Document:

Exhibit 10.1

 

$120,000,000

 

ENPHASE ENERGY, INC.

 

1.000% Convertible Senior Notes due 2024

 

PURCHASE AGREEMENT

 

May 30, 2019

 

CREDIT SUISSE SECURITIES (USA) LLC
 BARCLAYS CAPITAL INC.

 

As Representatives of the Several Purchasers,

 

c/o                               Credit Suisse Securities (USA) LLC

Eleven Madison Avenue,

New York, New York 10010-3629

 

c/o                               Barclays Capital Inc. 

745 Seventh Avenue

New York, New York 10019

 

Dear Sirs:

 

1.              Introductory. Enphase Energy, Inc., a Delaware corporation (“Company”), agrees with the several initial purchasers named in Schedule A hereto (“Purchasers”), subject to the terms and conditions stated herein, to issue and sell to the several Purchasers US$120,000,000 principal amount of its 1.000% Convertible Senior Notes due 2024 (the “Firm Securities”) and also proposes to grant to the Purchaser an option to purchase an aggregate of up to an additional U.S.$12,000,000 principal amount of its 1.000% Convertible Senior Notes due 2024 (the “Option Securities”), to be issued under an indenture, dated as of the Closing Date (“Indenture”), between the Company and U.S. Bank National Association, as Trustee (the “Trustee”). The Firm Securities and the Option Securities which the Purchasers may elect to purchase pursuant to Section 3 hereof are herein collectively called the “Offered Securities.” The Offered Securities will be convertible into cash, shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), or a combination of cash and Common Stock, at the Company’s election.

 

In connection with the offering of the Offered Securities, the Company and certain of the Purchasers or their respective affiliates (the “Call Spread Counterparties”) are entering into a convertible note hedge transactions and warrant transactions pursuant to convertible note hedge confirmations (the “Base Bond Hedge Confirmations”) and warrant confirmations (the “Base Warrant Confirmations”), each dated the date hereof (the Base Bond Hedge Confirmations and

 

 

the Base Warrant Confirmations, collectively, the “Base Call Spread Confirmations”), and in connection with the issuance of any Option Securities, the Company and the Call Spread Counterparties may enter into additional convertible note hedge transactions and additional warrant transactions pursuant to additional convertible note hedge confirmations (the “Additional Bond Hedge Confirmations”) and additional warrant confirmations (the “Additional Warrant Confirmations”), each to be dated the date of the exercise by the Purchasers of their option to purchase such Option Securities pursuant to Section 3 hereof (the Additional Bond Hedge Confirmations and the Additional Warrant Confirmations, collectively, the “Additional Call Spread Confirmations” and together with the Base Call Spread Confirmations, the “Call Spread Confirmations”).

 

2.              Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Purchasers that:

 

(a)         Offering Memoranda; Certain Defined Terms.  The Company has prepared or will prepare the Preliminary Offering Memorandum and the Final Offering Memorandum.

 

For purposes of this Agreement:

 

“Applicable Time” means 11:15 PM (Eastern time) on the date of this Agreement.

 

“Additional Closing Date” has the meaning set forth in Section 3 hereof.

 

“Closing Date” has the meaning set forth in Section 3 hereof.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

“Exchange Act Reports” means the Company’s Annual Report on Form 10-K most recently filed with the Commission and all subsequent reports (including exhibits to the extent incorporated by reference as set forth below) filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof and which are incorporated by reference in the Preliminary Offering Memorandum, the Final Offering Memorandum or any Free Writing Communication, as applicable.

 

“Final Offering Memorandum” means the final offering Memorandum relating to the Offered Securities to be offered by the Purchasers that discloses the offering price and other final terms of the Offered Securities and is dated as of the date of this Agreement (even if finalized and issued subsequent to the date of this Agreement), including the Exchange Act Reports and any other information incorporated by reference therein.

 

“Free Writing Communication” means a written communication (as such term is defined in Rule 405) that constitutes an offer to sell or a solicitation of an offer to buy the Offered Securities and is made by means other than the Preliminary Offering

 

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Memorandum or the Final Offering Memorandum, including the Exchange Act Reports.

 

“General Disclosure Package” means the Preliminary Offering Memorandum together with any Issuer Free Writing Communication existing at the Applicable Time and the information in which is intended for general distribution to prospective investors, as evidenced by it being specified in Schedule B hereto.

 

“General Solicitation” means any offer to sell or solicitation of an offer to buy the Offered Securities by any form of general solicitation or advertising (as those terms are used in Regulation D under the Securities Act).

 

“Issuer Free Writing Communication” means a Free Writing Communication prepared by or on behalf of the Company, used or referred to by the Company or containing a description of the final terms of the Offered Securities or of their offering, in the form retained in the Company’s records.

 

“Preliminary Offering Memorandum” means the preliminary offering memorandum, dated May 29, 2019, relating to the Offered Securities to be offered by the Purchasers, including the Exchange Act Reports and any other information incorporated by reference therein.

 

“Rules and Regulations” means the rules and regulations of the Commission.

 

“Securities Act” means the United States Securities Act of 1933, as amended.

 

“Securities Laws” means, collectively, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the Securities Act, the Exchange Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors of “issuers” (as defined in the Sarbanes-Oxley Act) promulgated or approved by the Public Company Accounting Oversight Board and, as applicable, the rules of The Nasdaq Stock Market LLC (“Exchange Rules”).

 

“Significant Subsidiary” has the meaning set forth in Article 1, Rule 1-02 of Regulation S-X promulgated by the Commission, but excludes Enphase Energy, S.r.l.

 

“Supplemental Marketing Material” means any Issuer Free Writing Communication other than any Issuer Free Writing Communication specified in Schedule B hereto. Supplemental Marketing Materials include, but are not limited to, any Issuer Free Writing Communication listed on Schedule C hereto.

 

“Warrant Shares” has the meaning set forth in Section 2(g) hereof.

 

“Underlying Shares” shall mean shares of the Common Stock into which the Offered Securities are convertible.

 

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Unless otherwise specified, a reference to a “rule” is to the indicated rule under the Securities Act.

 

(b)         Disclosure.  As of its date, the Final Offering Memorandum does not, and as of the Closing Date and the Additional Closing Date, as the case may be, the Final Offering Memorandum will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  At the Applicable Time, neither (i) the General Disclosure Package, nor (ii) any General Solicitation that is not a Free Writing Communication, made by the Company or by any Purchaser with the consent of the Company, nor (iii) individual Supplemental Marketing Material, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding two sentences do not apply to statements in or omissions from the Preliminary Offering Memorandum or Final Offering Memorandum, the General Disclosure Package, any General Solicitation or any Supplemental Marketing Material based upon written information furnished to the Company by any Purchaser through the Representatives specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 8(b) hereof. Except as disclosed in the General Disclosure Package, on the date of this Agreement, the Exchange Act Reports which have been filed by the Company with the Commission or sent to stockholders pursuant to the Exchange Act and incorporated by reference in the Preliminary Offering Memorandum or the Final Offering Memorandum do not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the Rules and Regulations thereunder.

 

(c)          Good Standing of the Company. The Company has been duly incorporated and is existing and in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the General Disclosure Package; and the Company is duly qualified to do business as a foreign corporation and is in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on assets, business, operations, earnings, properties, condition (financial or otherwise), prospects, stockholders’ equity (as set forth on the Company’s most recent balance sheet included in the Exchange Act Reports) or results of operations of the Company and its subsidiaries taken as a whole, or prevent the consummation of the transactions contemplated hereby (a “Material Adverse Effect”).

 

(d)         Subsidiaries. Each Significant Subsidiary of the Company has been duly incorporated and is existing and in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and

 

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conduct its business as described in the General Disclosure Package (in each case to the extent such concepts (or functional equivalents) are applicable in the jurisdiction of organization of any such Significant Subsidiary); and each Significant Subsidiary of the Company is duly qualified to do business as a foreign corporation and is in good standing in all other jurisdictions (in each case to the extent such concepts (or functional equivalents) are applicable in the jurisdiction of organization of any such Significant Subsidiary) in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect; all of the issued and outstanding capital stock of each Significant Subsidiary of the Company has been duly authorized and validly issued and is fully paid and non-assessable (in each case to the extent such concepts (or functional equivalents) are applicable in the jurisdiction of organization of any such Significant Subsidiary); and, except as described otherwise in the General Disclosure Package or the Final Offering Memorandum, the capital stock of each Significant Subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects.

 

(e)          Indenture.  The Indenture has been duly authorized by the Company; the Offered Securities have been duly authorized by the Company; and when the Offered Securities are delivered and paid for pursuant to this Agreement on the Closing Date, the Indenture will have been duly executed and delivered, such Offered Securities will have been duly executed, authenticated, issued and delivered, will conform to the description thereof contained in the General Disclosure Package, the Final Offering Memorandum and the Indenture and such Offered Securities will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles, and entitled to the benefits provided by the Indenture.

 

(f)           Offered Securities.  When the Offered Securities are delivered and paid for in accordance with this Agreement on the Closing Date, such Offered Securities will be convertible into the Underlying Shares in accordance with the terms of the Indenture and the Offered Securities; the maximum number of Underlying Shares initially issuable upon conversion of such Offered Securities, after taking into account the maximum make-whole adjustment (the “Conversion Shares”) have been duly authorized and reserved for issuance upon such conversion, and when issued upon conversion of the Offered Securities in accordance with the terms of the Indenture and the Offered Securities, will conform in all material respects to the description of the Underlying Shares contained in the General Disclosure Package and the Final Offering Memorandum; the authorized equity capitalization of the Company is as set forth in the General Disclosure Package; all outstanding shares of capital stock of the Company are, and when the Underlying Shares have been issued upon conversion of the Offered Securities in accordance with the terms of the Indenture and the Offered Securities, the Underlying Shares will be, validly issued, fully paid and non-assessable; the stockholders of the Company have no preemptive rights with respect to the issuance by the Company of the Offered Securities or the Underlying Shares, and none of the outstanding shares of capital

 

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stock of the Company have been issued by the Company in violation of any preemptive or similar rights of any security holder.

 

(g) Warrant Shares.  Upon issuance and delivery of the warrants evidenced by the Base Warrant Confirmations and any Additional Warrant Confirmations, such warrants will be exercisable by the holder thereof for shares of Common Stock in accordance with the terms of the Base Warrant Confirmations and any Additional Warrant Confirmations; the maximum number of shares of Common Stock issuable upon exercise of the warrants evidenced by the Base Warrant Confirmations and any Additional Warrant Confirmations (the “Warrant Shares”) have been duly authorized and reserved and, when and to the extent issued upon exercise of such warrants in accordance with the terms of such warrants, will be validly issued, fully paid and non-assessable, and the issuance of any Warrant Shares will not be subject to any preemptive or similar rights.

 

(h)         No Finder’s Fee. Except as disclosed in the General Disclosure Package, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Purchaser for a brokerage commission, finder’s fee or other like payment in connection with this offering.

 

(i)             Absence of Further Requirements. No consent, approval, authorization, or order of, or filing or registration with, any person (including any governmental agency or body or any court) is required to be obtained or made by the Company for (i) the consummation of the transactions contemplated by this Agreement, the Indenture or the Call Spread Confirmations in connection with the offering, (ii) the issuance and sale of the Offered Securities and Underlying Shares by the Company, (iii) the issuance and sale of the warrants evidenced by the Base Warrant Confirmations and any Additional Warrant Confirmations (including any issuance of the Warrant Shares upon exercise thereof) or (iv) the consummation by the Company of any of the other transactions contemplated by this Agreement, in each case, except such as have been obtained or made, and such as may be required under state securities laws.

 

(j)            Title to Property. The Company and each of its Significant Subsidiaries have good and marketable title to all personal property owned by them (excluding Intellectual Property except to the extent otherwise covered in this Agreement) that are material to the businesses of the Company or such Significant Subsidiary, in each case free and clear of all liens, encumbrances and claims, except as described in the General Disclosure Package or the Final Offering Memorandum, and except those that (i) do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries or (ii) would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Any personal property described in the General Disclosure Package or the Final Offering Memorandum as being leased by the Company and any of its Subsidiaries is held by them under valid, existing and enforceable leases, with only such exceptions with respect to any particular lease as do not interfere in any

 

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material respect with the conduct of the business as conducted by them. Neither the Company nor any of its Significant Subsidiaries owns any real property.

 

(k)         Absence of Defaults and Conflicts Resulting from Transaction.  The execution, delivery and performance of the Indenture and this Agreement by the Company and the issuance and sale of the Offered Securities and Underlying Shares and  compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default or a Debt Repayment Triggering Event (as defined below) under, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter or by-laws of the Company or any of its Significant Subsidiaries, (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties of the Company or any of its subsidiaries is subject, except in the case of clauses (ii) and (iii) for any breach, violation, default, lien, charge or encumbrance for which waivers or consents have been obtained as of the Applicable Time or that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; a “Debt Repayment Triggering Event” means any event or condition that gives, or with the giving of notice or lapse of time would give, the holder of any note, debenture, or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

 

(l)             Absence of Existing Defaults and Conflicts. Neither the Company nor any of its Significant Subsidiaries is (i) in violation of its charter or by-laws or similar organizational documents; (ii) in default, and no event or condition has occurred that with the giving of notice or lapse of time would cause the Company or any of its Subsidiaries to be in default, under any existing obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other similar agreement or instrument to which the Company or any of its Significant Subsidiaries is a party or by which the Company or any of its Significant Subsidiaries is bound or to which any of the property or assets of the Company or any of its Significant Subsidiaries are subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of each of clauses (ii) and (iii) above, for any such violation or default that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company’s knowledge, no other party under any material contract or other agreement to which it or any of its Significant Subsidiaries is a party is in default in any respect thereunder where such default would have a Material Adverse Effect.

 

(m)     Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

 

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(n)         Authorization of Call Spread Confirmations.  The Base Call Spread Confirmations have been duly authorized, executed and delivered by the Company and are enforceable against the Company in accordance with their terms, and any Additional Call Spread Confirmations will, on or prior to the date such Additional Call Spread Confirmations are entered into, have been duly authorized, executed and delivered by the Company and each will be enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

 

(o)         Possession of Licenses and Permits. The Company and each of its subsidiaries possess or have obtained, all licenses, certificates, consents, orders, approvals, permits and other authorizations issued by the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as currently conducted, as described in the General Disclosure Package or the Final Offering Memorandum (the “Permits”), except where such failure would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its subsidiaries have received written notice of any proceeding relating to revocation or modification of any such Permit or has any reason to believe that such Permit will not be renewed in the ordinary course, except where the failure to obtain any such renewal would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(p)         Absence of Labor Dispute. No material labor dispute with the employees of the Company or any of its Significant Subsidiaries exists, except as described in the General Disclosure Package, or, to the knowledge of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that would reasonably be expected to have a Material Adverse Effect.

 

(q)         Intellectual Property. To its knowledge, the Company and its Significant Subsidiaries own or possess adequate rights to use all patents, patent applications, trademarks (both registered and unregistered), service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) (collectively, the “Intellectual Property”), necessary for the conduct of their respective businesses as conducted as of the date hereof, except to the extent that the failure to own or possess adequate rights to use such Intellectual Property would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; neither the Company nor any of its Significant Subsidiaries have received any written notice of any claim of infringement or conflict which asserted Intellectual Property rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect; there are no pending, or to the Company’s knowledge, threatened judicial proceedings or interference proceedings against the Company or its Significant Subsidiaries challenging

 

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the Company’s or its Significant Subsidiaries’ rights in or to or the validity of the scope of any of the Company’s or its Significant Subsidiaries’ owned material patents, patent applications or proprietary information; to the Company’s knowledge, no other entity or individual has any right or claim in any of the Company’s or its Significant Subsidiaries’ owned material patents, patent applications or any patent to be issued therefrom by virtue of any contract, license or other agreement entered into between such entity or individual and the Company or a Significant Subsidiary or by any non-contractual obligation of the Company or a Significant Subsidiary, other than by written licenses granted by the Company or a Significant Subsidiary and other than such rights or claims that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; the Company and its Subsidiaries have not received any written notice of any claim challenging the rights of the Company or a Significant Subsidiary in or to any Intellectual Property owned, licensed or optioned by the Company or such Significant Subsidiary which claim, if the subject of an unfavorable decision, would result in a Material Adverse Effect.

