) pursuant to Article 12 of   the Equity Definitions, an Additional Termination Event (with the Transaction   (or the cancelled or terminated portion thereof) being the Affected   Transaction and Counterparty being the sole Affected Party) shall be deemed   to occur, and, in lieu of Sections 12.7, 12.8 and 12.9 of the Equity   Definitions, Section 6 of the Agreement shall apply to such Affected   Transaction.
    
	
 
    	
 
    	
 
    
	
Additional Disruption Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(a) 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) by adding   the phrase “and/or Hedge Position” after the word “Shares” in clause   (X) thereof and (iii) by immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”; and provided further   that Section 12.9(a)(ii) of the Equity Definitions is hereby   amended by (i) 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 or promulgation of new regulations authorized or mandated   by existing statute)” and (ii) adding the words “, or holding, acquiring   or disposing of Shares or any Hedge Positions relating to,” after the words “obligations   under” in clause (Y) thereof.
    

 

14

 

	
(b) Failure to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(c) Insolvency Filing:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
(d) Hedging Disruption:
    	
 
    	
Applicable; provided that:

 

(i) Section 12.9(a)(v) of the Equity Definitions is   hereby amended by inserting the following sentence at the end of such   Section:

 

“For the avoidance of doubt, (i) the term “equity price risk”   shall be deemed to include, but shall not be limited to, stock price and   volatility risk, and (ii) the transactions or assets referred to in phrases   (A) or (B) above must be available on commercially reasonable   pricing and other terms.”; and

 

(ii) Section 12.9(b)(iii) of the Equity Definitions is   hereby amended by inserting in the third line thereof, after the words “to   terminate the Transaction”, the words “or a portion of the Transaction   affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
(e) Increased Cost of Hedging: 
    	
 
    	
Not Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
Dealer; provided that the Determining Party will promptly, 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   Determining Party 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).
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Agreements and Acknowledgments
    	
 
    	
Applicable 
    
	
 
    	
 
    	
 
    
	
Regarding Hedging Activities:
    	
 
    	
Applicable 
    
	
 
    	
 
    	
 
    
	
Additional Acknowledgments:
    	
 
    	
Applicable 
    
	
 
    	
 
    	
 
    
	
Hedging Adjustment:
    	
 
    	
For the avoidance of doubt, whenever Dealer, Determining Party or the   Calculation Agent is permitted to make an adjustment pursuant to the terms of   this Confirmation or the Equity Definitions to take into account the effect   of any event (other than an adjustment made by reference to the Indenture),   the Calculation Agent, Determining Party or Dealer, as the case may be, shall   make such adjustment by reference to the effect of such event on Dealer assuming   that Dealer maintains a commercially reasonable hedge position.
    

 

15

 

	
3.   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.    Calculation Agent agrees that it will promptly, 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).
    

 

	
4.
    	
 
    	
Account Details:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dealer Payment Instructions:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[             ]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Counterparty Payment Instructions:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[             ]
    
	
 
    	
 
    	
 
    
	
5.
    	
 
    	
Offices:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Office of Dealer for the Transaction is: [               ]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Office of Counterparty for the Transaction is:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Inapplicable,   Counterparty is not a Multibranch Party
    
	
 
    	
 
    	
 
    
	
6.
    	
 
    	
Notices:
    	
For purposes of   this Confirmation:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)
    	
Address for   notices or communications to Counterparty:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
To:
    	
Twilio Inc.
    
	
 
    	
 
    	
 
    	
375 Beale Street, Suite 300
    
	
 
    	
 
    	
 
    	
San Francisco, CA 94105
    
	
 
    	
 
    	
Attn:
    	
[            ]
    
	
 
    	
 
    	
Telephone:
    	
[            ]
    
	
 
    	
 
    	
Email:
    	
[            ]
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
with a copy to:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Goodwin Procter LLP
    
	
 
    	
 
    	
The New York Times Building
    
						

 

16

 

	
 
    	
 
    	
620 Eighth Avenue
    
	
 
    	
 
    	
New York, NY 10018
    
	
 
    	
 
    	
Attn:
    	
Yoel Kranz
    
	
 
    	
 
    	
Telephone:
    	
(212) 813-8800
    
	
 
    	
 
    	
Email:
    	
ykranz@goodwinlaw.com
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
Address for   notices or communications to Dealer:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
[Dealer Address]
    
					

 

7.                                      Representations, Warranties and Agreements:

 

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

 

(i)                                     On the Trade Date, (A) Counterparty is not aware of any material nonpublic information regarding Counterparty or the Shares and (B) all reports and other documents filed by Counterparty with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

 

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

 

(iii)                               Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that neither Dealer nor any of its affiliates is making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity (or any successor issue statements).

