Document:

Exhibit 10.5

 

GOLDMAN, SACHS & CO. | 200 WEST STREET | NEW YORK, NEW YORK 10282-2198

|TEL: (212) 902-1000

 

January 24, 2013

 

To:                             Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                         Jim Fickenscher, Chief Financial Officer
 Telephone No.:             (484) 321 – 5902
 Facsimile No.:                   (484) 321 – 5996 
 Email: jfickenscher@auxilium.com

 

Re:                             Base Warrants

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by Auxilium Pharmaceuticals, Inc.  (“Company”) to Goldman, Sachs & Co. (“Dealer”) 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.

 

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.

 

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 Company as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) as if Dealer and Company had executed an agreement in such form on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method and US Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word “third” in the last line of Section 5(a)(i) of the Agreement with the word “first” and (iii) the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Company with a “Threshold Amount” of USD20 million (provided that Section 5(a)(vi) of the Agreement shall be amended and restated in its entirety to read: “If ‘Cross-Default’ is specified in the Schedule as applying to the party, default by such party or any of such party’s subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of USD 20 million (or its foreign currency equivalent) in the aggregate of such party and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal of any such debt when due and payable at its stated maturity, upon required purchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure to pay shall not have been cured, as the case may be, within 5 days after written notice of such acceleration or such failure to pay, as the case may be, has been received by such party or such subsidiary.”)). In the event of any inconsistency between provisions of that 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 Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions.  The terms of the particular Transaction to which this Confirmation relates are as follows:

 

 

General Terms.

 

	
Trade   Date:
    	
January 24,   2013
    
	
 
    	
 
    
	
Effective   Date:
    	
The   third Exchange Business Day immediately prior to the Premium Payment Date
    
	
 
    	
 
    
	
Warrants:
    	
Equity   call warrants, each giving the holder the right to purchase a number of   Shares equal to the Warrant Entitlement at a price per Share equal to the   Strike Price, subject to the terms set forth under the caption “Settlement   Terms” below. For the purposes of the Equity Definitions, each reference to a   Warrant herein shall be deemed to be a reference to a Call Option.
    
	
 
    	
 
    
	
Warrant   Style:
    	
European
    
	
 
    	
 
    
	
Seller:
    	
Company
    
	
 
    	
 
    
	
Buyer:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The   common stock of Company, par value USD 0.01 per Share (Exchange symbol   “AUXL”)
    
	
 
    	
 
    
	
Number   of Warrants:
    	
5,379,010.   For the avoidance of doubt, the Number of Warrants shall be reduced by any   Warrants exercised or deemed exercised hereunder. In no event will the Number   of Warrants be less than zero.
    
	
 
    	
 
    
	
Warrant   Entitlement:
    	
One   Share per Warrant
    
	
 
    	
 
    
	
Strike   Price:
    	
USD 27.36.
    
	
 
    	
 
    
	
 
    	
Notwithstanding   anything to the contrary in the Agreement, this Confirmation or the Equity   Definitions, in no event shall the Strike Price be subject to adjustment to   the extent that, after giving effect to such adjustment, the Strike Price   would be less than USD 18.24, except for any adjustment pursuant to the terms   of this Confirmation and the Equity Definitions in connection with stock   splits or similar changes to Company’s capitalization.
    
	
 
    	
 
    
	
Premium:
    	
USD   15,405,000
    
	
 
    	
 
    
	
Premium   Payment Date:
    	
January 30,   2013
    
	
 
    	
 
    
	
Exchange:
    	
The   NASDAQ Global Select Market
    
	
 
    	
 
    
	
Related   Exchange(s):
    	
All   Exchanges
    

 

Procedures for Exercise.