 

(r)            Cybersecurity. Except as would not, individually or in the aggregate, result in a Material Adverse Effect (i) there has been no security breach or incident, unauthorized access or disclosure, or other compromise of or relating to the Company’s or its Significant Subsidiaries’ information technology and computer systems, networks, hardware, software, data and databases (including the data and information of its customers, employees, suppliers, vendors and any third party data maintained, processed or stored by the Company, and any such data processed or stored by third parties on behalf of the Company), equipment or technology (collectively, the “IT Systems and Data”); (ii) neither the Company nor any of its Significant Subsidiaries has been notified of, or has knowledge of any event or condition that could result in, any security breach or incident, unauthorized access or disclosure or other compromise to its IT Systems and Data; (iii) the Company and its Significant Subsidiaries have implemented commercially reasonable controls, policies, procedures, and technological safeguards to maintain and protect the integrity, continuous operation, redundancy and security of the IT Systems and Data consistent with industry standards and practices, or as required by applicable regulatory standards; (iv) the Company and its Significant Subsidiaries are presently in material compliance with all internal and external privacy policies, contractual obligations, applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations, in each case relating to the privacy and security of any IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification; and (v) there is no pending or, to the knowledge of the Company, threatened action, suit or proceeding by or before any court, arbitrator or governmental or regulatory authority alleging non-compliance with the foregoing.

 

(s)           Environmental Laws. The Company and its Significant Subsidiaries (i) are in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants

 

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(collectively, “Environmental Laws”); (ii) have received and are in compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses as described in the General Disclosure Package and the Final Offering Memorandum; and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except, in the case of any of clauses (i), ((ii) or (iii) above, for any such failure to comply or failure to receive required permits, licenses, other approvals or liability as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(t)            Accurate Disclosure.  The statements in the General Disclosure Package and the Final Offering Memorandum under the headings “Certain U.S. Federal Income Tax Considerations,” “Description of Notes” and “Description of Capital Stock,” insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are in all material respects accurate and fair summaries of such legal matters, agreements, documents or proceedings and present the information required to be shown.

 

(u)         Absence of Manipulation. The Company has not taken, directly or indirectly, any action that is designed to or that has constituted or that would reasonably be expected to cause or result in the stabilization or manipulation of the price of the Common Stock or any other security of the Company to facilitate the sale or resale of the Offered Securities; provided, however, that no representation is made with regard to any actions of the Purchasers.

 

(v)         Statistical and Market-Related Data. Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included or incorporated by reference in each of the General Disclosure Package and the Final Offering Memorandum is not based on or derived from sources that are reliable and accurate in all material respects.

 

(w)       Internal Controls and Compliance with the Sarbanes-Oxley Act.

 

(i)             The Company maintains a system of internal accounting controls designed to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting. Since the date of the latest audited financial statements of the Company included in the General Disclosure Package and the

 

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Final Offering Memorandum, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting (other than as set forth in the General Disclosure Package and the Final Offering Memorandum). The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) that comply with the requirements of the Exchange Act.

 

(ii)          There is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the Company’s directors or officers, in their capacities as such, to materially comply with any applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder. Each of the principal executive officer and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports, schedules, forms, statements and other documents required to be filed by it or furnished by it to the Commission during the past 12 months. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

 

(x)         Legal and Governmental Proceedings. Except as described in the General Disclosure Package and the Final Offering Memorandum (including the Exchange Act Reports), there are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any legal, governmental or regulatory investigations, to which the Company or any of its subsidiaries is a party or to which any property of the Company or any of its subsidiaries is the subject that, individually or in the aggregate, if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under this Agreement; to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others that, individually or in the aggregate, if determined adversely to the Company or any of its Subsidiaries, would reasonably be expected to have a Material Adverse Effect; and there are no current or pending legal, governmental or regulatory actions, suits or proceedings or, to the Company’s knowledge, investigations that would be required under the Securities Act to be described in the General Disclosure Package and the Final Offering Memorandum if the offer and sale of the Offered Securities and Underlying Securities were registered under the Securities Act that are not so described in the General Disclosure Package and the Final Offering Memorandum (including the Exchange Act Reports).

 

(y)         Financial Statements.  The consolidated financial statements of the Company included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum, together with the related notes and schedules, present

 

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fairly, in all material respects, the consolidated financial position of the Company and its subsidiaries as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company and its subsidiaries for the periods specified (subject, in the case of unaudited statements, to normal year-end audit adjustments) and have been prepared in compliance with the requirements of the Securities Act and Exchange Act, as applicable, and in conformity with GAAP applied on a consistent basis (except for such adjustments to accounting standards and practices as are noted therein and except in the case of unaudited financial statements to the extent they may exclude footnotes or may be condensed or summary statements) during the periods involved; the other financial and statistical data with respect to the Company and its subsidiaries contained or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum are accurately and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are no financial statements (historical or pro forma) that would be required to be included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum if the offer and sale of the Offered Securities and the Underlying Securities were registered under the Securities Act that are not included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum; and the Company and its subsidiaries do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations), not described in the General Disclosure Package and the Final Offering Memorandum.

 

(z)          No Material Adverse Change in Business. Since the date of the most recent financial statements of the Company included or incorporated by reference in the General Disclosure Package and the Final Offering Memorandum, there has not been (i) any Material Adverse Effect, (ii) any transaction which is material to the Company and  its subsidiaries taken as a whole, (iii) any obligation or liability, direct or contingent (including any off-balance sheet obligations), incurred by the Company or any Significant Subsidiary, which is material to the Company and its subsidiaries taken as a whole, (iv) any material change in the capital stock (other than (A) the grant of additional stock awards under the Company’s existing equity incentive plans or employee stock purchase plan disclosed in the Exchange Act Reports, (B) changes in the number of outstanding shares of Common Stock of the Company due to the issuance of shares upon the exercise or conversion of securities exercisable for, or convertible into, Common Stock outstanding on the date hereof, (C) as a result of the issuance or conversion of the Offered Securities or (D) otherwise publicly announced) or outstanding long-term indebtedness of the Company or any of its Significant Subsidiaries or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company or any such Significant Subsidiary, other than in each case above (1) in the ordinary course of business, in the case of any such Significant Subsidiary or (2) as otherwise disclosed in the General Disclosure Package and the Final Offering Memorandum.

 

(aa)            Investment Company Act. Neither the Company nor any of its Significant Subsidiaries is or, after giving effect to the offer and sale of the Offered Securities and the transactions contemplated by the Call Spread Confirmations, will be an “investment company” or an entity “controlled” by an “investment company,” as such terms are

 

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defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

(bb)            Tax Matters. The Company and each of its Significant Subsidiaries have filed all federal, state, local and foreign tax returns which have been required to be filed or has requested extensions thereof, except where the failure to file would not, individually or in the aggregate, have a Material Adverse Effect, and paid all taxes required to be paid thereon (except for cases in which the failure to pay would not have a Material Adverse Effect, or, except as currently being contested in good faith and for which reserves required by U.S. GAAP have been created in the financial statements of the Company). No tax deficiency has been determined adversely to the Company or any of its Significant Subsidiaries which has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. The Company has no knowledge of any federal, state or other governmental tax deficiency, penalty or assessment which has been asserted or threatened against it which would have a Material Adverse Effect.

 

(cc)              No Unlawful Payments. Neither the Company nor, to the Company’s knowledge, any director, officer, employee, agent, or representative of the Company, has taken or, with respect to the Company, will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Company has conducted its business in compliance with applicable anti-corruption laws and has instituted and maintained and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.

 

(dd)            Compliance with Anti-Money-Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with all applicable financial recordkeeping and reporting requirements, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

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(ee)              Compliance with Sanctions. (i)  Neither the Company nor any of its Subsidiaries (collectively, the “Entity”) or, to the Company’s knowledge, any director, officer, employee, agent, affiliate or representative of the Entity, is a government, individual, or entity (in this Section 2(bb), “Person”) that is, or is owned or controlled by a Person that is:

 

(A)       currently the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control, the United Nations Security Council, the European Union, Her Majesty’s Treasury, the Swiss Secretariat of Economic Affairs or other relevant sanctions authority (collectively, “Sanctions”), nor

 

(B)       located, organized or resident in a country or territory that is the subject of Sanctions.

 

(ii)          The Company represents and covenants that the Entity will not, directly or indirectly, knowingly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person:

 

(A)       to fund or facilitate any activities or business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions; or

 

(B)       in any other manner that will result in a violation of Sanctions by any Person (including any Person participating in the offering, whether as underwriter, advisor, investor or otherwise).

 

(iii)       The Company represents and covenants that, except as detailed in the General Disclosure Package and the Final Offering Memorandum, for the past five years, the Entity has not knowingly engaged in and is not now knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions.

 

(ff)                No Rated Securities. There are no debt securities or preferred stock of, or guaranteed by, the Company that are rated by a “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) of the Exchange Act.

 

(gg)              Insurance. Except as described in the General Disclosure Package and the Final Offering Memorandum, the Company and each of its Significant Subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as the Company and each of its Significant Subsidiaries reasonably believe are adequate for the conduct of their business, as customary for companies of similar size engaged in similar businesses in similar industries.

 

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(hh)            Class of Securities Not Listed.  No securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system.

 

(ii)                    No Registration.  The offer and sale of the Offered Securities by the Company to the several Purchasers and the initial resale of the Offered Securities by the several Purchasers in the manner contemplated by the Offering Memorandum will be exempt from the registration requirements of the Securities Act; and it is not necessary to qualify the Indenture under the United States Trust Indenture Act of 1939, as amended. Upon any qualification of the Indenture under the Trust Indenture Act, the Indenture will comply in all material respects with the requirements of the Trust Indenture Act.

 

(jj)                  General Solicitation.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has (i) within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in the Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities or (ii) offered or will offer or sell the Offered Securities by means of any General Solicitation that is not a Free Writing Communication other than General Solicitations listed on Schedule B hereto or those made with the prior written consent of the Representatives. The Company has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement.

 

(kk)            Reporting Status.  The Company is subject to Section 13 or 15(d) of the Exchange Act.

 

(ll)                    Solvency. Immediately after the consummation of the issuance of the Offered Securities and the transactions contemplated by the Call Spread Confirmations, the Company will be Solvent.  As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets of the Company are not less than the total amount required to pay the probable liabilities of the Company on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) the Company is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) assuming the sale of the Offered Securities as contemplated by this Agreement, the General Disclosure Package and the Final Offering Memorandum, the Company is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature, (iv) the Company is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged, and (v) the Company is not a defendant in any civil action that would result in a judgment that the Company is or would become unable to satisfy. In computing the amount of such contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in the

 

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light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

(mm)    Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) included in the General Disclosure Package or the Final Offering Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

 

3.              Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements and subject to the terms and conditions set forth herein, (a) the Company agrees to sell to the several Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.0% of the principal amount thereof plus accrued interest, if any, from June 5, 2019 to the Closing Date, the respective principal amounts of Offered Securities set forth opposite the names of the several Purchasers in Schedule A hereto and (b) in the event and to the extent that the Purchasers shall exercise the election to purchase Option Securities as provided below, the Company agrees to issue and sell to each of the Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company, at the same purchase price set forth in clause (a) of this Section 3, that portion of the aggregate principal amount of the Option Securities as to which such election shall have been exercised (to be adjusted by the Representatives so as to eliminate fractions of $1,000), determined by multiplying such aggregate principal amount of Option Securities by a fraction, the numerator of which is the maximum aggregate principal amount of Option Securities that such Purchaser is entitled to purchase as set forth opposite the name of such Purchaser in Schedule A hereto and the denominator of which is the maximum aggregate principal amount of Option Securities that all of the Purchasers are entitled to purchase hereunder.

 

The Company hereby grants to the Purchasers the right to purchase at their election up to US$12,000,000 aggregate principal amount of Option Securities, at the purchase price set forth in clause (a) of the first paragraph of this Section 3 to the extent that the Purchasers sell in excess of the aggregate principal amount of Firm Securities for the sole purpose of covering over-allotments, if any. Any such election to purchase Option Securities may be exercised by written notice from the Representatives to the Company, given within a period of 13 calendar days after the date of this Agreement, setting forth the aggregate principal amount of Option Securities to be purchased and the date on which such Option Securities are to be delivered, as determined by the Representatives but in no event earlier than the Closing Date (as defined below) or, unless the Representatives and the Company otherwise agree in writing, earlier than one or later than 10 business days after the date of such notice.

 

The Company will deliver the Offered Securities to or as instructed by the Representatives for the accounts of the several Purchasers in a form reasonably acceptable to the Representatives against payment of the purchase price by the Purchasers in Federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives drawn to the order of the Company at the office of Davis Polk & Wardwell, LLP, 1600 El Camino Real, Menlo Park, California 94025. The time and date of such delivery and payment shall be, with

 

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respect to the Firm Securities, at 10:00 a.m., New York time, on June 5, 2019, or at such other time not later than seven full business days thereafter as the Representatives and the Company determine. The time and date of such delivery and payment shall be, with respect to the Option Securities, 10:00 a.m., New York time, on the date specified in the written notice given by Representatives of the Purchasers’ election to purchase such Option Securities, or such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Securities are herein called the “Closing Date,” such time and date for delivery of the Option Securities, if not the Closing Date, are herein called the “Additional Closing Date.”  For purposes of Rule 15c6-1 under the Exchange Act, the Closing Date (if later than the otherwise applicable settlement date) shall be the settlement date for payment of funds and delivery of securities for all the Firm Securities sold pursuant to the offering. The Offered Securities so to be delivered or evidence of their issuance will be made available for checking at the above office of Davis Polk & Wardwell LLP at least 24 hours prior to the Closing Date, with respect to the Firm Securities, and at least 24 hours prior to the Additional Closing Date, with respect to the Option Securities.

 

4.              Representations by Purchasers; Resale by Purchasers.  (a) Each Purchaser severally represents and warrants to the Company that it is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act and it is an “accredited investor” within the meaning of Regulation D under the Securities Act.

 

(b)         Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from the registration requirements of the Securities Act.  Each Purchaser severally represents and agrees that it has offered and sold the Offered Securities, and will offer and sell the Offered Securities only in accordance with Rule 144A under the Securities Act.  Accordingly, such Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirements of Rule 144A under the Securities Act.

 

(c)          Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Company.

 

(d)         Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities by means of any form of General Solicitation, other than a permitted communication listed on Schedule B.  Each Purchaser severally agrees, with respect to the initial resales made by such Purchaser in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A thereunder.

 

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5.              Certain Agreements of the Company. The Company agrees with the several Purchasers that:

 

(a)         Amendments and Supplements to Offering Memoranda.  The Company will promptly advise the Representatives of any proposal to amend or supplement the Preliminary Offering Memorandum or Final Offering Memorandum and will not effect any such amendment or supplement to which the Representatives reasonably object; provided that the Company may effect any such amendment or supplement constituting a filing under the Exchange Act that, in the opinion of counsel, is required by law. If, at any time prior to the completion of the initial resale of the Offered Securities by the Purchasers, there occurs an event or development as a result of which any document included in the Preliminary Offering Memorandum or Final Offering Memorandum, the General Disclosure Package or any Supplemental Marketing Material, if republished immediately following such event or development, included or would include an untrue statement of a material fact or omitted or would omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company promptly will notify the Representatives of such event and promptly will prepare and furnish, at its own expense, to the Purchasers and to any dealers at the request of the Representatives, an amendment or supplement which will correct such statement or omission. Neither the Representatives’ consent to, nor the Purchasers’ delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 7.

 

(b)         Furnishing of Offering Memoranda.  The Company will furnish to the Representatives copies of the Preliminary Offering Memorandum, each other document comprising a part of the General Disclosure Package, the Final Offering Memorandum, all amendments and supplements to such documents and each item of Supplemental Marketing Material, in each case as soon as available and in such quantities as the Representatives reasonably request. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish or cause to be furnished, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A under the Securities Act in connection with resales by such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the holders or prospective purchasers of the Offered Securities all such documents.

 

(c)          General Solicitations. The Company will furnish to the Representatives any proposed General Solicitation to be made by the Company or on its behalf before its use, and will not make or use any proposed General Solicitation without the Representatives’ prior written consent.