 

(iv)                              Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

 

(v)                                 Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction.

 

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

 

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

 

17

 

(viii)                        On each of the Trade Date and the Premium Payment Date, 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 Counterparty would be able to purchase the Number of Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation.

 

(ix)                              The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section [1] of the Purchase Agreement, dated as of May [ ], 2018, between Counterparty and [Goldman Sachs & Co. LLC] as representative[s] of the initial purchasers party thereto (the “Purchase Agreement”) are true and correct as of the Trade Date and the Effective Date and are hereby deemed to be repeated to Dealer as if set forth herein.

 

(x)                                 To the knowledge of Counterparty, no state or local (including non-U.S. jurisdictions) 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 affiliates being financial institutions or broker-dealers.

 

(xi)                              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.

 

(b)                                 Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended, and is entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.

 

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

 

(d)                                 Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge (A) that this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(27), 362(o), 546(e), 546(j), 548(d)(2), 555 and 561 of the Bankruptcy Code.

 

18

 

(e)                                  As a condition to the effectiveness of the Transaction, Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Premium Payment Date and reasonably acceptable to Dealer in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and Section 7(a)(vii) hereof; provided that any such opinion of counsel may contain customary exceptions and qualifications, including, without limitation, exceptions and qualifications relating to indemnification provisions.

 

(f)                                   Counterparty understands that notwithstanding any other relationship between Counterparty and Dealer and its affiliates, in connection with this Transaction and any other over-the-counter derivative transactions between Counterparty and Dealer or its affiliates, Dealer or its affiliates is acting as principal and is not a fiduciary or advisor in respect of any such transaction, including any entry, exercise, amendment, unwind or termination thereof.

 

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

 

(h)                                 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, in each case, to the extent such rules are applicable to such party.

 

8.                                      Other Provisions:

 

(a)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Exercise Date or Settlement Date or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the relevant Options (in which event the Calculation Agent, in good faith and in a commercially reasonable manner, shall make appropriate adjustments to the Delivery Obligation), if Dealer determines, in good faith and in a commercially reasonable manner, and, in respect of clause (ii) below, based on the advice of counsel, that such extension is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock borrow market or other relevant market (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 purchases or sales of Shares or Share Termination Delivery Units in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would (assuming, in the case of purchases, 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 (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer and, in the case of policies or procedures, so long as such policies or procedures are consistently applied to transactions similar to the Transaction); provided that no such Exercise Date, Settlement Date or other date of valuation, payment or delivery may be postponed or added more than 30 Trading Days after the original Exercise Date, Settlement Date or other date of valuation, payment or delivery, as the case may be.

 

(b)                                 Additional Termination Events.

 

(i)                                     The occurrence of an event of default with respect to Counterparty under the terms of the Convertible Securities as set forth in Section [6.01]41 of the Indenture, which default has resulted in the Convertible Securities becoming due and payable under the terms thereof, shall

 

41                                      Insert cross reference to section of the Indenture setting forth Events of Default

 

19

 

constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole Affected Party, and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement.