 

	
Expiration   Time:
    	
The   Valuation Time
    
	
 
    	
 
    
	
Expiration   Dates:
    	
Each   Scheduled Trading Day during the period from, and including, the First   Expiration Date to, but excluding, the 140th Scheduled Trading Day following the First   Expiration Date shall be an “Expiration Date” for a number of Warrants equal   to the Daily Number of Warrants on such date; provided that, notwithstanding
    

 

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anything   to the contrary in the Equity Definitions, if any such date is a Disrupted   Day in whole or in part, the Calculation Agent shall make adjustments, if   applicable, to the Daily Number of Warrants or shall reduce such Daily Number   of Warrants to zero for which such day shall be an Expiration Date and shall   designate a Scheduled Trading Day or a number of Scheduled Trading Days as   the Expiration Date(s) for the remaining Daily Number of Warrants or a   portion thereof for the originally scheduled Expiration Date; and provided  further that   if such Expiration Date has not occurred pursuant to this clause as of the   eighth Scheduled Trading Day following the last scheduled Expiration Date   under the Transaction, the Calculation Agent shall have the right to declare   such Scheduled Trading Day to be the final Expiration Date and the   Calculation Agent shall determine its good faith estimate of the fair market   value for the Shares as of the Valuation Time on that eighth Scheduled   Trading Day or on any subsequent Scheduled Trading Day, as the Calculation   Agent shall determine using commercially reasonable means.
    
	
 
    	
 
    
	
First   Expiration Date:
    	
October 15,   2018 (or if such day is not a Scheduled Trading Day, the next following   Scheduled Trading Day), subject to Market Disruption Event below.
    
	
 
    	
 
    
	
Daily   Number of Warrants:
    	
For   any Expiration Date, the Number of Warrants that have not expired or been   exercised as of such day, divided by   the remaining number of Expiration Dates (including such day), rounded down   to the nearest whole number, subject to adjustment pursuant to the provisos   to “Expiration Dates”.
    
	
 
    	
 
    
	
Automatic   Exercise:
    	
Applicable;   and means that for each Expiration Date, a number of Warrants equal to the   Daily Number of Warrants for such Expiration Date will be deemed to be   automatically exercised at the Expiration Time on such Expiration Date,   unless Buyer notifies Seller (by telephone or in writing) prior to the   Expiration Time on such Expiration Date that it does not wish Automatic   Exercise to occur, in which case Automatic Exercise will not apply to such   Expiration Date.
    
	
 
    	
 
    
	
Market   Disruption Event:
    	
Section 6.3(a) of   the Equity Definitions is hereby amended by (A) deleting the words   “during the one hour period that ends at the relevant Valuation Time, Latest   Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the   case may be,” in clause (ii) thereof and (B) by replacing the words   “or (iii) an Early Closure.” therein with “(iii) an Early Closure,   or (iv) a Regulatory Disruption; in each case, that the Calculation   Agent determines is material.”
    
	
 
    	
 
    
	
 
    	
Section 6.3(d) of   the Equity Definitions is hereby amended by deleting the remainder of the   provision following the words “Scheduled Closing Time” in the fourth line   thereof.
    

 

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Regulatory   Disruption:
    	
Any   event that Dealer, in its reasonable discretion, based upon the advice of   counsel, determines makes it appropriate, with regard to any legal,   regulatory or self-regulatory requirements or related policies and   procedures, for Dealer to refrain from or decrease any market activity in   connection with the Transaction.
    

 

Valuation Terms.

 

	
Valuation   Time:
    	
Scheduled   Closing Time; provided that if the principal   trading session is extended, the Calculation Agent shall determine the   Valuation Time in its reasonable discretion.
    
	
 
    	
 
    
	
Valuation   Date:
    	
Each   Exercise Date.
    

 

Settlement Terms.

 

	
Settlement   Method:
    	
Net   Share Settlement.
    
	
 
    	
 
    
	
Net   Share Settlement:
    	
On   the relevant Settlement Date, Company shall deliver to Dealer a number of   Shares equal to the Share Delivery Quantity for such Settlement Date to the   account specified herein free of payment through the Clearance System, and   Dealer shall be treated as the holder of record of such Shares at the time of   delivery of such Shares or, if earlier, at 5:00 p.m. (New York City   time) on such Settlement Date, and Company shall pay to Dealer cash in lieu   of any fractional Share based on the Settlement Price on the relevant   Valuation Date.
    
	
 
    	
 
    
	
Share   Delivery Quantity:
    	
For   any Settlement Date, a number of Shares, as calculated by the Calculation   Agent, equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the Valuation Date for   such Settlement Date.
    
	
 
    	
 
    
	
 
    	
The   Share Delivery Quantity shall be delivered by Company to Dealer no later than   12:00 noon (local time in New York City) on the relevant Settlement Date.
    