 

(d)         Blue Sky Qualifications. The Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment

 

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under the laws of such jurisdictions as the Representatives designate and will continue such qualifications in effect so long as required for the initial resale of the Offered Securities by the Purchasers; provided, that, in connection therewith, the Company will not be required to file a general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified, or subject itself to taxation for doing business in any jurisdiction in which it is not otherwise so subject.

 

(e)          Reporting Requirements. For so long as the Offered Securities remain outstanding, the Company will furnish, upon request, to the Representatives and to each of the other Purchasers, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish, upon request, to the Representatives (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to stockholders, and (ii) from time to time, such other information concerning the Company as the Representatives may reasonably request; provided, that, if the Representatives shall request nonpublic confidential information, the Company shall only be required to provide the Representatives with such information if the Representatives shall enter into a customary confidentiality agreement with the Company with respect thereto. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely filing reports with the Commission on its Electronic Data Gathering, Analysis and Retrieval system, it is not required to furnish such reports or statements to the Representatives or the Purchasers.

 

(f)           Transfer Restrictions.  At any time when any Offered Securities are deemed “restricted securities” under Rule 144, the Company will inform the Representatives, each of the other Purchasers and, upon request, any holder of Offered Securities if any event has occurred that would result in additional interest being payable on such Offered Securities under the terms of the Indenture as a result of such securities not being “freely tradable” (as defined in the Indenture).

 

(g)          No Resales by Affiliates.  The Company will not, and will not permit any of its “controlled” affiliates (as defined in Rule 144) to, resell any of the Offered Securities that have been reacquired by any of them, except for Offered Securities purchased by the Company or any such affiliates and resold in a transaction registered under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act in a transaction that results in such Offered Securities no longer being deemed “restricted securities” under Rule 144.

 

(h)         Investment Company.  During the period of one year after the Closing Date, the Company will not be or become, an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act.

 

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(i)             Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement and the Indenture, including but not limited to (i) the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities, the preparation and printing of this Agreement, the Offered Securities, the Indenture, the Preliminary Offering Memorandum, any other documents comprising any part of the General Disclosure Package, the Final Offering Memorandum, all amendments and supplements thereto, each item of Supplemental Marketing Material and any other document relating to the issuance, offer, sale and delivery of the Offered Securities; (iii) the cost of any advertising approved in advance by the Company in connection with the issue of the Offered Securities; (iv) any expenses (including fees and disbursements of counsel to the Purchasers) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions in the United States and Canada as the Representatives designate and the preparation and printing of memoranda relating thereto; provided that the amount payable by the Company with respect to fees and disbursements of counsel for the Purchasers pursuant to this clause (iv) shall not exceed $10,000); (v) any fees charged by investment rating agencies for the rating of the Securities, (vi) expenses incurred in distributing the Preliminary Offering Memorandum, any other documents comprising any part of the General Disclosure Package, the Final Offering Memorandum (including any amendments and supplements thereto) and any Supplemental Marketing Material to the Purchasers; (vii) any stamp or transfer taxes in connection with the original sale and issuance of the Offered Securities and (viii) the cost of listing the Conversion Shares and the Warrant Shares in accordance with the rules of The Nasdaq Stock Market LLC. The Company will also pay or reimburse the Purchasers (to the extent incurred by them) for costs and expenses of the Purchasers and the Company’s officers and employees and any other expenses of the Purchasers and the Company relating to investor presentations or any “road show” in connection with the offering and sale of the Offered Securities including, without limitation, any travel expenses of the Company’s officers and employees and any other expenses of the Company.  It is understood, however, that, except as provided in this Agreement, the Purchasers shall pay all of their own costs and expenses, including the fees and disbursements of their counsel, transfer taxes on resale of any of the Offered Securities by them and any advertising expenses in connection with any offers they may make.

 

(j)            Use of Proceeds. The Company will use the net proceeds received in connection with this offering in the manner described in the “Use of Proceeds” section of the General Disclosure Package and, except as disclosed in the General Disclosure Package, the Company does not intend to use any of the proceeds from the sale of the Offered Securities hereunder to repay any outstanding debt owed to any affiliate of any Purchaser.

 

(k)         Absence of Manipulation. In connection with the offering, until the Representatives shall have notified the Company and the other Purchasers of the completion of the resale of the Offered Securities, which notice shall be promptly provided upon such completion, neither the Company nor any of its controlled affiliates

 

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will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities.

 

(l)             Restriction on Sale of Securities. For the period specified below (the “Lock-Up Period”), the Company will not, directly or indirectly, take any of the following actions with respect to shares of its Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock (“Lock-Up Securities”): (i) offer, sell, issue, contract to sell, pledge or otherwise dispose of Lock-Up Securities; (ii) offer, sell, issue, contract to sell, contract to purchase or grant any option, right or warrant to purchase Lock-Up Securities; (iii) enter into any swap, hedge or any other agreement that transfers, in whole or in part, the economic consequences of ownership of Lock-Up Securities; (iv) establish or increase a put equivalent position or liquidate or decrease a call equivalent position in Lock-Up Securities within the meaning of Section 16 of the Exchange Act or (v) file with the Commission a registration statement under the Securities Act relating to Lock-Up Securities, or publicly disclose the intention to take any such action, without the prior written consent of the Representatives, except (A) the issuance by the Company of the Offered Securities to be sold hereunder or any Underlying Shares issued upon conversion thereof; (B) entry into the Call Spread Confirmations and the Company’s performance thereunder or the Company’s performance under the Convertible Note Hedge Confirmations and Warrant Confirmations entered into in connection with the offering of the Offered Securities; (C) the issuances of shares of Common Stock upon the conversion of any of the Company’s outstanding 4.00% convertible senior notes due 2023 (the “2023 Notes”); (D) the issuance by the Company of Lock-Up Securities upon the exercise of an option or warrant, the vesting or settlement of any restricted stock units or other equity compensation awards or the conversion of a security outstanding on the date hereof; (E) the grant of options, restricted stock units or other equity compensation awards, including any time-based or performance-based awards, or the issuance of Lock-Up Securities by the Company to employees, officers, directors, advisors or consultants of the Company in each case pursuant to equity incentive, stock option, inducement award and employee stock purchase plans described in the General Disclosure Package and the Final Offering Memorandum, and the issuance by the Company of any Lock-Up Securities upon the exercise, vesting or settlement of such equity compensation awards;  (F) the filing of any registration statement on Form S-8 in respect of any equity compensation plans or arrangements maintained by the Company; or (G) the issuances of shares of Common Stock in connection with any repurchases or exchanges of the 2023 Notes. The Company will not at any time directly or indirectly, take any action referred to in clauses (i) through (v) above with respect to any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption afforded by Section 4(a)(2) of the Securities Act to cease to be applicable to the offer and sale of the Offered Securities by the Company to the several Purchasers. The initial Lock-Up Period will commence on the date hereof and continue for 90 days after the date hereof or such earlier date that the Representatives consent to in writing.

 

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(m)     Certification Regarding Beneficial Owners of Legal Entity Customers. The Company will deliver to each Purchaser (or its agent), on the date of execution of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners of Legal Entity Customers, together with copies of identifying documentation, and the Company undertakes to provide such additional supporting documentation as each Purchaser may reasonably request in connection with the verification of the foregoing Certification.

 

(n)         Reservation of Conversion Shares.  The Company will reserve and keep available at all times, free of preemptive rights, a number of shares of Common Stock equal to the number of Conversion Shares for the purpose of enabling the Company to satisfy all obligations to issue any Underlying Shares upon conversion of the Securities. The Company will use its best efforts to effect and maintain the listing of the Conversion Shares on the Nasdaq Global Market.

 

(o)         Reservation of Warrant Shares.  The Company will reserve and keep available at all times, free of preemptive rights, the Warrant Shares for the purpose of enabling the Company to satisfy all obligations to issue any shares of Common Stock upon exercise of the warrants evidenced by the Base Warrant Confirmation and any Additional Warrant Confirmation. The Company will use its best efforts to cause the Warrant Shares to be listed on the Nasdaq Global Market.

 

6.              Free Writing Communications. (a) Issuer Free Writing Communications. The Company represents and agrees that, unless it obtains the prior consent of the Representatives, and each Purchaser represents and agrees that, unless it obtains the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Communication.

 

(b)         Term Sheets.  The Company consents to the use by any Purchaser of a Free Writing Communication that (i) contains only (A) information describing the preliminary terms of the Offered Securities or their offering or (B) information that describes the final terms of the Offered Securities or their offering and that is included in the Final Offering Memorandum or (ii) does not contain any material information about the Company or its securities that was provided by or on behalf of the Company, it being understood and agreed that the Company shall not be responsible to any Purchaser for liability arising from any inaccuracy in such Free Writing Communications referred to in clause (i) or (ii) as compared with the information in the Preliminary Offering Memorandum, the Final Offering Memorandum or the General Disclosure Package.

 

7.              Conditions of the Obligations of the Purchasers. The obligations of the several Purchasers to purchase and pay for the Offered Securities on the Closing Date or the Option Securities on the Additional Closing Date, as the case may be, will be subject to the accuracy of the representations and warranties of the Company herein (as though made on the Closing Date or the Additional Closing Date, as the case may be), to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent:

 

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(a)         Accountants’ Comfort Letters. The Representatives shall have received letters, dated, respectively, the date hereof and the Closing Date or the Additional Closing Date, as the case may be, in form and substance satisfactory to the Purchasers, of Deloitte & Touche LLP confirming that they are a registered public accounting firm and independent public accountants within the meaning of the Securities Laws and containing statements and information of the type or identity included in accountant’s comfort letters to underwriters with respect to the financial statements and certain financial information of the Company included or incorporated by reference into the General Disclosure Package and the Final Offering Memorandum (except that, in any letter dated the Closing Date or the Additional Closing Date, the specified date referred to therein shall be a date no more than three days prior to such Closing Date or such Additional Closing Date, as the case may be).

 

(b)         No Material Adverse Change. Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company which, in the judgment of the Representatives, is material and adverse and makes it impractical or inadvisable to market the Offered Securities; (ii) any suspension or material limitation of trading in securities generally on The New York Stock Exchange or The Nasdaq Global Market, or any setting of minimum or maximum prices for trading on such exchange; (iii) any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; or (iv) any major disruption of settlements of securities, payment, or clearance services in the United States or any other country where such securities are listed.

 

(c)          Lock-Up Agreements. The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between the Representatives and each executive officer (within the meaning of Rule 16a-1(f) under the Exchange Act) and director of the Company and certain other stockholders of the Company relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to the Representatives on or before the date hereof, shall be in full force and effect on the Closing Date or Additional Closing Date, as the case may be.

 

(d)         Opinions of Counsel for Company. The Representatives shall have received on the Closing Date or Additional Closing Date, as the case may be, an opinion of Arnold & Porter Kaye Scholer LLP, outside counsel for the Company, together with a negative assurance letter, each dated the Closing Date or Additional Closing Date, as the case may be, in the form agreed upon as of the date hereof.

 

(e)          Opinion of Counsel for Purchasers. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, an opinion of Davis Polk & Wardwell LLP, counsel for the Purchasers, with respect to such matters as the Representatives may require, together with a negative assurance letter, each dated the Closing Date or the Additional Closing Date, as the case may be, and the 

 

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Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

 

(f)           Officer’s Certificate. The Representatives shall have received and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate, dated the Closing Date or the Additional Closing Date, as the case may be, of an executive officer of the Company and a principal financial or accounting officer of the Company in which such officers shall state that: the representations and warranties of the Company in this Agreement are true and correct; the Company has complied, in all material respects, with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be, and that subsequent to the date of the most recent financial statements in the General Disclosure Package, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company except as set forth in the General Disclosure Package or as described in such certificate.

 

(g)          Listing. A “Listing of Additional Shares Notification Form” relating to the Conversion Shares, the Warrant Shares shall have been submitted to The Nasdaq Stock Market LLC, and the Company shall have received confirmation from The Nasdaq Stock Market LLC that it has completed its review of such form.

 

The Company will furnish the Representatives with such conformed copies of such opinions, certificates, letters and documents as the Representatives reasonably request. The Representatives may in their sole discretion waive on behalf of the Purchasers compliance with any conditions to the obligations of the Purchasers hereunder.

 

8.              Indemnification and Contribution.

 

(a)         Indemnification of Purchasers. The Company will indemnify and hold harmless each Purchaser, its partners, members, directors, officers, employees, agents, affiliates and each person, if any, who controls such Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Indemnified Party”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Preliminary Offering Memorandum or the Final Offering Memorandum, in each case as amended or supplemented, any Issuer Free Writing Communication, any General Solicitation made by the Company (including, in each case, the Exchange Act Reports, as applicable), or arise out of or are based upon the omission or alleged omission of a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating, preparing or defending against any

 

24

 

loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Indemnified Party is a party thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to any of the above as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Purchaser through the Representatives specifically for use therein, it being understood and agreed that the only such information furnished by any Purchaser consists of the information described as such in subsection (b) below.

 

(b)         Indemnification of Company. Each Purchaser will severally and not jointly indemnify and hold harmless the Company, each of its directors and each of its officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a “Purchaser Indemnified Party”), against any losses, claims, damages or liabilities to which such Purchaser Indemnified Party may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Preliminary Offering Memorandum or the Final Offering Memorandum, in each case as amended or supplemented, any Issuer Free Writing Communication, or arise out of or are based upon the omission or the alleged omission of a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Purchaser through the Representatives specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by such Purchaser Indemnified Party in connection with investigating, preparing or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Purchaser Indemnified Party is a party thereto), whether threatened or commenced, based upon any such untrue statement or omission, or any such alleged untrue statement or omission as such expenses are incurred, it being understood and agreed that the only such information furnished by any Purchaser consists of the following information in the Preliminary Offering Memorandum and the Final Offering Memorandum furnished on behalf of each Purchaser: the information contained in the tenth paragraph under the caption “Plan of Distribution”; provided, however, that the Purchasers shall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company’s failure to perform its obligations under Section 5(a) of this Agreement.

 

(c)          Actions against Parties; Notification. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of

 

25

 

the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (1) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (2) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Purchasers and all persons, if any, who control any Purchaser within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Purchaser within the meaning of Rule 405 under the Securities Act and (ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers and each person, if any, who controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Purchasers and such control persons and affiliates of any Purchasers, such firm shall be designated in writing by the Representatives. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (A) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (B) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party.

 

26

 

(d)         Contribution. If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the Purchasers. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased by it were resold exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Purchasers’ obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. The Company and the Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d).

 

9.                            Default of Purchasers. If any Purchaser or Purchasers default in their obligations to purchase Offered Securities hereunder on the Closing Date or the Additional Closing Date, as the case may be, and the aggregate principal amount of Offered Securities that such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the aggregate principal amount of Offered Securities that the Purchasers are obligated to purchase on the Closing Date or the Additional Closing Date, as the case may be, the Representatives may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Purchasers, but if no such arrangements are made by such Closing

 

27

 

Date or such Additional Closing Date, as the case may be, the non-defaulting Purchasers shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Purchasers agreed but failed to purchase on the Closing Date or the Additional Closing Date, as the case may be. If any Purchaser or Purchasers so default and the aggregate principal amount of Offered Securities with respect to which such default or defaults occur exceeds 10% of the aggregate principal amount of Offered Securities that the Purchasers are obligated to purchase on the Closing Date or the Additional Closing Date, as the case may be, and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Purchaser or the Company, except as provided in Section 10. As used in this Agreement, the term “Purchaser” includes any person substituted for a Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser from liability for its default.

 

10.       Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or its officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Purchaser, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If the purchase of the Offered Securities by the Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 9 hereof, the Company will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities, and the respective obligations of the Company and the Purchasers pursuant to Section 8 hereof shall remain in effect. In addition, if any Offered Securities have been purchased hereunder, the representations and warranties in Section 2 and all obligations under Section 5 shall also remain in effect.