 

(ii)                                  As promptly as practicable (but in any event within five Scheduled Trading Days) following any Repurchase Event (as defined below), Counterparty may notify Dealer in writing of such Repurchase Event and the number of Convertible Securities subject to such Repurchase Event (any such notice, a “Convertible Securities Repurchase Notice”) [; provided that any “Convertible Securities Repurchase Notice” delivered to Dealer pursuant to the Base Call Option Transaction Confirmation shall be deemed to be a Convertible Securities Repurchase Notice pursuant to this Confirmation and the terms of such Convertible Securities Repurchase Notice shall apply, mutatis mutandis, to this Confirmation]42.  Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty of (x) any Convertible Securities Repurchase Notice, and (y) a written representation and warranty by Counterparty that, as of the date of such Convertible Securities Repurchase Notice, Counterparty is not in possession of any material nonpublic information regarding Counterparty or the Shares and that such Repurchase Event and the delivery of such Convertible Securities Repurchase Notice are each being made in good faith and not as part of a plan or scheme to evade compliance with federal securities laws, within the applicable time period set forth in the preceding sentence, shall constitute an Additional Termination Event as provided in this Section 8(b)(ii).  Upon receipt of any such Convertible Securities Repurchase Notice and the related written representation and warranty, Dealer shall promptly designate an Exchange Business Day following receipt of such Convertible Securities Repurchase Notice (which in no event shall be earlier than the related repurchase date for such Convertible Securities) as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “Repurchase Options”) equal to the lesser of (A) the number of such Convertible Securities specified in such Convertible Securities Repurchase Notice [minus the number of Repurchase Options (as defined in the Base Call Option Transaction Confirmation), if any, that relate to such Convertible Securities (and for purposes of determining whether any Options under this Confirmation or under the Base Call Option Transaction Confirmation will be among the Repurchase Options hereunder or under, and as defined in, the Base Call Option Transaction Confirmation, the Convertible Securities specified in such Convertible Securities Repurchase Notice shall be allocated first to the Base Call Option Transaction Confirmation until all Options thereunder are exercised or terminated)]43 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 Repurchase Options.  Any payment hereunder with respect to such termination 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 this Transaction and a Number of Options equal to the number of Repurchase 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.  “Repurchase Event” means that (i) any Convertible Securities are repurchased or redeemed (whether pursuant to Section [15.02]44 or Section [   ]45 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 Securities 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 Securities is repaid prior to the final maturity date of the Convertible Securities, or (iv) any Convertible

 

42                                      Include for additional capped call.

 

43                                      Include for additional capped call

 

44                                      Insert cross-reference to section of the Indenture relating to fundamental change repurchase.

 

45                                      Insert cross-reference to section of the Indenture relating to optional redemption.

 

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Securities 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 Securities (whether into cash, Shares, “Reference Property” (as defined in the Indenture) or any combination thereof) pursuant to the terms of the Indenture shall not constitute a Repurchase Event. Counterparty acknowledges and agrees that if an Additional Termination Event has occurred under this Section 8(b)(ii) that any related Convertible Securities subject to a Repurchase Event will be deemed to be cancelled and disregarded and no longer outstanding for all purposes hereunder.

 

(iii)                               Notwithstanding anything to the contrary in this Confirmation, upon any Early Conversion in respect of which the relevant converting Holder has satisfied the requirements to conversion set forth in Section [14.02(b)]46 of the Indenture:

 

(A)                               Counterparty shall, as promptly as practicable (but in any event within five Scheduled Trading Days of the “Conversion Date” (as defined in the Indenture) for such Early Conversion), provide written notice (an “Early Conversion Notice”) to Dealer specifying the number of Convertible Securities surrendered for conversion on such Conversion Date (such Convertible Securities, the “Affected Convertible Securities”), and the giving of such Early Conversion Notice shall constitute an Additional Termination Event as provided in this Section 8(b)(iii); provided that any such Early Conversion Notice shall contain a written acknowledgement by Counterparty of its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of the delivery of such Early Conversion Notice.

 

(B)                               upon receipt of any such Early Conversion Notice, within a commercially reasonable period of time thereafter, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for such Affected Convertible Securities) 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 Securities [minus the “Affected Number of Options” (as defined in the Base Call Option Transaction Confirmation) (and for purposes of determining whether any Options under this Confirmation or under the Base Call Option Transaction Confirmation will be among the Affected Number of Options hereunder or under, and as defined in, the Base Call Option Transaction Confirmation, the Affected Convertible Securities specified in such Early Conversion Notice shall be allocated first to the Base Call Option Transaction Confirmation until all options thereunder are exercised or terminated)]47 and (y) the Number of Options as of the “Conversion Date” (as defined in the Indenture) for such Early Conversion;

 

(C)                               any payment 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