	
 
    	
 
    
	
Net   Share Settlement Amount:
    	
For   any Settlement Date, an amount equal to the product of (i) the number of   Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant   Valuation Date and (iii) the Warrant Entitlement.
    
	
 
    	
 
    
	
Settlement   Price:
    	
For   any Valuation Date, the per Share volume-weighted average price as displayed   under the heading “Bloomberg VWAP” on Bloomberg page AUXL <equity>   AQR (or any successor thereto) in respect of the regular trading session   (including any extensions thereof but without regard to pre-open or after   hours trading outside of such regular trading session) on such Valuation Date   (or if such volume-weighted average price is unavailable or manifestly   incorrect, the market value of one Share on such Valuation Date, as   determined by the Calculation Agent using a volume-weighted methodology). Notwithstanding the   foregoing, if (i) any Expiration Date
    

 

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is a Disrupted Day and (ii) the Calculation Agent determines that   such Expiration Date shall be an Expiration Date for fewer than the Daily   Number of Warrants, as described above, then the Settlement Price for the   relevant Valuation Date shall be the volume-weighted average price per Share   on such Valuation Date on the Exchange, as determined by the Calculation   Agent based on such sources as it deems appropriate using a volume-weighted   methodology, for the portion of such Valuation Date for which the Calculation   Agent determines there is no Market Disruption Event.
    
	
 
    	
 
    
	
Settlement   Dates:
    	
As   determined pursuant to Section 9.4 of the Equity Definitions, subject to   Section 9(k)(i) hereof.
    
	
 
    	
 
    
	
Other   Applicable Provisions:
    	
The   provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity   Definitions will be applicable, except that all references in such provisions   to “Physically-settled” shall be read as references to “Net Share Settled.”   “Net Share Settled” in relation to any Warrant means that Net Share   Settlement is applicable to that Warrant.
    
	
 
    	
 
    
	
Representation   and Agreement:
    	
Notwithstanding   Section 9.11 of the Equity Definitions, the parties acknowledge that any   Shares delivered to Dealer may be, upon delivery, subject to restrictions and   limitations arising from Company’s status as issuer of the Shares under   applicable securities laws.
    

 

3.                                      Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
Method   of Adjustment:
    	
Calculation   Agent Adjustment. For the avoidance of doubt, in making any adjustments under   the Equity Definitions, the Calculation Agent may make adjustments, if any,   to any one or more of the Strike Price, the Number of Warrants, the Daily   Number of Warrants and the Warrant Entitlement. Notwithstanding the   foregoing, any cash dividends or distributions on the Shares, whether or not   extraordinary, shall be governed by Section 9(f) of this   Confirmation in lieu of Article 10 or Section 11.2(c) of the   Equity Definitions. For the avoidance of doubt, Calculation Agent Adjustment   and the provisions is Section 9(f) of this Confirmation shall   continue to apply until the obligations of the parties (including any   obligations of Company pursuant to Section 9(q)(ii) of this   Confirmation) under the Transaction have been satisfied in full.
    

 

Extraordinary Events applicable to the Transaction:

 

	
New   Shares:
    	
Section 12.1(i) of   the Equity Definitions is hereby amended (a) by deleting the text in   clause (i) thereof in its entirety (including the word “and” following   clause (i)) and replacing it with the phrase “publicly quoted, traded or   listed (or whose related depositary receipts are publicly quoted, traded or   listed) on any of the New York Stock Exchange, The NASDAQ Global Select   Market or The
    

 

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NASDAQ   Global Market (or their respective successors)” and (b) by inserting   immediately prior to the period the phrase “and (iii) of an entity or   person that is a corporation organized under the laws of the United States,   any State thereof or the District of Columbia.
    
	
 
    	
 
    
	
Consequence   of Merger Events:
    	
 
    
	
 
    	
 
    
	
Merger   Event:
    	
Applicable; provided that if an event   occurs that constitutes both a Merger Event under   Section 12.1(b) of the Equity Definitions and an Additional   Termination Event under Section 9(h)(ii)(B) of this Confirmation,   the provisions set forth in Section 9(h)(ii)(B) shall apply in lieu   of the provisions of Section 12.2 of the Equity Definitions.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Cancellation   and Payment (Calculation Agent Determination)
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Cancellation   and Payment (Calculation Agent Determination); provided   that Dealer may elect, in its commercially reasonable judgment, Component   Adjustment (Calculation Agent Determination) for all or any portion of the   Transaction.
    