 

11.       Notices. All communications hereunder will be in writing and, if sent to the Purchasers, will be mailed, delivered or telegraphed and confirmed to (a) Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629, Attention: IBCM-Legal and (b) Barclays Capital Inc., 745 Seventh Avenue, New York, NY 10019, Attention: Syndicate Registration (fax: (646) 834-8133), or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to Enphase Energy, Inc., 47281 Bayside Parkway, Fremont, CA 94538, Attention: Eric Branderiz, with a copy (which shall not constitute notice hereunder) to Arnold & Porter Kaye Scholer LLP, 250 West 55th Street, New York, NY 10019-9710, Attention: Michael Penney and Christopher P. Peterson; provided, however, that any notice to a Purchaser pursuant to Section 8 will be mailed, delivered or telegraphed and confirmed to such Purchaser.

 

12.       Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8, and no other person will have any right or obligation hereunder; except that holders of Offered Securities shall be entitled to enforce the agreements for their

 

28

 

benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties thereto.

 

13.       Representation of Purchasers. The Representatives will act for the several Purchasers in connection with this purchase, and any action under this Agreement taken by the Representatives will be binding upon all the Purchasers.

 

14.       Recognition of the U.S. Special Resolution Regimes.

 

(a)                                           In the event that any Purchaser that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Purchaser of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

 

(b)                                           In the event that any Purchaser that is a Covered Entity or a BHC Act Affiliate of such Purchaser becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Purchaser are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

 

For purposes of this Section a “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

 

15.       Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same agreement.

 

16.       Absence of Fiduciary Relationship. The Company acknowledges and agrees that:

 

(a)                                           No Other Relationship. The Representatives have been retained solely to act as a Purchaser in connection with the initial purchase, offering and resale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and the Representatives has been created in respect of any of the transactions contemplated by this Agreement or the Preliminary Offering Memorandum or Final

 

29

 

Offering Memorandum, irrespective of whether the Representatives have advised or are advising the Company on other matters;

 

(b)                                           Arm’s-Length Negotiations. The purchase price of the Offered Securities set forth in this Agreement was established by the Company following discussions and arm’s-length negotiations with the Representatives and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;

 

(c)                                            Absence of Obligation to Disclose. The Company has been advised that the Representatives and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Representatives have no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and

 

(d)                                           Waiver. The Company waives, to the fullest extent permitted by law, any claims it may have against the Representatives for breach of fiduciary duty or alleged breach of fiduciary duty in connection with the sale of Offered Securities, and agrees that the Representatives shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.

 

17.       Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company irrevocably and unconditionally waives any objection to the laying of venue of any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in Federal and state courts in the Borough of Manhattan in The City of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum.

 

18.       Integration. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes and replaces all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.

 

30

 

If the foregoing is in accordance with the Representatives’ understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Purchasers in accordance with its terms.

 

	
 
    	
Very truly yours, 

 

ENPHASE   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Eric Branderiz
    
	
 
    	
 
    	
Name: Eric   Branderiz
    
	
 
    	
 
    	
Title: Chief   Financial Officer
    

 

[Signature page to the Purchase Agreement]

 

 

	
The foregoing   Purchase Agreement is hereby confirmed and accepted as of the date first   above written.
    	
 
    
	
 
    	
 
    
	
CREDIT SUISSE SECURITIES (USA) LLC
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Ted Michaels
    	
 
    
	
 
    	
Name:
    	
Ted Michaels
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    
	
 
    	
 
    	
 
    
	
BARCLAYS CAPITAL INC.
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Syed Rajib   Imteaz
    	
 
    
	
 
    	
Name:
    	
Syed Rajib Imteaz
    	
 
    
	
 
    	
Title:
    	
Managing Director
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Acting on behalf   of themselves and as the Representatives of the several Purchasers.
    	
 
    

 

[Signature page to the Purchase Agreement]

 

 

SCHEDULE A

 

	
Purchaser
    	
 
    	
Principal Amount of
   Offered Securities
    	
 
    
	
Credit Suisse   Securities (USA) LLC
    	
 
    	
$
    	
72,000,000
    	
 
    
	
Barclays Capital   Inc.
    	
 
    	
$
    	
48,000,000
    	
 
    
	
Total
    	
 
    	
$
    	
120,000,000
    	
 
    

 

 

SCHEDULE B

 

1.                                      Issuer Free Writing Communications (included in the General Disclosure Package)

 

1.                            Final term sheet, dated May 30, 2019, a copy of which is attached as Exhibit B hereto.

 

2.                                      Other Information Included in the General Disclosure Package

 

The following information is also included in the General Disclosure Package:

 

None

 

3.                                      Permitted General Solicitations other than Information Included Above

 

None

 

 

SCHEDULE C

 

1.                                      Supplemental Marketing Materials

 

Electronic Roadshow relating to the Offered Securities dated May 29, 2019.

 

 

EXHIBIT A

 

Form of Lock-Up Letter

 

 

Form of Lock-Up Letter

 

Enphase Energy, Inc.

47281 Bayside Parkway

Fremont, CA 94538

 

Credit Suisse Securities (USA) LLC

Barclays Capital Inc.

As Representatives of the Several Purchasers,

 

c/o                               Credit Suisse Securities (USA) LLC

Eleven Madison Avenue,

New York, New York 10010-3629

 

c/o                               Barclays Capital Inc. 

745 Seventh Avenue

New York, New York 10019

 

Dear Sirs:

 

As an inducement to the Purchasers to execute the Purchase Agreement ( the “Purchase Agreement”), pursuant to which an offering (the “Offering”) will be made of Convertible Senior Notes due 2024 (the “Securities”), of Enphase Energy, Inc., and any successor (by merger or otherwise) thereto (the “Company”), which are convertible into cash, shares of the Company’s common stock, par value $0.00001 per share (“Common Stock”), or a combination of cash and Common Stock, at the Company’s election, the undersigned hereby agrees that during the period specified in the following paragraph (the “Lock-Up Period”), the undersigned will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of Common Stock or securities convertible into or exchangeable or exercisable for any shares of Common Stock, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such aforementioned transaction is to be settled by delivery of the Common Stock or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC and Barclays Capital Inc. (the “Representatives”); provided, that if the undersigned is an executive officer of the Company, the foregoing restrictions shall no longer apply at such time as the undersigned ceases to be an executive officer of the Company. In addition, the undersigned agrees that, without the prior written consent of the Representatives, it will not, during the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for the Common Stock.

 

The Lock-Up Period will commence on the date of this Lock-Up Agreement and continue and include the date 90 days after the date of the Purchase Agreement, to which the Representatives are or are expected to become a party.

 

Deemed dispositions of any restricted stock unit awards granted by the Company to the undersigned upon the vesting or settlement of such awards in accordance with their terms shall not be subject to this Lock-Up Agreement, provided that Common Stock acquired upon the vesting or settlement of such restricted stock unit awards shall be subject to the restrictions imposed by this Lock-Up Agreement, giving effect to the exceptions provided herein.

 

Notwithstanding the foregoing, the undersigned may (1) transfer shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock by gift or gifts, will or intestacy to a member or members of his or her immediate family, to a trust formed for the benefit of any such person, or to a partnership, the partners of which are exclusively the undersigned and/or a member or members of his or her immediate family and/or a charity, provided that (i) the transferee execute a copy of this Lock-Up Agreement, (ii) no filing by any party (donor, donee, transferor or transferee) under Section 16(a) of the Securities and Exchange Act of 1934, as

 

 

amended  (the “Exchange Act”) (other than a filing on Form 5 made after the expiration of the Lock-Up Period), and (iii) no such transfer may include a disposition for value; (2) sales pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act (any such plan, a “10b5-1 Plan”) in effect on the date hereof and disclosed to the Representatives; (3) enter into a 10b5-1 Plan during the Lock-Up Period if sales under such plan do not occur until after the expiration of the Lock-Up Period and no disclosure regarding the entry into such plan is made during the Lock-Up Period; (4) exercise outstanding options or warrants to purchase Common Stock in accordance with their terms; provided (a) the shares received upon exercise of the options or warrants are subject to the terms of this Lock-Up Agreement and (b) any filing under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto that (i) the filing relates to the exercise of options or warrants, as the case may be, (ii) no shares were sold by the reporting person (other than sales to satisfy tax withholding obligations in connection with the exercise of an option or warrant pursuant to Company equity compensation plans or arrangements in effect on the date hereof and disclosed in the Company’s public filings with the U.S. Securities and Exchange Commission; provided that any public filing, report or announcement of such transfer shall disclose that the sale was for the purpose of covering such taxes payable) and (iii) the shares of Common Stock received upon exercise of the options or warrants are subject to a lock-up agreement with the Representatives; (5) transfer shares of Common Stock to the Company to satisfy tax withholding obligations in connection with the vesting of restricted stock units pursuant to Company equity compensation plans or arrangements in effect on the date hereof and disclosed in the Company’s public filings with the U.S. Securities and Exchange Commission; provided that any public filing, report or announcement of such transfer shall disclose that the sale or transfer was for the purpose of covering such taxes payable; and (6) transfer shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock pursuant to a sale or an offer to all holders of the Common Stock to purchase outstanding Common Stock, whether pursuant to a merger, tender offer or otherwise, to a bona fide third party or group of bona fide third parties that is approved by the Board of Directors of the Company and involving a Change of Control (as defined below); provided that in the event the merger, tender offer or other transaction is not completed, the securities owned by the undersigned shall remain subject to the restrictions contained in this Lock-Up Agreement. For purposes of this paragraph, “immediate family” means the spouse, domestic partner, lineal descendants, father, mother, brother or sister of the transferor. For the purposes of clause (6) of this paragraph, “Change of Control” shall mean the consummation of any bona fide third-party tender offer, merger or other similar transaction or series of transactions, the result of which is that any “person” (as defined in Section 13(d)(3) of the Exchange Act), or group of persons, other than the Company, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) of 50% of total voting power of the voting stock of the Company (or the surviving entity if other than the Company).

 

In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of shares of Common Stock if such transfer would constitute a violation or breach of this Lock-Up Agreement.

 

This Lock-Up Agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned. This Lock-Up Agreement shall lapse and become null and void if (a) the Offering shall not have occurred on or before September 1, 2019; (b) the Company notifies the Representatives in writing that it does not intend to proceed with the Offering or (c) if the Purchase Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated for any reason prior to payment for and delivery of the Securities to be sold thereunder. This Lock-Up Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

 

[Signature page follows]

 

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Name of stockholder]
    

 

[Signature page to Lock-up Agreement]

 

 

EXHIBIT B

 

Final Term Sheet

 

 

PRICING TERM   SHEET DATED May 30, 2019 STRICTLY CONFIDENTIAL ENPHASE ENERGY, INC.   $120,000,000 1.00% CONVERTIBLE SENIOR NOTES DUE 2024 The information in this   pricing term sheet supplements Enphase Energy, Inc.’s preliminary offering   memorandum, dated May 29, 2019 (the “Preliminary Offering Memorandum”), and   supersedes the information in the Preliminary Offering Memorandum to the   extent inconsistent with the information in the Preliminary Offering   Memorandum. In all other respects, this term sheet is qualified in its   entirety by reference to the Preliminary Offering Memorandum, including all   other documents incorporated by reference therein. References to “we,”   “our,”“us” and “the Company” refer to Enphase Energy, Inc. and not to its   consolidated subsidiaries. Terms used herein but not defined herein shall   have the respective meanings as set forth in the Preliminary Offering   Memorandum. All references to dollar amounts are references to U.S. dollars.   Issuer: Enphase Energy, Inc., a Delaware corporation. Ticker/Exchange for   Common Stock: “ENPH”/The Nasdaq Global Market. Securities: 1.00% Convertible   Senior Notes due 2024 (the “notes”). Aggregate Principal Amount:   $120,000,000. Over-allotment Option: $12,000,000 Denominations: $1,000 and   multiples of $1,000 in excess thereof. Ranking: Senior unsecured. June 1,   2024, unless earlier converted or repurchased. Maturity: We may not redeem   the notes prior to the maturity date and no “sinking fund” is provided for   the notes, which means that we are not required to redeem or retire the notes   periodically. No Redemption: If we undergo a “fundamental change” (as defined   in the Preliminary Offering Memorandum under “Description of   Notes—Fundamental Change Permits Holders to Require Us to Repurchase Notes”),   subject to certain conditions, holders may require us to repurchase for cash   all or part of their notes in principal amounts of $1,000 or a multiple   thereof. The fundamental change repurchase price will be equal to 100% of the   principal amount of the notes to be repurchased, plus accrued and unpaid   interest to, but excluding, the fundamental change repurchase date. See   “Description of Notes— Fundamental Change Permits Holders to Require Us to   Repurchase Notes” in the Preliminary Offering Memorandum. 1.00% per year.   Fundamental Change: Interest and Interest Payment Dates: Interest will accrue   from June 5, 2019 and will be payable semiannually in arrears on June 1 and   December 1 of each year, beginning on December 1, 2019. We will pay   additional interest, if any, at our election as the sole remedy relating to   the failure to comply with our reporting obligations as described under   “Description of Notes—Events of 

    

 

Default” and   under the circumstances described under Description of Notes—No Registration   Rights; Additional Interest” in the Preliminary Offering Memorandum.” Regular   Record Dates: May 15 and November 15 of each year, immediately preceding the   June 1 or December 1 interest payment date, as the case may be. 100% of   principal, plus accrued interest, if any, from June 5, 2019 if settlement   occurs after that date. Issue Price: Last Reported Sale Price of Our Common   Stock on May 30, 2019: $15.77 per share. Initial Conversion Rate: 48.7781   shares of common stock per $1,000 principal amount of the notes, subject to   adjustment under the Indenture. Approximately $20.50 per share of common   stock, subject to adjustment under the Indenture. Approximately 30% above the   last reported sale price of our common stock on May 30, 2019. Cash, shares of   common stock or a combination of cash and shares of common stock, as   described in the “Description of Notes—Conversion Rights—Settlement upon   Conversion” in the Preliminary Offering Memorandum. Credit Suisse Securities   (USA) LLC, Barclays Capital Inc. May 30, 2019. May 31, 2019. Initial   Conversion Price: Conversion Premium: Settlement Method: Joint Book-Running   Managers: Pricing Date: Trade Date: Expected Settlement Date: CUSIP Number   (144A): ISIN (144A): Listing: Net Proceeds: June 5, 2019 (T+3). 29355A AC1   US29355AAC18 None. We estimate that the net proceeds from the sale of the   notes will be approximately $115.9 million (or $127.5 million if the initial   purchasers exercise their option to purchase additional notes in full), after   deducting the initial purchasers’ discount and estimated offering expenses   payable by us. Use of Proceeds: In connection with pricing the notes, we have   entered into convertible note hedge transactions with certain of the initial   purchasers, and/or their respective affiliates (the ‘‘hedge counterparties’’).   We have also entered into warrant transactions with the hedge counterparties.   We intend to use approximately $5.9 million of the net proceeds (or $6.5   million if the initial purchasers exercise their option to purchase   additional notes in full) from this offering to pay the cost of the   convertible note hedge transactions (after such cost is partially offset by   the proceeds to us from the sale of the warrant transactions). We intend to   use $6.0 million of the net proceeds of this offering to pay the cash portion   of the consideration for the 2023 Notes Repurchase Transactions that we have   entered into concurrently with pricing this offering, pursuant to which we   will repurchase 2023 Notes in exchange for a number of shares of our common   stock approximately equal to the 

    