 

46                                      Insert cross reference to section of the Indenture setting forth requirements for conversion

 

47                                      Include for additional capped call.

 

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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) and (ii) the number of Shares delivered (if any) to the Holder (as such term is defined in the Indenture) of an Affected Convertible Security upon conversion of such Affected Convertible Security (in each case, including any cash and/or Shares payable and/or deliverable as the result of a Make-Whole Adjustment (if any)), multiplied by the fair market value of one Share as determined by the Calculation Agent in good faith and in a commercially reasonable manner, 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 adjustment to the conversion rate for the Convertible Securities has occurred pursuant to any Make-Whole Adjustment or Discretionary Adjustment and (z) the corresponding Convertible Securities remain outstanding; and

 

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

 

(c)                                  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 all holders of Shares consists solely of cash, (ii) a 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) and 6(e) of the Agreement (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 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) as of the date of such election, Counterparty represents that is not in possession of any material non-public information regarding Counterparty or the Shares, and that such election is being made in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws, and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 6(d)(ii) and 6(e) of the Agreement, as the case may be, shall apply.

 

	
Share Termination Alternative:
    	
 
    	
If applicable, means that Dealer shall deliver to   Counterparty the Share Termination Delivery Property on the date on which the   Payment Obligation would otherwise be due pursuant to   Section 6(d)(ii) of the Agreement or such later date or dates as   Dealer may commercially reasonably determine (the “Share Termination Payment   Date”) taking into account commercially reasonable hedging or hedge unwind   activity, in satisfaction of the Payment Obligation.
    

 

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Share   Termination Delivery
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Property:
    	
 
    	
A number of Share Termination Delivery Units, as   calculated by the Calculation Agent in good faith and in a commercially   reasonable manner, equal to the Payment Obligation divided by the Share   Termination Unit Price. The Calculation Agent shall, in good faith and in a   commercially reasonable manner, adjust the Share Termination Delivery   Property by replacing any fractional portion of the aggregate amount of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    	
 
    
	
Share   Termination Unit Price:
    	
 
    	
The value of property contained in one Share   Termination Delivery Unit on the date such Share Termination Delivery Units   are to be delivered as Share Termination Delivery Property, as determined by   the Calculation Agent in a commercially reasonable manner and notified by the   Calculation Agent to Dealer at the time of notification of the Payment   Obligation.
    
	
 
    	
 
    	
 
    
	
Share   Termination Delivery Unit:
    	
 
    	
In the case of a Termination Event (other than on   account of an Insolvency, Nationalization or Merger Event), Event of Default,   Delisting or Additional Disruption Event, one Share or, in the case of an   Insolvency, Nationalization or Merger Event, one Share or a unit consisting   of the number or amount of each type of property received by a holder of one   Share (without consideration of any requirement to pay cash or other   consideration in lieu of fractional amounts of any securities) in such   Insolvency, Nationalization or Merger Event, as applicable. If such   Insolvency, Nationalization or Merger Event involves a choice of   consideration to be received by holders, such holder shall be deemed to have   elected to receive the maximum possible amount of cash.
    
	
 
    	
 
    	
 
    
	
Failure to   Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Other Applicable   Provisions:
    	
 
    	
If Share Termination Alternative is applicable, the   provisions of Sections 9.8, 9.9 and 9.11 of the Equity Definitions will be   applicable as if “Physical Settlement” applied to the Transaction, except   that all references to “Shares” shall be read as references to “Share   Termination Delivery Units”; provided that the Representation and Agreement   contained in Section 9.11 of the Equity Definitions shall be modified by   excluding any representations therein relating to restrictions, obligations,   limitations or requirements under applicable securities laws as a result of   the fact that Counterparty is the issuer of any Share Termination Delivery   Units (or any part thereof).
    