 

Consequence of Tender Offers:

 

	
Tender   Offer:
    	
Applicable;   provided that if an event occurs that   constitutes both a Tender Offer under Section 12.1(d) of the Equity   Definitions and Additional Termination Event under   Section 9(h)(ii)(A) of this Confirmation, the provisions set forth   in Section 9(h)(ii)(A) shall apply in lieu of the provisions of   Section 12.3 of the Equity Definitions.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Modified   Calculation Agent Adjustment
    

 

	
Modified   Calculation
    	
 
    
	
Agent   Adjustment:
    	
If,   in respect of any Merger Event to which Modified Calculation Agent Adjustment   applies, the adjustments to be made in accordance with   Section 12.2(e)(i) of the Equity Definitions would result in   Company being different from the issuer of the Shares, then with respect to   such Merger Event, as a condition precedent to the adjustments contemplated   in Section 12.2(e)(i) of the Equity Definitions, Company and the   issuer of the Shares shall, prior to the Merger Date, have entered into such documentation   containing representations, warranties and agreements relating to securities   law and other issues as requested by Dealer that Dealer has determined, in   its reasonable discretion, to be reasonably necessary or appropriate to allow   Dealer to continue as a party to the Transaction, as adjusted under   Section 12.2(e)(i) of the Equity Definitions, and to preserve its   hedging or hedge unwind
    

 

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activities   in connection with the Transaction in a manner compliant with applicable   legal, regulatory or self-regulatory requirements, or with related policies   and procedures applicable to Dealer, and if such conditions are not met or if   the Calculation Agent determines that no adjustment that it could make under   Section 12.2(e)(i) of the Equity Definitions will produce a   commercially reasonable result, then the consequences set forth in   Section 12.2(e)(ii) of the Equity Definitions shall apply.
    

 

	
Nationalization, Insolvency   or Delisting:
    	
Cancellation   and Payment (Calculation Agent Determination); provided that, in addition to the provisions of   Section 12.6(a)(iii) of the Equity Definitions, it will also   constitute a Delisting if the Exchange is located in the United States and   the Shares are not immediately re-listed, re-traded or re-quoted on any of   the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market (or their respective successors); if the Shares are immediately   re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The   NASDAQ Global Select Market or The NASDAQ Global Market (or their respective   successors), such exchange or quotation system shall thereafter be deemed to   be the Exchange.
    

 

Additional Disruption Events:

 

	
Change   in Law:
    	
Applicable;   provided that Section 12.9(a)(ii) of   the Equity Definitions is hereby amended by (i) replacing the phrase   “the interpretation” in the third line thereof with the phrase “, or public   announcement of, the formal or informal interpretation”, (ii) by adding   the phrase “and/or Hedge Position” after the word “Shares” in clause   (X) thereof and (iii) by immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”; provided,   further that Section 12.9(a)(ii) of the Equity   Definitions is hereby amended by replacing the parenthetical beginning after   the word “regulation” in the second line thereof with the phrase “(including,   for the avoidance of doubt and without limitation, (x) any tax law or   (y) adoption or promulgation of new regulations authorized or mandated   by existing statute)”.
    
	
 
    	
 
    
	
Failure   to Deliver:
    	
Not   Applicable
    
	
 
    	
 
    
	
Insolvency   Filing:
    	
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:
    

 

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“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 terms that do   not result in Dealer incurring a materially increased cost, as determined by   the Calculation Agent.”; 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:
    	
Applicable
    
	
 
    	
 
    
	
Loss   of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Maximum   Stock Loan Rate:
    	
200   basis points
    
	
 
    	
 
    
	
Increased   Cost of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Initial   Stock Loan Rate:
    	
25   basis points
    
	
 
    	
 
    
	
Hedging   Party:
    	
For   all applicable Additional Disruption Events, Dealer.
    

 

	
Determining   Party:
    	
For   all applicable Extraordinary Events, Dealer.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable.
    
	
 
    	
 
    
	
Agreements   and Acknowledgments
    	
 
    
	
Regarding   Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.                                      Calculation   Agent.
    	