 

number of   shares underlying the repurchased 2023 Notes and a cash amount that was   negotiated with each holder. We expect to use any remaining net proceeds from   the sale of the notes for general corporate purposes, which may include the   repayment of indebtedness, working capital, and potential acquisitions and   strategic transactions. However, we currently have no commitments with   respect to any such acquisition or other strategic transactions. See “Use of   Proceeds” in the Preliminary Offering Memorandum. 2023 Notes Repurchase   Transactions: Concurrently with this pricing offering, we have entered into   separate and privately negotiated 2023 note repurchase transactions with one   or more holders of our 2023 Notes pursuant to which we have agreed to   purchase $60.0 million principal amount of 2023 Notes for an aggregate of   10,801,080 shares of our common stock and $6.0 million cash. We may enter   into additional note repurchase transactions in the future. The repurchase of   our outstanding 2023 Notes could affect the market price of our common stock   and, in the case of repurchase effected concurrently with pricing this   offering, the initial conversion price of the notes. We also expect that   holders of the 2023 Notes that sell their 2023 Notes in any 2023 Notes Repurchase   Transaction may purchase or sell shares of our common stock in the market to   hedge their exposure in connection with these transactions. This activity   could affect the market price of our common stock and, in the case of sales   or exchanges effected concurrently with pricing this offering, this activity   could also impact the initial conversion price of the notes. See “2023 Notes   Repurchase Transactions” in the Preliminary Offering Memorandum. Convertible   Note Hedge and Warrant Transactions: In connection with the pricing of the   notes, we have entered into convertible note hedge transactions with the   hedge counterparties. We also have entered into warrant transactions with the   hedge counterparties. The convertible note hedge transactions are expected   generally to reduce potential dilution to our common stock upon any   conversion of notes and/or offset any cash payments we are required to make   in excess of the principal amount of converted notes, as the case may be.   However, the warrant transactions could separately have a dilutive effect to   the extent that the market value per share of our common stock exceeds the   strike price of the warrants. If the initial purchasers exercise their option   to purchase additional notes, we expect to enter into additional convertible   note hedge transactions and additional warrant transactions with the hedge   counterparties. In connection with establishing their initial hedge of the   convertible note hedge and warrant transactions, the hedge counterparties or   their respective affiliates expect to enter into various derivative   transactions with respect to our common stock concurrently with or shortly   after the pricing of the notes. This activity could increase (or reduce the   size of any decrease in) the market price of our common stock or the notes at   that time. In addition, the hedge counterparties or their respective   affiliates may modify their hedge positions by entering into or unwinding   various derivatives with respect to our common stock and/or purchasing or   selling our common stock or other securities of ours in secondary market   transactions following the pricing of the notes and prior to the maturity of   the notes (and are likely to do so during any observation period related to a   conversion of notes). This activity could also cause or avoid an increase 

    

 

or a decrease   in the market price of our common stock or the notes, which could affect your   ability to convert the notes and, to the extent the activity occurs during   any observation period related to a conversion of notes, it could affect the   number of shares and value of the consideration that you will receive upon   conversion of the notes. See “Plan of distribution—Convertible Note Hedge and   Warrant Transactions” in the Preliminary Offering Memorandum. [Remainder of   Page Intentionally Blank] 

    

 

 Description of Notes—Conversion   Rights—Increase in Conversion Rate upon Conversion upon a Make-Whole   Fundamental Change Holders who convert their notes in connection with a   make-whole fundamental change occurring prior to the maturity date of the   notes may be entitled to an increase in the conversion rate for the notes so   surrendered for conversion. The following table sets forth the number of   additional shares by which the conversion rate for the notes will be   increased per $1,000 principal amount of notes for each stock price and   effective date set forth below: Stock Price Effective Date$15.77 $17.00   $18.00 $19.00 $20.50 $24.00 $28.00 $35.00 $45.00 $60.00 June 5, 2019   ....................................................... 14.6334 12.4149   10.90389.60787.99065.29283.37541.55510.45760.0098 June 1, 2020   ....................................................... 14.6334 12.7457   11.12579.74248.02575.19683.22701.41640.38380.0028 June 1, 2021 .......................................................   14.6334 12.6652 10.94209.48037.68254.77802.82371.12100.23860.0002 June 1,   2022 ....................................................... 14.6334 12.3391   10.47718.91407.01964.05972.18700.70990.07920.0000 June 1, 2023 .......................................................   14.6334 11.47709.38697.66705.64582.87191.24870.23410.00000.0000 June 1, 2024   ....................................................... 14.6334   10.04546.77743.85350.00240.00000.00000.00000.00000.0000 The exact stock   prices and effective dates or redemption notice dates may not be set forth in   the table above, in which case: •If the stock price is between two stock   prices in the table or the effective date is between two effective dates in   the table, the number of additional shares by which the conversion rate will   be increased will be determined by a straight-line interpolation between the   number of additional shares set forth for the higher and lower stock prices   and the earlier and later effective dates, as applicable, based on a 365-day   year. •If the stock price is greater than $60.00 per share (subject to   adjustment in the same manner as the stock prices set forth in the column   headings of the table above), no additional shares will be added to the conversion   rate. •If the stock price is less than $15.77 per share (subject to   adjustment in the same manner as the stock prices set forth in the column   headings of the table above), no additional shares will be added to the   conversion rate. Notwithstanding the foregoing, in no event will the   conversion rate per $1,000 principal amount of notes exceed 63.4115 shares of   common stock, subject to adjustment in the same manner as the conversion rate   as set forth in the Preliminary Offering Memorandum under “Description of   Notes—Conversion Rights—Conversion Rate Adjustments.’’ Our obligation to   increase the conversion rate for notes converted in connection with a   make-whole fundamental change could be considered a penalty, in which case   the enforceability thereof would be subject to general principles of   reasonableness and equitable remedies. [Remainder of Page Intentionally   Blank] 

    

 

This   communication is intended for the sole use of the person to whom it is   provided by the sender. This material is confidential and is for your   information only and is not intended to be used by anyone other than you.   This information does not purport to be a complete description of the notes   or the offering. This communication does not constitute an offer to sell or the   solicitation of an offer to buy any notes in any jurisdiction to any person   to whom it is unlawful to make such offer or solicitation in such   jurisdiction. The notes and the shares of common stock issuable upon   conversion of the notes, if any, have not been and will not be registered   under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or   any other securities laws, and may not be offered or sold within the United   States or any other jurisdiction, except pursuant to an exemption from, or in   a transaction not subject to, the registration requirements of the Securities   Act and any other applicable securities laws. The initial purchasers are   initially offering the notes only to qualified institutional buyers as   defined in, and in reliance on, Rule 144A under the Securities Act. The notes   and the shares of common stock issuable upon conversion of the notes, if any,   are not transferable except in accordance with the restrictions described   under “Transfer Restrictions” in the Preliminary Offering Memorandum. A copy   of the Preliminary Offering Memorandum for the offering of the notes may be   obtained by contacting your sales representative. Any legends, disclaimers or   other notices that may appear below are not applicable to this communication and   should be disregarded. Such legends, disclaimers or other notices have been   automatically generated as a result of this communication having been sent   via Bloomberg or another system. No PRIIPs KID: The Notes may not be offered,   sold or otherwise made available to any retail investor in the European   Economic Area. Consequently, no key information document (“KID”) required by   the PRIIPs Regulation has been prepared.Exhibit 10.2

 

[Credit Suisse Capital LLC

c/o Credit Suisse Securities (USA) LLC
 Eleven Madison Avenue
 New York, NY 10010]

 

[Barclays Bank PLC

5 The North Colonnade

Canary Wharf, London E14 4BB

Facsimile: +44(20)77736461

Telephone: +44 (20) 777 36810

 

c/o Barclays Capital Inc.

as Agent for Barclays Bank PLC

745 Seventh Avenue

New York, NY 10019

Telephone: +1 212 412 4000]

 

[                    ], 2019

 

To:                             Enphase Energy, Inc.
  47281 Bayside Parkway
 Fremont, CA 94538
 Attention: [Title of contact] 
 Telephone No.: (707) 774-7000

 

Re:                             [Base][Additional] Call Option Transaction

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction entered into between [Credit Suisse Capital LLC][ Barclays Bank PLC]  (“Dealer”)[, represented by Credit Suisse Securities (USA) LLC (“Agent”) as its agent,] [, through its agent Barclays Capital Inc. (the “Agent”)] and Enphase Energy, Inc. (“Counterparty”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction. [Dealer is not a member of the Securities Investor Protection Corporation.  Dealer is authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.]

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated May 30, 2019 (the “Offering Memorandum”) relating to the Convertible Senior Notes due 2024 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD 120,000,000 (as increased by [up to]1 an aggregate principal amount of USD 12,000,000 [if and to the extent that]2[pursuant to the exercise by]3 the Initial Purchasers (as defined herein) [exercise]4[of]5 their over-allotment option to purchase additional Convertible Notes pursuant to the Purchase Agreement (as defined herein)) pursuant to an Indenture [to

 

1  Include in the Base Call Option Confirmation.

2  Include in the Base Call Option Confirmation.

3  Include in the Additional Call Option Confirmation.

4  Include in the Base Call Option Confirmation.

5  Include in the Additional Call Option Confirmation.

 

 

be]6 dated June 5, 2019 between Counterparty and U.S. Bank National Association, as trustee (the “Indenture”).  In the event of any inconsistency between the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern.  The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum.  If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation.  The parties further acknowledge that the Indenture section numbers used herein are based on the [draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties]7[Indenture as executed]8.  Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended following such date (other than any amendment pursuant to Section 10.01(m) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Offering Memorandum), any such amendment 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.

 

1.                                      This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for (i) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)[, (ii) the election of an executed guarantee of [         ] (“Guarantor”) dated as of the Trade Date in substantially the form attached hereto as Annex A as a Credit Support Document, (iii) the election of Guarantor as a Credit Support Provider in relation to Dealer] and [(ii)][(iv)] the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Dealer, with a “Threshold Amount” of 3% of Dealer’s ultimate parent’s shareholders’ equity (provided that (a) the phrase “, or becoming capable at such time of being declared,” shall be deleted from clause (1) of such Section 5(a)(vi) of the Agreement, (b) “Specified Indebtedness” shall have the meaning specified in Section 14 of the Agreement, except that such term shall not include obligations in respect of deposits received in the ordinary course of Dealer’s banking business and (c) the following sentence shall be added to the end of Section 5(a)(vi) of the Agreement:  “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (i) the default was caused solely by error or omission of an administrative or operational nature; (ii) funds were available to enable the relevant party to make the payment when due; and (iii) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”)) on the Trade Date.  In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

 

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

 

	
General Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
[                 ],   2019
    

 

6  Insert if Indenture is not completed at the time of the Confirmation.

7  Include in the Base Call Option Confirmation.  Include in the Additional Call Option Confirmation if it is executed before closing of the base deal.

8  Include in the Additional Call Option Confirmation, but only if the Additional Call Option Confirmation is executed after closing of the base deal.

 

2

 

	
Effective Date:
    	
 
    	
The closing date of the [initial]9 issuance of the Convertible Notes [issued   pursuant to the option to purchase additional Convertible Notes exercised on   the date hereof]10
    
	
 
    	
 
    	
 
    
	
Option Style:
    	
 
    	
“Modified American”, as described under “Procedures   for Exercise” below
    
	
 
    	
 
    	
 
    
	
Option Type:
    	
 
    	
Call
    
	
 
    	
 
    	
 
    
	
Buyer:
    	
 
    	
Counterparty
    
	
 
    	
 
    	
 
    
	
Seller:
    	
 
    	
Dealer
    
	
 
    	
 
    	
 
    
	
Shares:
    	
 
    	
The common stock of Counterparty, par value USD   0.00001 per share (Exchange symbol “ENPH” as of the Trade Date).
    
	
 
    	
 
    	
 
    
	
Number of Options:
    	
 
    	
[       ]11. For the avoidance of   doubt, the Number of Options shall be reduced by any Options exercised by   Counterparty. In no event will the Number of Options be less than zero.
    
	
 
    	
 
    	
 
    
	
Applicable Percentage:
    	
 
    	
[  ]%
    
	
 
    	
 
    	
 
    
	
Option Entitlement:
    	
 
    	
A number equal to the product of the Applicable   Percentage and [      ]12.
    
	
 
    	
 
    	
 
    
	
Strike Price:
    	
 
    	
USD [      ]
    
	
 
    	
 
    	
 
    
	
Premium:
    	
 
    	
USD [      ]
    
	
 
    	
 
    	
 
    
	
Premium Payment Date:
    	
 
    	
[          ],   2019
    
	
 
    	
 
    	
 
    
	
Exchange:
    	
 
    	
The NASDAQ Global Market
    
	
 
    	
 
    	
 
    
	
Related Exchange(s):
    	
 
    	
All Exchanges; provided that   Section 1.26 of the Equity Definitions shall be amended to add the words   “United States” before the word “exchange” in the tenth line of such section.
    
	
 
    	
 
    	
 
    
	
Excluded Provisions:
    	
 
    	
Section 14.04(h) and Section 14.03 of   the Indenture.
    
	
 
    	
 
    	
 
    
	
Procedures for Exercise.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Conversion Date:
    	
 
    	
With respect to any conversion of a Convertible   Note, the date on which the Holder (as such term is defined in the Indenture)   of such Convertible Note satisfies all of the requirements for conversion   thereof as set forth in Section 14.02(b) of the Indenture.
    

 

9  Include for Base Call Option Confirmation.

10  Include for Additional Call Option Confirmation.

11  For the Base Call Option Confirmation, this is equal to the number of Convertible Notes in principal amount of $1,000 initially issued on the closing date for the Convertible Notes.  For the Additional Call Option Confirmation, this is equal to the number of additional Convertible Notes in principal amount of $1,000.

12  Insert the initial Conversion Rate for the Convertible Notes.

 

3

 

	
Averaging Period   Threshold Date:
    	
 
    	
December 1, 2023
    
	
 
    	
 
    	
 
    
	
Expiration Time:
    	
 
    	
The Valuation Time
    
	
 
    	
 
    	
 
    
	
Expiration Date:
    	
 
    	
June 1, 2024, subject to earlier exercise.
    
	
 
    	
 
    	
 
    
	
Multiple Exercise:
    	
 
    	
Applicable, as described under “Automatic Exercise”   below.
    
	
 
    	
 
    	
 
    
	
Automatic Exercise:
    	
 
    	
Notwithstanding Section 3.4 of the Equity Definitions,   on each Conversion Date in respect of which a Notice of Conversion that is   effective as to Counterparty has been delivered by the relevant converting   Holder, a number of Options equal to [(i)] the number of Convertible Notes in   denominations of USD 1,000 as to which such Conversion Date has occurred [minus (ii) the number of Options that are or are   deemed to be automatically exercised on such Conversion Date under the Base   Call Option Transaction Confirmation letter agreement dated   [          ], 2019 between   Dealer and Counterparty (the “Base Call Option   Confirmation”),]13 shall be deemed   to be automatically exercised; provided that   such Options shall be exercised or deemed exercised only if Counterparty or   the Trustee (or other agent authorized by Counterparty and previously   identified to Dealer by Counterparty in writing) on behalf of Counterparty   has provided a Notice of Exercise to Dealer in accordance with “Notice of   Exercise” below; provided further   that if the Trustee or any other such agent on behalf of Counterparty   provides such Notice of Exercise to Dealer, Dealer shall be entitled to rely   on the accuracy of such Notice of Exercise without any independent   investigation.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding the foregoing, in no event shall the   number of Options that are exercised or deemed exercised hereunder exceed the   Number of Options.
    