 

(d)                                 Disposition of Hedge Shares.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on the advice of counsel, the Shares (the “Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction in a commercially reasonable manner cannot be sold in the U.S. public market by Dealer without registration under the Securities Act, Counterparty shall, at its election:  (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering, (B) provide accountant’s “comfort” letters in customary form for registered offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of

 

23

 

equity securities (in all cases of (A)-(E) above, as would be usual and customary for offerings for companies of similar size and industry); provided that if Counterparty elects clause (i) above but the items referred to therein are not completed in a timely manner, or 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 Section 8(d) 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, including using reasonable efforts to include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), and best efforts obligations to provide opinions and certificates and such other documentation as is customary for private placements agreements for transactions of similar size and type, as is commercially reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its 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.  This Section 8(d) shall survive the termination, expiration or early unwind of the Transaction.

 

(e)                                  Repurchase and Conversion Rate Adjustment Notices.  Counterparty shall, at least two Exchange Business Days prior to any day on which Counterparty effects any repurchase of Shares or consummates or otherwise engages in any transaction or event (a “Conversion Rate Adjustment Event”) that could reasonably be expected to lead to an increase in the “Conversion Rate” (as defined in the Indenture), give Dealer a written notice of such repurchase or Conversion Rate Adjustment Event (a “Repurchase Notice”) if, following such repurchase or Conversion Rate Adjustment Event, the Notice Percentage would reasonably be expected to be (i) greater than [     ]48% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof).  The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares plus the number of Shares underlying any other convertible bond hedge transactions or similar call options sold by Dealer to Counterparty and the denominator of which is the number of Shares outstanding on such day.  In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses (including losses relating to the Dealer’s commercially reasonable hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to this Transaction), claims, damages and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act or under any state or federal law, regulation or regulatory order, relating to or arising out of such failure.  If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability.  In addition, Counterparty will reimburse any Indemnified Party for all reasonable out-of-pocket expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty.  This

 

48                                      To be 0.5% higher than the number of Shares underlying the capped call (including any additional capped call) of the Dealer with the highest Applicable Percentage.

 

24

 

indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement and shall inure to the benefit of any permitted assignee of Dealer.

 

(f)                                   Transfer and Assignment.  Either party may transfer or assign any of its rights or obligations under the Transaction with the prior written consent of the non-transferring party, such consent not to be unreasonably withheld or delayed; provided that Dealer may transfer or assign without any consent of Counterparty its rights and obligations hereunder, in whole or in part, to any person, or any person whose obligations would be guaranteed by a person, in either case, with a rating (i) for its long-term, unsecured and unsubordinated indebtedness at least equivalent to Dealer’s (or its ultimate parent’s) or (ii) that is no lower than A3 from Moody’s Investor Service, Inc. (or its successor) or A- from Standard and Poor’s Rating Group, Inc. (or its successor); provided further that, at the time of such transfer or assignment either (i) both the Dealer and transferee in any such transfer or assignment are a “dealer in securities” within the meaning of Section 475(c) (1) of the Internal Revenue Code of 1986, as amended (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.  If at any time at which (1) the Equity Percentage exceeds 8.0% or (2) Dealer, Dealer Group (as defined below) or any person whose ownership position would be aggregated with that of Dealer or Dealer Group (Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203 of the Delaware General Corporation Law or other federal, state or local law, rule, regulation or regulatory order or organizational documents or contracts of Counterparty 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 in excess of a number of Shares equal to (x) the number of Shares that would give rise to reporting, registration, filing or notification obligations or other requirements (including obtaining prior approval by a state or federal regulator, but excluding reporting obligations arising under Section 13 of the Exchange Act) of a Dealer Person under Applicable Restrictions and with respect to which such requirements have not been met or the relevant approval has not been received, or that would have any other adverse effect on a Dealer Person, under Applicable Restrictions minus (y) 1% of the number of Shares outstanding on the date of determination (either such condition described in clause (1) or (2), an “Excess Ownership Position”), Dealer, in its discretion, is unable to effect a transfer or assignment to a third party after its commercially reasonable efforts on pricing and terms and within a time period reasonably acceptable to Dealer such that an Excess Ownership Position no longer exists, Dealer may designate any Scheduled Trading Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction, such that an Excess Ownership Position would no longer exist following the resulting partial termination of the Transaction (after taking into account commercially reasonable adjustments to Dealer’s commercially reasonable Hedge Positions from such partial termination).  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement or Section 8(c) of this Confirmation as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii) Counterparty were the sole Affected Party with respect to such partial termination, (iii) such portion of the Transaction were the only Terminated Transaction and (iv) Dealer were the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement and to determine the amount payable pursuant to Section 6(e) of the Agreement.  The “Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of 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.  In the case of a transfer or assignment by Counterparty of its rights and obligations hereunder and under the Agreement, in whole or in part (any such Options so transferred or assigned, the “Transfer Options”), to any party, withholding of such consent by Dealer shall not be considered unreasonable if such transfer or assignment does not meet the reasonable conditions that Dealer may impose including, but not limited, to the following conditions:

 

25

 

(A)                               With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 8(e) or any obligations under Section 2 (regarding Extraordinary Events) or 8(d) 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 Code);

 

(C)                               Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, undertakings 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 by, and reasonably satisfactory to, Dealer;

 

(D)                               Dealer shall not, as a result of such transfer and assignment, be required to pay the transferee 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;

 

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

 

(F)                                 Without limiting the generality of clause (B), Counterparty shall have caused the transferee to make such Payee Tax Representations and to 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.

 

(g)                                  Staggered Settlement.  If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s 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 (each, a “Staggered Settlement Date”) as follows:

 

(i)                                     in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (the first of which will be such Nominal Settlement Date and the last of which will be no later than the twentieth (20th) Exchange Business Day following 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.

 

26

 

(h)                                 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.

 

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

 

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

 

(k)                                 Early Unwind.  In the event the sale by Counterparty of the [Base Convertible Securities]49[Optional Convertible Securities]50 is not consummated pursuant to the Purchase Agreement for any reason by the close of business in New York on [          ], 201851 (or such later date as agreed upon by the parties) ([          ], 2018 or such later date being the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and the Transaction and all of the respective rights and obligations of Dealer and Counterparty hereunder shall be cancelled and terminated.  Following such termination and cancellation, each party shall be released and discharged by the other party from, and agrees not to make any claim against the other party with respect to, any obligations or liabilities of either party arising out of, and to be performed in connection with, the Transaction either prior to or after the Early Unwind Date.  Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(l)                                     Agreements and Acknowledgements 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 “Daily VWAP” (as defined in the Indenture); (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 “Daily VWAP” (as defined in the Indenture),

 

49                                      Include for base capped call.

 

50                                      Include for additional capped call.

 

51                                      For the base capped call, to be the scheduled closing date for the Base Convertible Securities. For the additional capped call, to be the scheduled closing date for the Additional Convertible Securities.

 

27

 

each in a manner that may be adverse to Counterparty; and (E) the Transaction is a derivatives transaction in which it has granted Dealer an option, and Dealer may purchase shares for its own account at an average price that may be greater than, or less than, the price paid by Counterparty under the terms of the Transaction.

 

(m)                             Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (the “WSTAA”), the parties hereby agree that neither the enactment of the WSTAA (or any statute containing any legal certainty provision similar to Section 739 of the WSTAA) or any regulation under the WSTAA (or any such statute), nor any requirement under the WSTAA (or any statute containing any legal certainty provision similar to Section 739 of the WSTAA) or an amendment made by the WSTAA (or any such statute), 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 or Illegality).

 

(n)                                 Governing Law; Exclusive Jurisdiction; Waiver of Jury.

 

(i)                                     THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF ARTICLE 5 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

(ii)                                  Section 13(b) of the Agreement is deleted in its entirety and replaced by the following:

 

“Each party hereby irrevocably and unconditionally submits for itself and its property in any suit, legal action or proceeding relating to this Confirmation or the Agreement, or for recognition and enforcement of any judgment in respect thereof, (each, “Proceedings”) to the exclusive jurisdiction of the Supreme Court of the State of New York, sitting in New York County, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof.  Nothing in this Confirmation or the Agreement precludes either party from bringing Proceedings in any other jurisdiction if (A) the courts of the State of New York or the United States of America for the Southern District of New York lack jurisdiction over the parties or the subject matter of the Proceedings or decline to accept the Proceedings on the grounds of lacking such jurisdiction; (B) the Proceedings are commenced by a party for the purpose of enforcing against the other party’s property, assets or estate any decision or judgment rendered by any court in which Proceedings may be brought as provided hereunder; (C) the Proceedings are commenced to appeal any such court’s decision or judgment to any higher court with competent appellate jurisdiction over that court’s decisions or judgments if that higher court is located outside the State of New York or Borough of Manhattan, such as a federal court of appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has been commenced in another jurisdiction by or against the other party or against its property, assets or estate and, in order to exercise or protect its rights, interests or remedies under this Confirmation or the Agreement, the party (1) joins, files a claim, or takes any other action, in any such suit, action or proceeding, or (2) otherwise commences any Proceeding in that other jurisdiction as the result of that other suit, action or proceeding having commenced in that other jurisdiction.”