Dealer;   provided that (x) Calculation   Agent shall make all calculations, adjustments and determinations required   pursuant to the Transaction in good faith and in a commercially reasonable   manner and (y) if an Event of Default described in   Section 5(a)(vii) of the Agreement has occurred and is continuing   with respect to Dealer, the Calculation Agent shall be a leading recognized   dealer in equity derivatives designated in good faith by Counterparty for so   long as such Event of Default is continuing.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Company:  To be advised.

 

Account for delivery of Shares from Company:  To be advised.

 

(b)                                 Account for payments to Dealer:

 

Chase Manhattan Bank New York

For A/C Goldman, Sachs & Co.

A/C #930-1-011483

 

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ABA:  021000021

 

Account for delivery of Shares from Dealer:

 

To be provided by Dealer

 

6.                                      Offices.

 

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

 

(b)                                 The Office of Dealer for the Transaction is: 200 West Street, New York, NY 10282-2198

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Company:

 

Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                               Jim Fickenscher, Chief Financial Officer
 Telephone No.:                   (484) 321 – 5902
 Facsimile No.:                         (484) 321 – 5996 
 Email: jfickenscher@auxilium.com

 

With a copy to:

 

Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                               Andrew Koven, Chief Administrative Officer and General Counsel
 Telephone No.:                   (484) 321 – 5907
 Facsimile No.:                         (484) 321 – 5996 
 Email: akoven@auxilium.com

 

(b)                                 Address for notices or communications to Dealer:

 

Goldman, Sachs & Co.
 200 West Street
  New York, NY 10282-2198
 Attn:                    Jason Lee

Equity Capital Markets

Telephone:                                   (212) 902-0923

Facsimile:                                         (212) 902-5305

Email:                                                            jason.lee@gs.com

 

With a copy to:

Attention:                                         Michael Voris

Equity Capital Markets

Telephone No:                (212) 902-4895

Facsimile No:                      (212) 291-5027

Email:                                                            Michael.Voris@gs.com

 

And email notification to the following address:

Eq-derivs-notifications@am.ibd.gs.com

 

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8.                                      Representations, Warranties and Covenants of Company.

 

Each of the representations and warranties of Company set forth in Section 1 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of January 24, 2013, among Company, Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as representatives of the underwriters party thereto (the “Underwriters”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Company hereby further represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(d), at all times until termination of the Transaction, that:

 

(a)                                 Company 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 Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.

 

(b)                                 Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company 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.

 

(c)                                  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 Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “Securities Act”) or state securities laws.

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights. Company represents and warrants to Dealer that the Maximum Number of Shares is equal to or less than the number of authorized but unissued Shares of the Company that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) on the date of the determination of the Maximum Number of Shares (such Shares, the “Available Shares”).  Company shall not take any action to decrease the number of Available Shares below the Maximum Number of Shares.

 

(e)                                  Company 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.

 

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

 

(g)                                  Company and each of its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.

 

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

 

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

 

(j)                                    Company (i) is an “institutional account” as defined in FINRA Rule 4512(c); (ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating the recommendations of Dealer or its associated persons; and (iii) will notify Dealer if any of the statements contained in clause (i) or (ii) of this Section 8(j) ceases to be true.

 

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

 

(l)                                     Prior to the Trade Date, Company shall deliver to Dealer a resolution of Company’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

 

(m)                             Company is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(n)                                 On the Trade Date and the Premium Payment Date (i) the assets of Company at their fair valuation exceed the liabilities of Company, including contingent liabilities, (ii) the capital of Company is adequate to conduct the business of Company and (iii) Company has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.

 

(o)                                 (i) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as defined in Regulation M unless Company has provided written notice to Dealer of such “restricted period” no later than the Scheduled Trading Day immediately preceding the first day of such “restricted period.” Company acknowledges that any such notice may give rise to a Regulatory Disruption and/or a right for Dealer, pursuant to Section 9(s), to postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants.

 

(p)                                 During the Settlement Period and on any other Exercise Date, neither Company nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other

 

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derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer; provided that this clause shall not apply to any purchase that does not constitute a “Rule 10b-18 purchase” (as such term is defined in Rule 10b-18(a)(13)).