	
 
    	
 
    	
 
    
	
Notice of Exercise:
    	
 
    	
Notwithstanding anything to the contrary in the   Equity Definitions or under “Automatic Exercise” above, in order to exercise   any Options, Counterparty or the Trustee (or other agent authorized by   Counterparty and previously identified to Dealer by Counterparty in writing)   on behalf of Counterparty must notify Dealer in writing before 5:00   p.m. (New York City time) on the Scheduled Valid Day immediately   preceding the scheduled first day of the Settlement Averaging Period for the   Options being exercised (the “Exercise Notice Deadline”)   of (i) the number of such Options, (ii) the scheduled first day of   the Settlement Averaging Period and the scheduled Settlement Date,   (iii) the Relevant Settlement Method for such Options, and (iv) if   the settlement method for the related Convertible Notes is not Settlement in   Shares or Settlement in Cash (each as defined below), the fixed amount of   cash per Convertible Note that Counterparty has elected to pay to Holders (as   such term is defined in the Indenture) of the
    

 

13  Include for Additional Call Option Confirmation only.

 

4

 

	
 
    	
 
    	
related Convertible Notes (the “Specified   Cash Amount”); provided that   notwithstanding the foregoing, in respect of any Options relating to   Convertible Notes with a Conversion Date occurring prior to the Averaging   Period Threshold Date, such notice (and the related exercise of Options)   shall be effective if given after the Exercise Notice Deadline, but prior to   4:00 p.m. (New York City time) on the fifth Scheduled Valid Day   following the Exercise Notice Deadline, in which event the Calculation Agent   shall have the right to adjust the delivery obligation under this Confirmation   as appropriate to reflect the commercially reasonable additional costs   (including, but not limited to, additional costs related to hedging   mismatches and market losses and gains) and commercially reasonable expenses   incurred by Dealer in connection with commercially reasonable hedging   activities (including the unwinding of any commercially reasonable Hedge   Positions) as a result of Dealer not having received such notice on or prior   to the Exercise Notice Deadline and Dealer’s obligation to make any payment   or delivery in respect of such exercise shall not be extinguished; and provided further that in respect of any Options relating   to Convertible Notes with a Conversion Date occurring on or after the   Averaging Period Threshold Date, (A) such notice may be given on or   prior to the second Scheduled Valid Day immediately preceding the Expiration   Date and need only specify the information required in clause (i) above,   and (B) if the Relevant Settlement Method for such Options is   (x) Net Share Settlement and the Specified Cash Amount is not USD 1,000,   (y) Cash Settlement or (z) Combination Settlement, Dealer shall   have received a separate notice (the “Notice of Final   Settlement Method”) in respect of all such Convertible Notes   before 5:00 p.m. (New York City time) on the Averaging Period Threshold   Date specifying the information required in clauses (iii) and   (iv) above. Counterparty acknowledges its responsibilities under   applicable securities laws, and in particular Section 9 and Section 10(b) of   the Exchange Act (as defined below) and the rules and regulations   thereunder, in respect of any election of a settlement method with respect to   the Convertible Notes. The parties hereto agree and acknowledge that if the   Trustee or any other agent authorized by Counterparty and previously   identified to Dealer by Counterparty in writing on behalf of Counterparty   provides notice to Dealer as provided for in the second immediately preceding   sentence, Dealer shall be entitled to rely on the accuracy of such notice   without any independent investigation.
    
	
 
    	
 
    	
 
    
	
Valuation Time:
    	
 
    	
At the close of trading of the regular trading   session on the Exchange; provided that   if the principal trading session is extended, the Calculation Agent shall   determine the Valuation Time in good faith and in a commercially reasonable   manner.
    

 

5

 

	
Market Disruption   Event:
    	
 
    	
Section 6.3(a) of the Equity Definitions   is hereby replaced in its entirety by the following:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“‘Market Disruption Event’ means, in respect of a   Share, (i) a failure by the primary United States national or regional   securities exchange or market on which the Shares are listed or admitted for   trading to open for trading during its regular trading session or (ii) the   occurrence or existence prior to 1:00 p.m. (New York City time) on any   Scheduled Valid Day for the Shares for more than one half-hour period in the   aggregate during regular trading hours of any suspension or limitation   imposed on trading (by reason of movements in price exceeding limits   permitted by the relevant stock exchange or otherwise) in the Shares or in   any options contracts or futures contracts relating to the Shares.”
    
	
 
    	
 
    	
 
    
	
Settlement Terms.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Settlement Method:
    	
 
    	
For any Option, Net Share Settlement; provided that if the Relevant Settlement Method set forth   below for such Option is not Net Share Settlement, then the Settlement Method   for such Option shall be such Relevant Settlement Method, but only if   Counterparty, or the Trustee (or other agent authorized by Counterparty and   previously identified to Dealer by Counterparty in writing) on behalf of   Counterparty, shall have notified Dealer of the Relevant Settlement Method in   the Notice of Exercise or Notice of Final Settlement Method, as applicable,   for such Option. The parties hereto agree and acknowledge that if the Trustee   or any other agent authorized by Counterparty and previously identified to   Dealer by Counterparty in writing on behalf of Counterparty provides notice   to Dealer as provided for in the proviso to   the immediately preceding sentence, Dealer shall be entitled to rely on the   accuracy of such notice without any independent investigation.
    
	
 
    	
 
    	
 
    
	
Relevant Settlement   Method:
    	
 
    	
In respect of any Option:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             if Counterparty has elected to settle   its conversion obligations in respect of the related Convertible Note   (A) entirely in Shares pursuant to Section 14.02(iv)(A) of the   Indenture (together with cash in lieu of fractional Shares) (such settlement   method, “Settlement in Shares”),   (B) in a combination of cash and Shares pursuant to   Section 14.04(iv)(C) of the Indenture with a Specified Cash Amount   less than USD 1,000 (such settlement method, “Low Cash   Combination Settlement”) or (C) in a combination of cash and   Shares pursuant to Section 14.04(iv)(C) of the Indenture with a   Specified Cash Amount equal to USD 1,000, then, in each case, the   Relevant Settlement Method for such Option shall be Net Share Settlement;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)          if Counterparty has elected to settle its   conversion obligations in respect of the related Convertible Note in a
    

 

6

 

	
 
    	
 
    	
combination of cash and Shares pursuant to   Section 14.04(iv)(C)  of the Indenture with a Specified Cash Amount   greater than USD 1,000, then the Relevant Settlement Method for such Option   shall be Combination Settlement; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)       if Counterparty has elected to settle its   conversion obligations in respect of the related Convertible Note entirely in   cash pursuant to Section 14.04(iv)(B) of the Indenture (such   settlement method, “Settlement in Cash”),   then the Relevant Settlement Method for such Option shall be Cash Settlement.
    
	
 
    	
 
    	
 
    
	
Net Share Settlement:
    	
 
    	
If Net Share Settlement is applicable to any Option   exercised or deemed exercised hereunder, Dealer will deliver to Counterparty,   on the relevant Settlement Date for each such Option, a number of Shares (the   “Net Share Settlement Amount”) equal   to the sum, for each Valid Day during the Settlement Averaging Period for   each such Option, of (i) (a) the Daily Option Value for such Valid   Day, divided by (b) the Relevant Price   on such Valid Day, divided by   (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net Share Settlement   Amount for any Option exceed a number of Shares equal to the Applicable Limit   for such Option, divided by   the Applicable Limit Price on the Settlement Date for such Option.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dealer will pay cash in lieu of delivering any   fractional Shares to be delivered with respect to any Net Share Settlement   Share Amount valued at the Relevant Price for the last Valid Day of the   Settlement Averaging Period.
    
	
 
    	
 
    	
 
    
	
Combination Settlement:
    	
 
    	
If Combination Settlement is applicable to any   Option exercised or deemed exercised hereunder, Dealer will pay or deliver,   as the case may be, to Counterparty, on the relevant Settlement Date for each   such Option:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             cash (the “Combination Settlement Cash Amount”) equal to the sum, for   each Valid Day during the Settlement Averaging Period for such Option, of   (A) an amount (the “Daily Combination   Settlement Cash Amount”) equal to the lesser of (1) the   product of (x) the Applicable Percentage and (y) the Specified Cash   Amount minus USD 1,000 and (2) the Daily   Option Value, divided by (B) the number   of Valid Days in the Settlement Averaging Period; provided   that if the calculation in clause (A) above results in zero or a   negative number for any Valid Day, the Daily Combination Settlement Cash   Amount for such Valid Day shall be deemed to be zero; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)          Shares (the “Combination Settlement Share Amount”) equal to the sum,   for each Valid Day during the Settlement Averaging Period for such
    

 

7

 

	
 
    	
 
    	
Option, of a number of   Shares for such Valid Day (the “Daily Combination   Settlement Share Amount”) equal to (A) (1) the Daily   Option Value on such Valid Day minus the   Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the   Settlement Averaging Period; provided that   if the calculation in sub-clause (A)(1) above results in zero or a   negative number for any Valid Day, the Daily Combination Settlement Share   Amount for such Valid Day shall be deemed to be zero;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
provided that in no event shall   the sum of (x) the Combination Settlement Cash Amount for any Option, and (y) the Combination Settlement Share Amount for   such Option, multiplied by the Applicable   Limit Price on the Settlement Date for such Option, exceed the Applicable   Limit for such Option.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dealer will pay cash in lieu of delivering any   fractional Shares to be delivered with respect to any Combination Settlement   Share Amount valued at the Relevant Price for the last Valid Day of the   Settlement Averaging Period.
    
	
 
    	
 
    	
 
    
	
Cash Settlement:
    	
 
    	
If Cash Settlement is applicable to any Option   exercised or deemed exercised hereunder, in lieu of Section 8.1 of the   Equity Definitions, Dealer will pay to Counterparty, on the relevant   Settlement Date for each such Option, an amount of cash (the “Cash Settlement Amount”) equal to the sum, for each Valid   Day during the Settlement Averaging Period for such Option, of (i) the   Daily Option Value for such Valid Day, divided by   (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Cash Settlement Amount   exceed the Applicable Limit for such Option.
    
	
 
    	
 
    	
 
    
	
Daily Option Value:
    	
 
    	
For any Valid Day, an amount equal to (i) the   Option Entitlement on such Valid Day, multiplied by   (ii) the Relevant Price on such Valid Day less   the Strike Price on such Valid Day; provided that   if the calculation contained in clause (ii) above results in a negative   number, the Daily Option Value for such Valid Day shall be deemed to be zero.   In no event will the Daily Option Value be less than zero.
    
	
 
    	
 
    	
 
    
	
Make-Whole Adjustment:
    	
 
    	
Notwithstanding anything to the contrary herein, in   respect of any exercise of Options relating to a conversion of Convertible   Notes for which additional Shares will be added to the “Conversion Rate” (as   defined in the Indenture) as determined pursuant to Section 14.03 of the   Indenture, the Daily Option Value shall be calculated as if the Option   Entitlement included the Applicable Percentage of the number of such   additional Shares as determined with reference to the adjustment set forth in   such Section 14.03 of the Indenture; provided that   if the sum of (i) the product
    

 

8

 

	
 
    	
 
    	
of (a) the number of Shares (if any)   deliverable by Dealer to Counterparty per exercised Option and (b) the   Applicable Limit Price on the Settlement Date and (ii) the amount of   cash (if any) payable by Dealer to Counterparty per exercised Option would   otherwise exceed the amount per Option, as determined by the Calculation   Agent, that would be payable by Dealer under Section 6 of the Agreement   if (x) the relevant Conversion Date were an Early Termination Date   resulting from an Additional Termination Event with respect to which the   Transaction was the sole Affected Transaction and Counterparty was the sole   Affected Party and (y) Section 14.03 of the Indenture were deleted,   then each Daily Option Value shall be proportionately reduced to the extent   necessary to eliminate such excess.
    
	
 
    	
 
    	
 
    
	
Applicable Limit:
    	
 
    	
For any Option, an amount of cash equal to the   Applicable Percentage, multiplied by   the excess of (i) the aggregate of (A) the amount of cash, if any,   paid to the Holder of the related Convertible Note upon conversion of such   Convertible Note and (B) the number of Shares, if any, delivered to the   Holder of the related Convertible Note upon conversion of such Convertible   Note multiplied by the Applicable Limit   Price on the Settlement Date for such Option, over (ii) USD 1,000.
    
	
 
    	
 
    	
 
    
	
Applicable Limit Price:
    	
 
    	
On any day, the opening price as displayed under the   heading “Op” on Bloomberg page ENPH <equity> (or any successor   thereto).
    
	
 
    	
 
    	
 
    
	
Valid Day:
    	
 
    	
A day on which (i) there is no Market Disruption   Event and (ii) trading in the Shares generally occurs on the Exchange   or, if the Shares are not then listed on the Exchange, on the principal other   United States national or regional securities exchange on which the Shares   are then listed or, if the Shares are not then listed on a United States   national or regional securities exchange, on the principal other market on   which the Shares are then listed or admitted for trading. If the Shares are   not so listed or admitted for trading, “Valid Day” means a Business Day.
    
	
 
    	
 
    	
 
    
	
Scheduled Valid Day:
    	
 
    	
A day that is scheduled to be a Valid Day on the   principal United States national or regional securities exchange or market on   which the Shares are listed or admitted for trading. If the Shares are not so   listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
    
	
 
    	
 
    	
 
    
	
Business Day:
    	
 
    	
Any day other than a Saturday, a Sunday or a day on   which the Federal Reserve Bank of New York is authorized or required by law   or executive order to close or be closed.
    
	
 
    	
 
    	
 
    
	
Relevant Price:
    	
 
    	
On any Valid Day, the per Share volume-weighted   average price as displayed under the heading “Bloomberg VWAP” on Bloomberg   page ENPH <equity> AQR (or its equivalent successor if such   page is not available) in respect of the period from the scheduled   opening time of
    

 

9

 

	
 
    	
 
    	
the Exchange to the Scheduled Closing Time of the   Exchange on such Valid Day (or if such volume-weighted average price is   unavailable, the market value of one Share on such Valid Day, as determined   by the Calculation Agent in good faith and in a commercially reasonable   manner using, if practicable, a volume-weighted average method). The Relevant   Price will be determined without regard to after-hours trading or any other   trading outside of the regular trading session trading hours.
    
	
 
    	
 
    	
 
    
	
Settlement Averaging   Period:
    	
 
    	
For any Option and regardless of the Settlement   Method applicable to such Option:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             if the related   Conversion Date occurs prior to the Averaging Period Threshold Date, the 40   consecutive Valid Days commencing on, and including, the second Valid Day   following such Conversion Date; or
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)          if the related   Conversion Date occurs on or following the Averaging Period Threshold Date,   the 40 consecutive Valid Days commencing on, and including, the 41st Scheduled Valid Day immediately prior to the   Expiration Date.
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
For any Option, the date cash is paid and Shares, if   any, are delivered under the terms of the Indenture with respect to the   conversion of the Convertible Note related to such Option.
    
	
 
    	
 
    	
 
    
	
Settlement Currency:
    	
 
    	
USD
    
	
 
    	
 
    	
 
    
	
Other Applicable   Provisions:
    	
 
    	
The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11   of the Equity Definitions will be applicable, except that all references in   such provisions to “Physically-settled” shall be read as references to “Share   Settled”. “Share Settled” in relation to any Option means that Net Share   Settlement or Combination Settlement is applicable to that Option.
    
	
 
    	
 
    	
 
    
	
Representation and   Agreement:
    	
 
    	
Notwithstanding anything to the contrary in the   Equity Definitions (including, but not limited to, Section 9.11   thereof), the parties acknowledge that (i) any Shares delivered to   Counterparty shall be, upon delivery, subject to restrictions and limitations   arising from Counterparty’s status as issuer of the Shares under applicable   securities laws, (ii) Dealer may deliver any Shares required to be   delivered hereunder in certificated form in lieu of delivery through the   Clearance System and (iii) any Shares delivered to Counterparty may be   “restricted securities” (as defined in Rule 144 under the Securities Act   of 1933, as amended (the “Securities Act”)).
    

 

10

 

3.                                      Additional Terms applicable to the Transaction.

 

	
Adjustments   applicable to the Transaction:
    
	
 
    	
 
    	
 
    
	
Potential Adjustment   Events:
    	
 
    	
Notwithstanding Section 11.2(e) of the   Equity Definitions, a “Potential Adjustment Event” means an occurrence of any   event or condition, as set forth in any Dilution Adjustment Provision, that   would result in an adjustment under the Indenture to the “Conversion Rate” or   the composition of a “unit of Reference Property” or to any “Last Reported   Sale Price,”  “Daily VWAP,” “Daily Conversion Value” or “Daily   Settlement Amount” (each as defined in the Indenture). For the avoidance of   doubt, Dealer shall not have any delivery or payment obligation hereunder,   and no adjustment shall be made to the terms of the Transaction, on account   of (x) any distribution of cash, property or securities by Counterparty   to holders of the Convertible Notes (upon conversion or otherwise) or   (y) any other transaction in which holders of the Convertible Notes are   entitled to participate, in each case, in lieu of an adjustment under the   Indenture of the type referred to in the immediately preceding sentence   (including, without limitation, pursuant to the fourth sentence of Section 14.04(c) of   the Indenture or the fourth sentence of Section 14.04(d) of the   Indenture).
    