 

(iii)                               EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL RIGHT TO TRIAL

 

28

 

BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS CONFIRMATION OR THE AGREEMENT.

 

(o)                                 Amendment.  This Confirmation and the Agreement may not be modified, amended or supplemented, except in a written instrument signed by Counterparty and Dealer.

 

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

 

(q)                                 Tax Matters.  For purposes of Sections 4(a)(i) and (ii) of the Agreement, Counterparty agrees to deliver to Dealer, upon request, one duly executed and completed United States Internal Revenue Service Form W-9 (or successor thereto).  Dealer shall provide to Counterparty one duly executed and completed United States Internal Revenue Service Form [W-9][W-8BEN]52 (or successor thereto), upon reasonable request of Counterparty.

 

(r)                                    Withholding Tax with Respect to Non-US Counterparties.”  Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include (i) 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”) or (ii) any U.S. federal withholding tax imposed on amounts treated as dividends from sources within the United States under Section 871(m) of the Code (or any Treasury regulations or other guidance issued thereunder).  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.

 

(s)                                   Amendment to Equity Definitions.

 

(i)                                     Solely in respect of adjustments to the Cap Price pursuant to Section 8(t), Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “that may have a diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “that is the result of a corporate event involving the Issuer or its securities that has, in the commercially reasonable judgment of the Calculation Agent, a material economic effect on the Shares or options on the Shares; provided that such event is not based on (a) an observable market, other than the market for the Company’s own stock or (b) an observable index, other than an index calculated and measured solely by reference to Company’s own operations.”.

 

(ii)                                  Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect or, if Counterparty represents to Dealer in writing at the time of such election that (i) it is not aware of any material nonpublic information with respect to Counterparty or the Shares and (ii) it is not making such election as part of a plan or scheme to evade compliance with the U.S. federal securities laws, Counterparty may elect”.

 

(t)                                    Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in the Agreement, the Equity Definitions or this Confirmation, 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, the Calculation Agent shall determine in good faith and in a commercially reasonable manner whether such occurrence or declaration, as applicable, has had a material economic effect on the Transaction and, if so, shall, in its good faith and commercially reasonable discretion, adjust the Cap Price to preserve the fair value of the Options taking into account, for the avoidance of doubt, such economic

 

52                                      Insert as applicable.

 

29

 

effect on both the Strike Price and Cap Price (provided that in no event shall the Cap Price be less than the Strike Price; provided further that any adjustment to the Cap Price made pursuant to this Section 8(t) shall be made without duplication of any other adjustment hereunder).  Solely for purposes of this Section 8(t), the terms “Potential Adjustment Event,” “Merger Event,” and “Tender Offer” shall each have the meanings assigned to each such term in the Equity Definitions (as amended by Section 8 (s)(i)).

 

(u)                                 Notice of Certain Other Events.  (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 Securities 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.

 

(v)                                 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.

 

(w)                               Payee Tax Representations.  For the purpose of Section 3(f) of the Agreement, Dealer makes the representations below:

 

(i)                                     [Dealer is organized under the laws of the United States and its U.S. taxpayer identification number is [     ].  It is “exempt” within the meaning of Treasury Regulation sections 1.6041-3(p) and 1.6049-4(c) from information reporting on IRS Form 1099 and backup withholding.]