 

(q)                                 Company agrees that it (A) will not during the Settlement Period make, or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction unless such public announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares; (B) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify Dealer following any such announcement that such announcement has been made; and (C) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Dealer with written notice specifying (i) Company’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date that were not effected through Dealer or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the announcement date.  Such written notice shall be deemed to be a certification by Company to Dealer that such information is true and correct.  In addition, Company shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.  “Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

 

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

 

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

 

9.                                      Other Provisions.

 

(a)                                 Incumbency Certificate and Opinions.  Company shall deliver to Dealer an incumbency certificate, dated as of the Trade Date, of Company in customary form. Company shall also deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (e) of this Confirmation.  Delivery of such incumbency certificate and 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.

 

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(b)                                 Repurchase Notices.  Company shall, on any day on which Company 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 on such day, subject to any adjustments provided herein, is (i) less than 47,795,215 (in the case of the first such notice) or (ii) thereafter more than 1,527,005 less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and reasonable expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually incurs as a result of Company’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 asserted against the Indemnified Person as a result of Company’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Company in writing, and Company, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Company may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Company shall be relieved from liability to the extent that the Indemnified Person fails promptly to notify Company of any action commenced against it in respect of which indemnity may be sought hereunder; provided that failure to notify Company (x) shall not relieve Company from any liability hereunder to the extent it is not materially prejudiced as a result thereof and (y) shall not, in any event, relieve Company from any liability that it may have otherwise than on account of the Transaction.  Company 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, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  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 Company, in lieu of indemnifying such Indemnified Person hereunder, 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 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.  Company is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Exchange Act, of any securities of Company, other than (x) a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M and (y) the distribution of the Company’s 1.50% Convertible Senior Notes due 2018.  Company shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.

 

(d)                                 No Manipulation.  Company 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

 

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raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)                                  Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party.  If at any time at which (A) the Section 16 Percentage exceeds 8.5%, (B) the Warrant 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 Warrants 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 Terminated Portion, 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 Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company 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(j) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company 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 each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding.  The “Warrant 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 Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, 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 Company 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 (other than any Schedule 13D or Schedule 13G filing under the Exchange Act) 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.  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 Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or 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 Company to the extent of any such performance.

 

(f)                                   Dividends.  If at any time during the period from and including the Effective Date, to and including the last Expiration Date (or, if any Deficit Shares are owed pursuant to Section 9(q)(ii) of this Confirmation, such later date on which Company’s obligations under this Transaction have been satisfied in full), an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise,

 

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settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend.

 

(g)                                  [Reserved.]

 

(h)                                 Additional Provisions.

 

(i)                                     Amendments to the Equity Definitions:

 

(A)                               Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “an”; and adding the phrase “or Warrants” at the end of the sentence.

 

(B)                               Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

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

 

(D)                               [Reserved.]

 

(E)                                Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; “Lending Party” means a third party that is not Company or an affiliate of Company that Dealer considers to be an acceptable counterparty (acting in good faith and in a reasonable manner in light of (x) other transactions that Dealer (or its agent or affiliate) may have entered into with such party and (y) any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements or related policies and procedures are imposed by law or have been voluntarily adopted by Dealer) that apply generally to transactions of a nature and kind similar to the transactions contemplated with such party).

 

(F)                                 Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

 

(x)                                 adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(y)                                 (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence.

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early

 

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Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its sole discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:

 

(A)                               A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its wholly owned subsidiaries or its or their employee benefit plans, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the common equity of Company representing more than 50% of the voting power of such common equity.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (A) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock, depositary receipts representing common equity interests or other certificates representing common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights.

 

(B)                               The consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets or (II) any share exchange, consolidation, merger or similar transaction involving Company pursuant to which the Shares will be converted into cash, securities or other property or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s subsidiaries.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock, depositary receipts representing common equity interests or other certificates representing common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights.

 

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(C)                               The stockholders of Company approve any plan or proposal for the liquidation or dissolution of Company; or

 

(D)                               The Shares ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

 

(E)                                Default by Company or any of its subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of USD 25 million (or its foreign currency equivalent) in the aggregate of Company and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal of any such debt when due and payable at its stated maturity, upon required purchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure shall not have been cured, as the case may be, within 30 days after written notice of such acceleration has been received by Company or such subsidiary.