	
 
    	
 
    	
 
    
	
Method of Adjustment:
    	
 
    	
Calculation Agent Adjustment, which means that,   notwithstanding Section 11.2(c) of the Equity Definitions, upon any   Potential Adjustment Event, the Calculation Agent shall make a corresponding   adjustment to any one or more of the Strike Price, Number of Options, Option   Entitlement and any other variable relevant to the exercise, settlement or   payment for the Transaction; provided   that, notwithstanding the foregoing, if the Calculation Agent acting in good   faith and in a commercially reasonable manner disagrees with any adjustment   pursuant to the terms and provisions of the Indenture that is the basis of   any calculation hereunder and that involves an exercise of discretion by   Counterparty or its board of directors (including, without limitation,   pursuant to Section 14.05 of the Indenture, Section 14.07 of the   Indenture or any supplemental indenture entered into thereunder or in connection   with any proportional adjustment or the determination of the fair value of   any securities, property, rights or other assets), then in each such case,   the Calculation Agent will determine the adjustment to be made to any one or   more of the Strike Price, Number of Options, Option Entitlement and any other   variable relevant to the exercise, settlement or payment for the Transaction   in a commercially reasonable manner.
    
	
 
    	
 
    	
 
    
	
Dilution Adjustment   Provisions:
    	
 
    	
Sections 14.04(a), (b), (b), (b) and   (e) and Section 14.05 of the Indenture.
    
	
 
    	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    
	
 
    	
 
    	
 
    
	
Merger Events:
    	
 
    	
Applicable; provided that   notwithstanding Section 12.1(b) of the Equity Definitions, a   “Merger Event” means the occurrence of any event or condition set forth in   the
    

 

11

 

	
 
    	
 
    	
definition of “Merger Event” in Section 14.07(a) of   the Indenture.
    
	
 
    	
 
    	
 
    
	
Tender Offers:
    	
 
    	
Applicable; provided that   notwithstanding Section 12.1(d) of the Equity Definitions, a   “Tender Offer” means the occurrence of any event or condition set forth in   Section 14.04(e) of the Indenture.
    
	
 
    	
 
    	
 
    
	
Consequences of Merger   Events / Tender Offers:
    	
 
    	
Notwithstanding Section 12.2 and   Section 12.3 of the Equity Definitions, upon the occurrence of a Merger   Event or a Tender Offer, the Calculation Agent shall make a corresponding   adjustment in respect of any adjustment under the Indenture to any one or more   of the nature of the Shares (in the case of a Merger Event), Strike Price,   Number of Options, Option Entitlement and any other variable relevant to the   exercise, settlement or payment for the Transaction; provided, however, that such adjustment shall be made without   regard to any adjustment to the Conversion Rate determined pursuant to any   Excluded Provision; provided further   that if, with respect to a Merger Event or a Tender Offer, (i) the   consideration for the Shares includes (or, at the option of a holder of   Shares, may include) shares of an entity or person that is not a corporation   or is not organized under the laws of the United States, any State thereof or   the District of Columbia or (ii) the Counterparty to the Transaction   following such Merger Event or Tender Offer, will not be a corporation or   will not be the Issuer following such Merger Event or Tender Offer, then   Cancellation and Payment (Calculation Agent Determination) may apply at   Dealer’s sole election.
    
	
 
    	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 
    	
Cancellation and Payment (Calculation Agent   Determination); provided that, in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions,   it will also constitute a Delisting if the Exchange is located in the United   States and the Shares are not immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors); if the Shares are   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
 
    	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Change in Law:
    	
 
    	
Applicable; provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the word “Shares” with the phrase “Hedge Positions” in   clause (X) thereof, (ii) inserting the parenthetical “(including,   for the avoidance of doubt and without limitation, adoption or promulgation   of new regulations authorized or mandated by existing statute)” at the end of   clause (A) thereof and
    

 

12

 

	
 
    	
 
    	
(iii) immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”.
    
	
 
    	
 
    	
 
    
	
Failure to Deliver:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Disruption:
    	
 
    	
Applicable; provided   that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)             Section 12.9(a)(v) of   the Equity Definitions is hereby amended by (a) inserting the following   words at the end of clause (A) thereof: “in the manner contemplated by   the Hedging Party on the Trade Date” and (b) inserting the following two   phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be limited to, stock price and volatility risk. And, for the further   avoidance of doubt, any such transactions or assets referred to in phrases   (A) or (B) above must be available on commercially reasonable   pricing terms; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)          Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof, after the words “to terminate the Transaction”, the words “or a   portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
Increased Cost of   Hedging:
    	
 
    	
Not Applicable
    
	
 
    	
 
    	
 
    
	
Hedging Party:
    	
 
    	
For all applicable Additional Disruption Events,   Dealer.
    
	
 
    	
 
    	
 
    
	
Determining Party:
    	
 
    	
For all applicable Extraordinary Events, Dealer. All   calculations and determinations by the Determining Party shall be made in   good faith and in a commercially reasonable manner. Following any calculation   by the Determining Party hereunder, upon written request by Counterparty, the   Determining Party will provide to Counterparty by email to the email address   provided to Counterparty in such written request a report (in a commonly used   file format for the storage and manipulation of financial data) displaying in   reasonable detail the basis for such calculation; provided,   however, that in no event will the Determining Party be obligated   to share with Counterparty any proprietary or confidential data or   information or information or any proprietary or confidential models used by   it.
    
	
 
    	
 
    	
 
    
	
Non-Reliance:
    	
 
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
Agreements and Acknowledgments Regarding Hedging   Activities:
    	
 
    	
Applicable
    
	
 
    	
 
    	
 
    
	
Additional Acknowledgments:
    	
 
    	
Applicable
    

 

13

 

	
4.              Calculation Agent.
    	
 
    	
Dealer; provided that   following the occurrence and during the continuance of 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, if the Calculation Agent   fails to timely make any calculation, adjustment or determination required to   be made by the Calculation Agent hereunder or to perform any obligation of   the Calculation Agent hereunder and such failure continues for five Exchange   Business Days following notice to the Calculation Agent by Counterparty of   such failure, Counterparty shall have the right to designate a nationally   recognized third-party dealer in over-the-counter corporate equity   derivatives to act, during the period commencing on the first date the   Calculation Agent fails to timely make such calculation, adjustment or   determination or to perform such obligation, as the case may be, and ending   on the earlier of the Early Termination Date with respect to such Event of   Default and the date on which such Event of Default is no longer continuing,   as the Calculation Agent.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
All calculations and determinations by the   Calculation Agent shall be made in good faith and in a commercially   reasonable manner. Following any calculation by the Calculation Agent   hereunder, upon written request by Counterparty, the Calculation Agent will   provide to Counterparty by email to the email address provided by   Counterparty in such written request a report (in a commonly used file format   for the storage and manipulation of financial data) displaying in reasonable   detail the basis for such calculation; provided, however, that in no event will Dealer be obligated to   share with Counterparty any proprietary or confidential data or information   or any proprietary or confidential models used by it.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Counterparty:

 

[            ]

[            ]

[            ]

[            ]

[            ]

 

Account for delivery of Shares to Counterparty:

 

To be provided upon request.

 

(b)                                 Account for payments to Dealer:

 

[            ]

[            ]

[            ]

[            ]

[            ]

 

14

 

[            ]

 

[            ]

[            ]

[            ]

[            ]

[            ]

 

Account for delivery of Shares from Dealer:

 

To be provided by Dealer.

 

6.                                      Offices.

 

(a)                                 The Office of Counterparty for the Transaction is:  Inapplicable, Counterparty is not a Multibranch Party.

 

(b)                                 The Office of Dealer for the Transaction is:       [New York] [Inapplicable, Dealer is not a Multibranch Party]

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Counterparty:

 

[                   ]
 Attention:                                         [Title of contact] 
 Telephone No.:             [            ]
 Facsimile No.:                   [            ]

 

(b)                                 Address for notices or communications to Dealer:

 

[Any and all notices, demands, or communications of any kind relating to this Transaction between Dealer and Counterparty shall be transmitted exclusively through Agent at the following address:

 

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

Attention:                                         [            ]

Telephone:                                   [            ]

Facsimile:                                         [            ]

Email:                                                            [            ]

 

With a copy to:

 

Credit Suisse Securities (USA) LLC

11 Madison Avenue, 9th Floor

New York, New York 10010

Attn: [            ]

Telephone: [            ]

Facsimile: [            ]

Email: [            ]

 

For payments and deliveries:

 

Facsimile No.: [            ]

 

15

 

Telephone No.: [            ]

 

For all other communications:

 

Telephone: [            ]

Facsimile: [            ]

 

[Barclays Bank PLC

c/o Barclays Capital Inc.

745 Seventh Avenue

New York, NY 10019

Attn:                                                                    [            ]

Telephone:                                   [            ]

Facsimile:                                         [            ]

Email:            [            ]

 

8.                                      Representations and Warranties of Counterparty.

 

(a)                                 Representations and Warranties of Counterparty.  Each of the representations and warranties of Counterparty set forth in Section 2 of the Purchase Agreement (the “Purchase Agreement”), dated as of May 30, 2019, among Counterparty and Credit Suisse Securities (USA) LLC and Barclays Capital Inc., as representatives of the initial purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:

 

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

 

(ii)                                  Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of (A) the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or (B) any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or (C) any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument, except for any such conflicts, breaches, defaults or lien creations in the cases of clause (C) above that would not adversely affect the ability of Counterparty to fulfill its obligations under this Transaction.

 

(iii)                               No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities laws.

 

16

 

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

 

(v)                                Counterparty is in compliance, in all material respects, with its periodic reporting obligations under the Exchange Act.

 

(vi)                             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 $50 million.

 

(b)                                 Each of Dealer and Counterparty agrees and represents that it is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended (the “CEA”), other than a person that is an eligible contract participant under Section 1a(18)(C) of the CEA).

 

9.                                      Other Provisions.

 

(a)                                 Opinions. Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to (i) the matters set forth in Section 8(a)(ii)(B) and Section 8(a)(iii) of this Confirmation to the knowledge of counsel, (ii) due incorporation, existence and good standing of Counterparty in Delaware, (iii) the due authorization, execution and delivery of this Confirmation, and, (iv) in respect of the execution, delivery and performance of this Confirmation, the absence of any conflict with or breach of any material agreement required to be filed as an exhibit to Counterparty’s Annual Report on Form 10-K, Counterparty’s certificate of incorporation or Counterparty’s by-laws.  Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(b)                                 Repurchase Notices.  Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than [  ]14 million (in the case of the first such notice) or (ii) thereafter more than [  ]15 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or

 

14  Insert the number of Shares outstanding that would cause Dealer’s current position in the Shares underlying the Transaction (including the number of Shares underlying any additional transaction if the greenshoe is exercised in full, and any Shares under pre-existing call option transactions with Counterparty) to increase by 0.5%, based on dealer with highest Applicable Percentage.

15  Insert the number of Shares that, if repurchased, would cause Dealer’s current position in the Shares underlying the Transaction (including the number of Shares underlying any additional transaction if the greenshoe is exercised in full, and any Shares under pre-existing call option transactions with Counterparty) to increase by a further 0.5% from the threshold for the first Repurchase Notice, based on dealer with highest Applicable Percentage.

 

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asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

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

 

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

 

(e)                                  Transfer or Assignment.

 

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

 

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

 

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

 

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

 

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legal opinions with respect to securities laws and other matters by such third party and Counterparty, as are requested and reasonably satisfactory to Dealer;

 

(D)                              Dealer will not, as a result of such transfer and assignment, 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 will not occur as a result of such transfer and assignment;

 

(F)                                Without limiting the generality of clause (B), Counterparty shall cause 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 commercially reasonable costs and expenses, including commercially reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment.

 

(ii)                                  Dealer may, without Counterparty’s consent, transfer or assign (such transfer or assignment, a “Transfer”) all or any part of its rights or obligations under the Transaction (A) to any affiliate of Dealer (1) that has a long-term issuer rating that is equal to or better than Dealer’s credit rating at the time of such Transfer, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer or Dealer’s ultimate parent, or (B) to any other third party with a long-term issuer rating equal to or better than the lesser of (1) the credit rating of Dealer at the time of the Transfer and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such third party, at least an equivalent rating or better by a substitute rating agency mutually agreed by Counterparty and Dealer; provided that either (x) the transferee in any such Transfer shall be a “dealer in securities” within the meaning of Section 475(c)(1) of the Code or (y) the Transfer will not result in a deemed exchange by Counterparty within the meaning of Section 1001 of the Code; and provided further that Dealer shall provide notice to Counterparty following any such Transfer.  If at any time at which (A) the Section 16 Percentage exceeds 8.0%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party).   The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer

 

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for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

 

(iii)                              Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates (each, a “Dealer Designated Affiliate”) to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Counterparty under this Confirmation to the extent such Dealer Designated Affiliate fully performs the obligations designated by Dealer to such Dealer Designated Affiliate under this Section 9(e)(iii).

 

(f)                                   Staggered Settlement.  If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s commercially reasonable hedging activities hereunder that would be customarily applicable to transactions of this type by the dealers in this market as determined by the Calculation Agent, 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

 

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

 

(g)                                  Role of Agent.  [As a broker-dealer registered with the U.S. Securities and Exchange Commission (“SEC”), Credit Suisse Securities (USA) LLC in its capacity as Agent will be responsible for (i) effecting the Transactions, (ii) issuing all required confirmations and statements to Dealer and Counterparty, (iii) maintaining books and records relating to the Transactions as required by Rules 17a-3 and 17a-4 under the Exchange Act and (iv) unless otherwise requested by Counterparty, receiving, delivering, and safeguarding Counterparty’s funds and any securities in connection with each Transaction, in compliance with Rule 15c3-3 under the Exchange Act.

 

Credit Suisse Securities (USA) LLC is acting in connection with the Transaction solely in its capacity as Agent for Dealer and Counterparty pursuant to instructions from Dealer and Counterparty. Credit Suisse Securities (USA) LLC shall have no responsibility or personal liability to Dealer or Counterparty arising from any failure by Dealer or Counterparty to pay or perform any obligations hereunder, or to monitor or enforce compliance by Dealer or Counterparty with any obligation hereunder, including without limitation, any obligations to maintain collateral. Each of Dealer and Counterparty agrees to proceed solely against the other to collect or recover any securities or monies owing to it in connection with or as a result of the Transaction. Credit Suisse Securities (USA) LLC shall otherwise have no liability in respect of the Transaction, except for its gross negligence or willful misconduct in performing its duties as Agent.

 

Dealer is not a member of the SIPC (Securities Investor Protection Corporation).

 

Dealer represents that it is an “OTC derivatives dealer” as such term is defined in the Exchange Act and is an affiliate of a broker-dealer that is registered with and fully-regulated by the SEC, Credit Suisse Securities (USA) LLC.

 

The date and time of the Transaction evidenced hereby will be furnished by the Agent to Dealer and Counterparty upon written request.

 

The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with the Transaction evidenced hereby.]

 

[Each of Dealer and Counterparty acknowledges to and agrees with the other party hereto and to and with the Agent that (i) the Agent is acting as agent for Dealer under the Transaction pursuant to instructions from such party, (ii) the Agent is not a principal or party to the Transaction, and may transfer its rights and obligations with respect to the Transaction, (iii) the Agent shall have no responsibility, obligation or liability, by way of issuance, guaranty, endorsement or otherwise in any manner with respect to the performance of either party under the Transaction, (iv) Dealer and the Agent have not given, and Counterparty is not relying (for purposes of making any investment decision or otherwise) upon, any statements, opinions or representations (whether written or oral) of Dealer or the Agent, other than the representations expressly set forth in this Confirmation or the Agreement, and (v) each party agrees to proceed solely against the other party, and not the Agent, to collect or recover any money or securities owed to it in connection with the Transaction.  Each party hereto acknowledges and agrees that the Agent is an intended third party beneficiary hereunder.  Counterparty acknowledges that the Agent is an affiliate of Dealer. Dealer will be acting for its own account in respect of this Confirmation and the Transaction contemplated hereunder.]

 

(h)                                 Submission to Jurisdiction.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN

 

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CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

 

(i)                                     Additional Termination Events.