 

OR

 

(ii)                                  [[Dealer Parent] is a [corporation] established under the laws of [ ] and is classified as a corporation for U.S. federal income tax purposes.  No income received or to be received under this Agreement will be effectively connected with the conduct of a trade or business by [Dealer Parent] in the United States.  [Dealer Parent] is a “non-U.S. branch of a foreign person” as that term is used in Section 1.1441-4(a)(3)(ii) of the Regulations, and it is a “foreign person” as that term is used in Section 1.6041-4(a)(4) of the Regulations.]53

 

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

 

 

	
 
    	
Yours   faithfully,
    
	
 
    	
 
    
	
 
    	
[DEALER]
    

 

53                                      Insert as applicable depending on tax status of dealer.

 

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By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
Agreed   and Accepted By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
TWILIO INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

31EX-4.1

 Exhibit 4.1 
  

 
 Shares ESSA Pharma Inc. A BRITISH COLUMBIA BUSINESS CORPORATIONS ACT COMPANY C0000000230 | M .
zero****SPECIMEN29668H70800000000ESSA*Pharma*Inc . SPECIMEN . .zero****SPECIMEN29668H70800000000ESSA*Pharma*Inc THIS CERTIFIES THAT Number 00000000 IS THE REGISTERED HOLDER OF CUSIP 29668H708 ISIN CA29668H7085 SEE REVERSE FOR CERTAIN DEFINITIONS

FULLY PAID AND NON-ASSESSABLE COMMON SHARES WITHOUT PAR VALUE IN THE CAPITAL OF ESSA Pharma Inc. in the Authorized share structure of the above named Company
subject to the Articles of the Company transferable on the Central Securities Register of the Company by the registered holder in person or by attorney duly authorized in writing upon surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned by the Transfer Agent and Registrar of the Company. IN WITNESS WHEREOF the Company has caused this certificate to be signed on its behalf by the facsimile signatures of its duly authorized officers, at Vancouver,
British Columbia. President & Chief Executive Officer COUNTERSIGNED AND REGISTERED COMPUTERSHARE TRUST COMPANY, N.A. (CANTON, MA, JERSEY CITY, NJ AND LOUISVILLE, KY) TRANSFER AGENT AND REGISTRAR 
Dated: Apr 06, 2018 COUNTERSIGNED AND REGISTERED COMPUTERSHARE INVESTOR SERVICES INC. (VANCOUVER) (TORONTO) OR OR TRANSFER AGENT AND REGISTRAR By ____________________________

Authorized Officer The shares represented by this certificate are transferable at the offices of Computershare Investor Services Inc. in Vancouver, BC and Toronto,
ON or at the offices of Computershare Trust Company, N.A. in Canton, MA, Jersey City, NJ and Louisville, KY. By _____________________________ 
Authorized Officer

 

 
 The following abbreviations shall be construed as though the words set forth below opposite each abbreviation were written out in full
where such abbreviation appears: TEN COM as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with rights of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above
list. For value received the undersigned hereby sells, assigns and transfers unto Insert name and address of transferee shares Signature Guarantee: the Company with full power of substitution in the premises. DATED: represented by this certificate
and does hereby irrevocably constitute and appoint . the attorney of the undersigned to transfer the said shares on the books of The signature on this assignment must correspond with the name as written upon the face of the certificate(s), in every
particular, without alteration or enlargement, or any change whatsoever and must be guaranteed by a major Canadian Schedule I chartered bank or a member of an acceptable Medallion Signature Guarantee Program (STAMP, SEMP, MSP). The Guarantor must
affix a stamp bearing the actual words “Signature Guaranteed”. In the USA, signature guarantees must be done by members of a “Medallion Signature Guarantee Program” only. Signature guarantees are not accepted from Treasury
Branches, Credit Unions or Caisses Populaires unless they are members of the Stamp Medallion Program. SECURITY INSTRUCTIONS - INSTRUCTIONS DE SECURITE THIS IS WATERMARKED PAPER, DO NOT ACCEPT WITHOUT NOTHING WATERMARK HOLD TO LIGHT TO VERIFY
WATERMARK. PAPIER FILIGRANE,NE PAS ACCEPTER SANS VERIFIER LA PRESENCE DU FlLIGRANE. POUR CE FAIRE. PLACER A LA LUMIERE. EN COMP V2 01 (Name)CUST (Name) UNIF GIFT MIN ACT (State)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00283-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00283-of-00352.parquet"}]]