 

(i)                                     Notwithstanding anything to the contrary in this Confirmation if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

 

(ii)                                  Promptly (and in any event within five Scheduled Trading Days) following any repurchase (which, for the avoidance of doubt, includes any exchange transaction) and cancellation of Convertible Notes, including without limitation pursuant to Article 15 of the Indenture in connection with a “Fundamental Change” (as defined in the Indenture) (such event, a “Repurchase Event”), Counterparty may notify Dealer in writing of such Repurchase Event and the number of Convertible Notes subject to such Repurchase Event (any such notice, a “Repurchase Notice”). Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty of (x) any Repurchase Notice, within the applicable time period set forth in the preceding sentence, and (y) a written representation and warranty by Counterparty that, as of the date of such Repurchase Notice, Counterparty is not in possession of any material non-public information regarding Counterparty or the Shares, shall constitute an Additional Termination Event as provided in this paragraph. Upon receipt of any such Repurchase Notice and the related written representation and warranty, Dealer shall promptly designate an Exchange Business Day following receipt of such Repurchase Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related repurchase settlement date for the relevant Repurchase Event) 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 Notes specified in such Repurchase Notice [minus the number of “Repurchase Options” (as defined in the Base Call Option Confirmation), if any, that relate to such Convertible Notes]16 divided by the Applicable Percentage 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, (3) no adjustment to the “Conversion Rate” (as defined in the Indenture) for the Convertible Notes has occurred pursuant to any Excluded Provision, (4) the corresponding Convertible Notes remaining outstanding as if the circumstances related to the Repurchase Event had not occurred, (5) the relevant Repurchase Event and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred, and (6) the terminated portion of the Transaction were the sole Affected Transaction.

 

(j)                                    Amendments to Equity Definitions.

 

(i)                                     Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor,

 

16  Include for Additional Call Option Confirmation only.

 

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and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii)(1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

 

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

 

(k)                                 Setoff.  In addition to and without limiting any rights of set-off that a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early Termination Date, Dealer (and only Dealer) shall have the right to set off any obligation that it may have to Counterparty under this Confirmation, including without limitation any obligation to make any payment of cash or delivery of Shares to Counterparty, against any obligation Counterparty may have to Dealer under any other agreement between Dealer and Counterparty relating to Shares (each such contract or agreement, a “Separate Agreement”), including without limitation any obligation to make a payment of cash or a delivery of Shares or any other property or securities. For this purpose, Dealer shall be entitled to convert any obligation (or the relevant portion of such obligation) denominated in one currency into another currency at the rate of exchange at which it would be able to purchase the relevant amount of such currency, and to convert any obligation to deliver any non-cash property into an obligation to deliver cash in an amount calculated by reference to the market value of such property as of the Early Termination Date, as determined by the Calculation Agent in its sole discretion; provided that in the case of a set-off of any obligation to release or deliver assets against any right to receive fungible assets, such obligation and right shall be set off in kind and; provided further that in determining the value of any obligation to deliver Shares, the value at any time of such obligation shall be determined by reference to the market value of the Shares at such time, as determined in good faith by the Calculation Agent.  If an obligation is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained. For the avoidance of doubt and notwithstanding anything to the contrary provided in this Section 9(k), in the event of bankruptcy or liquidation of either Counterparty or Dealer neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(l)                                     Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.  If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to 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) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Counterparty remakes the representation set forth in Section 8(a)(v) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the

 

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provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

Share Termination Alternative:                                                                        If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment.

 

Share Termination Delivery Property:                                      A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price.  The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price.

 

Share Termination Unit Price:                                                                                The value to Dealer of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in good faith and in a commercially reasonable manner and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation. For the avoidance of doubt, the parties agree that in determining the Share Termination Delivery Unit Price the Calculation Agent may consider the purchase price paid in connection with the purchase of Share Termination Delivery Property.

 

Share Termination Delivery Unit:                                                             One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.

 

Failure to Deliver:                                                                                                                                                Applicable

 

Other applicable provisions:                                                                                         If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-

 

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settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”.  “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.

 

(m)                             Waiver of Jury Trial.  Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction.  Each party (i) certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

 

(n)                                 Registration.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on the advice of counsel, the Shares (“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election, either (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act and enter into an agreement, in customary form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary offering of equity securities of comparable size of companies of comparable size, maturity and line of business; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of comparable size of companies of comparable size, maturity and line of business, in customary form and substance that is commercially reasonable and reasonably satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its commercially reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer.

 

(o)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

 

(p)                                 Right to Extend.  Dealer may postpone or add, in a commercially reasonable manner, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably determines, in its reasonable discretion, that such action is reasonably necessary or appropriate to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions or to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer; provided that in no event shall Dealer have the right to so postpone or add any Valid Day(s) or any such other date beyond the 30th Valid

 

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Day immediately following the last Valid Day of the relevant Settlement Averaging Period (determined without regard to this Section 9(p)).

 

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

 

(r)                                    Securities Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

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

 

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

 

(ii)                                 promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment.

 

(t)                                    Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(u)                                 Agreements and 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 Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.

 

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(v)                                 Early Unwind. In the event the sale of the [“Underwritten Securities”]17[“Option Securities”]18 (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers for any reason, or Counterparty fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date, the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date; Each of Dealer and Counterparty represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

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

 

(x)                                 Determinations; Adjustments. All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Agent, as Determining Party or following the occurrence of an Early Termination Date, shall be made in good faith and in a commercially reasonable manner. Following any determination, adjustment or calculation by Dealer hereunder (including, without limitation, in its capacity as Calculation Agent), Dealer will provide to Counterparty by email to the email address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such calculation; provided, however, that in no event will Dealer be obligated to share with Counterparty any proprietary or confidential data or information or any proprietary or confidential models used by it. For the avoidance of doubt, whenever the Calculation Agent or Determining Party (as the case may be) is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions (other than any adjustment required to be made by reference to the terms of the Convertible Notes or the Indenture) to take into account the effect of an event, the Calculation Agent or Determining Party (as the case may be) shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

 

(y)                                 Tax Matters.

 

(i)                                     Payee Representations:

 

For the purpose of Section 3(f) of the Agreement, Counterparty makes the following representation to Dealer:

 

Counterparty is a corporation and a U.S. person (as that term is defined in Section 7701(a)(30) of the Code and used in Section 1.1441-4(a)(3)(ii) of the United States Treasury Regulations) for U.S. federal income tax purposes.

 

For the purpose of Section 3(f) of the Agreement, Dealer makes the following representation to Counterparty:

 

17  Insert for Base Call Option Confirmation.

18  Insert for Additional Call Option Confirmation.

 

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[(A) It is a “foreign person” (as that term is used in Section 1.6041-4(a)(4) of the United States Treasury Regulations) for U.S. federal income tax purposes; and

 

(B) Each payment received or to be received by it in connection with this Agreement will be effectively connected with its conduct of a trade or business in the United States.]

 

[(A) Dealer is entering into the Transaction in the ordinary course of its trade or business as, and is, a “dealer in securities” (as defined in Section 475(c )(1) (or any applicable successor provision) of the Code) within the meaning of Section 1.1001-4(b)(1) of the United States Treasury Regulations;

 

(B) Dealer is a limited liability company created or organized in the United States;

 

(C) Dealer is taxable as a corporation for U.S. federal income tax purposes and is therefore a “United States person” for U.S. federal income tax purposes as that term is defined in Section 7701(a)(30) (or any applicable successor provision) of the Code; and

 

(D) Dealer’s United States taxpayer identification number is 13-4097003.]

 

(ii)                                 Tax Documentation. For the purposes of Section 4(a)(i) of the Agreement, (1) Counterparty shall provide to Dealer a valid United States Internal Revenue Service Form W-9 (or successor thereto), and (2) Dealer shall provide to Counterparty a valid United States Internal Revenue Service Form [W-8ECI] (or successor thereto), in each case,  (A) on or before the date of execution of this Confirmation and (B) promptly upon learning that any such tax form previously provided by it has become obsolete or incorrect.

 

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

 

(iv)                             HIRE Act. “Indemnifiable Tax”, as defined in Section 14 of the Agreement, shall not include any tax imposed on payments treated as dividends from sources within the United States under Section 871(m) of the Code or any regulations issued thereunder.]

 

(z)                                  [Incorporation of ISDA 2015 Section 871(m) Protocol. The parties to this Confirmation agree that the amendments set out in the Attachment to the ISDA 2015 Section 871(m) Protocol published by ISDA on November 2, 2015 and available on the ISDA website (www.isda.org) shall apply to this Confirmation.  The parties further agree that this Confirmation will be deemed to be a Covered Master Agreement and that the Implementation Date shall be the effective date of this Confirmation as amended by the parties for the purposes of such Protocol amendments regardless of the definitions of such terms in the Protocol.

 

(aa)                          Incorporation of ISDA 2012 FATCA Protocol.  The parties to this Confirmation agree that the amendments set out in the Attachment to the ISDA 2012 FATCA Protocol published by ISDA on August 15, 2012 and available on the ISDA website (www.isda.org) shall apply to this Confirmation.  The parties further agree that this Confirmation will be deemed to be a Covered Master Agreement and that the Implementation Date shall be the effective date of this Confirmation as amended by the parties for the purposes of such Protocol amendments regardless of the definitions of such terms in the Protocol.

 

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(bb)                          U.S. Resolution Stay Protocol.  To the extent that the QFC Stay Rules are applicable hereto, then the parties agree that (i) to the extent that prior to the date hereof both parties have adhered to the 2018 ISDA U.S. Resolution Stay Protocol (the “Protocol”), the terms of the Protocol are incorporated into and form a part of this Confirmation, and for such purposes this Confirmation shall be deemed a Protocol Covered Agreement and each party shall be deemed to have the same status as “Regulated Entity” and/or “Adhering Party” as applicable to it under the Protocol; (ii) to the extent that prior to the date hereof the parties have executed a separate agreement the effect of which is to amend the qualified financial contracts between them to conform with the requirements of the QFC Stay Rules (the “Bilateral Agreement”), the terms of the Bilateral Agreement are incorporated into and form a part of this Confirmation and each party shall be deemed to have the status of “Covered Entity” or “Counterparty Entity” (or other similar term) as applicable to it under the Bilateral Agreement; or (iii) if clause (i) and clause (ii) do not apply, the terms of Section 1 and Section 2 and the related defined terms (together, the “Bilateral Terms”) of the form of bilateral template entitled “Full-Length Omnibus (for use between U.S. G-SIBs and Corporate Groups)” published by ISDA on November 2, 2018 (currently available on the 2018 ISDA U.S. Resolution Stay Protocol page at www.isda.org and, a copy of which is available upon request), the effect of which is to amend the qualified financial contracts between the parties thereto to conform with the requirements of the QFC Stay Rules, are hereby incorporated into and form a part of this Confirmation, and for such purposes this Confirmation shall be deemed a “Covered Agreement,” Dealer shall be deemed a “Covered Entity” and Counterparty shall be deemed a “Counterparty Entity.” In the event that, after the date of this Confirmation, both parties hereto become adhering parties to the Protocol, the terms of the Protocol will replace the terms of this paragraph. In the event of any inconsistencies between this Confirmation and the terms of the Protocol, the Bilateral Agreement or the Bilateral Terms (each, the “QFC Stay Terms”), as applicable, the QFC Stay Terms will govern. Terms used in this paragraph without definition shall have the meanings assigned to them under the QFC Stay Rules. For purposes of this paragraph, references to “this Confirmation” include any related credit enhancements entered into between the parties or provided by one to the other. In addition, the parties agree that the terms of this paragraph shall be incorporated into any related covered affiliate credit enhancements, with all references to Dealer replaced by references to the covered affiliate support provider.

 

(cc)                            “QFC Stay Rules” means the regulations codified at 12 C.F.R. 252.2, 252.81—8, 12 C.F.R. 382.1-7 and 12 C.F.R. 47.1-8, which, subject to limited exceptions, require an express recognition of the stay-and-transfer powers of the FDIC under the Federal Deposit Insurance Act and the Orderly Liquidation Authority under Title II of the Dodd Frank Wall Street Reform and Consumer Protection Act and the override of default rights related directly or indirectly to the entry of an affiliate into certain insolvency proceedings and any restrictions on the transfer of any covered affiliate credit enhancements.]

 

(dd)                          [Regulatory Provisions. The time of dealing for the Transaction will be confirmed by Dealer upon written request by Counterparty. The Agent will furnish to Counterparty upon written request a statement as to the source and amount of any remuneration received or to be received by the Agent in connection with a Transaction.

 

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

 

(ff)                              [2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol. The parties agree that the terms of the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by ISDA on July 19, 2013 (“Protocol”) apply to the Agreement as if the parties had adhered to the Protocol without amendment.  In respect of the Attachment to the Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “such party’s Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall

 

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be deemed to be “enters into the Agreement”, (iii) references to “Protocol Covered Agreement” shall be deemed to be references to the Agreement (and each “Protocol Covered Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Confirmation.  For the purposes of this section:

 

1.                                      Dealer is a Portfolio Data Sending Entity and Counterparty is a Portfolio Data Receiving Entity;

 

2.                                      Dealer and Counterparty may use a Third Party Service Provider, and each of Dealer and Counterparty consents to such use including the communication of the relevant data in relation to Dealer and Counterparty to such Third Party Service Provider for the purposes of the reconciliation services provided by such entity.

 

3.                                      The Local Business Days for such purposes in relation to Dealer and Counterparty is New York, New York, USA.

 

4.                                      The following are the applicable email addresses.

 

Portfolio Data:                                                                                                                                                               [         ]

 

Counterparty: [e-mail address]

 

Notice of discrepancy:                                                                                                                      [         ]

 

Counterparty: [e-mail address]

 

Dispute Notice:                                                                                                                                                             [         ]

 

Counterparty: [e-mail address]]

 

(gg)                            NFC Representation Protocol.    The parties agree that the provisions set out in the Attachment to the ISDA 2013 EMIR NFC Representation Protocol published by ISDA on March 8, 2013 (the “NFC Representation Protocol”) shall apply to the Agreement as if each party were an Adhering Party under the terms of the NFC Representation Protocol.  In respect of the Attachment to the NFC Representation Protocol, (i) the definition of “Adherence Letter” shall be deemed to be deleted and references to “Adherence Letter” shall be deemed to be to this section (and references to “the relevant Adherence Letter” and “its Adherence Letter” shall be read accordingly), (ii) references to “adheres to the Protocol” shall be deemed to be “enters into the Agreement”, (iii) references to “Covered Master Agreement” shall be deemed to be references to the Agreement (and each “Covered Master Agreement” shall be read accordingly), and (iv) references to “Implementation Date” shall be deemed to be references to the date of this Confirmation.  Counterparty confirms that it enters into this Confirmation as a party making the NFC Representation (as such term is defined in the NFC Representation Protocol).  Counterparty shall promptly notify Dealer of any change to its status as a party making the NFC Representation.

 

(hh)                          Acknowledgment regarding certain UK Resolution Authority Powers.

 

(i)                                     Dealer is authorized by the Prudential Regulation Authority (“PRA”) and regulated by the Financial Conduct Authority and the PRA, and is subject to the Bank of England’s resolution authority powers, as contained in the EU Bank Recovery and Resolution Directive, and transposed in the UK by the Banking Act 2009. The powers include the ability to (a) suspend temporarily the termination and security enforcement rights of parties to a qualifying contract, and/or (b) bail-in certain liabilities owed by Dealer including the writing-down of the value of certain liabilities and/or the conversion of such liabilities into equity holdings (as described in further detail below). Pursuant to PRA requirements, Dealer is required to ensure that counterparties to certain agreements it enters into which are governed by non-EEA law contractually recognize the validity and applicability of the

 

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above-mentioned resolution powers, in order to ensure their effectiveness in cross border scenarios.

 

(ii)                                 The terms of this section apply only to the Transaction and constitute our entire agreement in relation to the matters contained in this section, and do not extend or amend the resolution authority powers of the Bank of England or any replacement authority. The terms of this section may not be amended by any other agreements, arrangements or understandings between Dealer and Counterparty. By signing the Transaction, Counterparty acknowledges and agrees that, notwithstanding the governing law of the Transaction, the Transaction is subject to, and Counterparty will be bound by the effect of an application of, the Bank of England’s (or replacement resolution authority’s) powers to (a) stay termination and/or security enforcement rights, and (b) bail-in liabilities.]

 

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

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    	
[CREDIT   SUISSE CAPITAL LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CREDIT   SUISSE SECURITIES (USA) LLC, AS AGENT FOR CREDIT SUISSE CAPITAL LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[BARCLAYS   BANK PLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title: Authorised Signatory]
    

 

Accepted and confirmed
 as of the Trade Date:

 

	
Enphase   Energy, Inc.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    	
 
    	
 
    
	
Name:

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