 

(F)                                 A final judgment for the payment of USD 25 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against Company or any of its subsidiaries, which judgment is not discharged or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished.

 

(G)                               Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer), or Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal to hedge its obligations pursuant to this Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(iii)                               Notwithstanding anything to the contrary in the Equity Definitions, if, as a result of an Extraordinary Event, any Transaction would be cancelled or terminated (whether in whole or in part) pursuant to Article 12 of the Equity Definitions, an Additional Termination Event (with such terminated Transaction(s) (or portions thereof) being the Affected Transaction(s) and Counterparty being the sole Affected Party) shall be deemed to occur, and, in lieu of Sections 12.7, 12.8 and 12.9 of the Equity Definitions, Section 6 of the Agreement shall apply to such Affected Transaction(s).

 

(i)                                     No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral.  For the avoidance of doubt, in the event of bankruptcy or liquidation of either Company 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.

 

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(j)                                    Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

If, in respect of the Transaction, an amount is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Obligation”), Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company 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) Company remakes the representation set forth in Section 8(g) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

Share Termination Alternative:                        If applicable, Company shall deliver to Dealer the Share Termination Delivery Property on the date (the “Share Termination Payment Date”) on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, subject to Section 9(k)(i) below, in satisfaction, subject to Section 9(k)(ii) below, of the relevant Payment Obligation, in the manner reasonably requested by Dealer free of payment.

 

Share Termination Delivery

Property:                                                                                                                                              A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the relevant Payment Obligation divided by the Share Termination Unit Price.  The Calculation Agent shall adjust the amount of 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 (without giving effect to any discount pursuant to Section 9(k)(i)).

 

Share Termination Unit Price:                                The value to Dealer of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means.  In the case of a Private Placement of Share Termination Delivery Units that are Restricted Shares (as defined below), as set forth in Section 9(k)(i) below, the Share Termination Unit Price shall be determined by the discounted price applicable to such Share Termination Delivery Units.  In the case of a Registration Settlement of Share Termination Delivery Units that are Restricted Shares (as defined below) as set forth in Section 9(k)(ii) below, notwithstanding the foregoing, the Share Termination Unit Price shall be the Settlement Price 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.  The Calculation Agent shall notify Company of the Share Termination Unit Price at the time of notification of such Payment Obligation to Company or, if applicable, at the time the discounted price applicable to the relevant Share Termination Units is determined pursuant to Section 9(k)(i).

 

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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 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.  If such Nationalization, Insolvency or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

 

Failure to Deliver:                                                                                                Inapplicable

 

Other applicable provisions:                                         If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”.  “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.

 

(k)                                 Registration/Private Placement Procedures.  If, in the reasonable opinion of Dealer, based upon the advice of counsel, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Company, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below.  Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the first Settlement Date for the first applicable Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants.  The Calculation Agent shall make reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.

 

(i)                                     If Company elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Company shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Company to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3)

 

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of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements for transactions of similar size, all reasonably acceptable to Dealer.  In the case of a Private Placement Settlement, Dealer shall reasonably determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of such Restricted Shares to be delivered to Dealer hereunder; provided that in no event shall such number be greater than the Maximum Number of Shares (defined below).  Notwithstanding anything to the contrary in the Agreement or this Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Dealer to Company, of such applicable discount and the number of Restricted Shares to be delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be due on the Share Termination Payment Date (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or on the Settlement Date for such Restricted Shares (in the case of settlement in Shares pursuant to Section 2 above).

 

(ii)                                  If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the earliest of (i) the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above), (ii) the date upon which all Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act and (iii) the date upon which all Restricted Shares may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act.  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Trading Day immediately following such resale the amount of such excess (the “Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”) in an amount that, based on the Settlement Price on such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares.

 

20

 

If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)          Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 of the Securities Act or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court change after the Trade Date, the agreements of Company herein shall be deemed modified to the extent necessary, in the opinion of outside counsel of Company, to comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the relevant Shares or Share Termination Delivery Property.

 

(iv)                              If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Company shall be the Defaulting Party.

 

(l)                                     Limit on Beneficial Ownership.  Notwithstanding anything to the contrary in the Agreement, the Equity Definitions or this Confirmation, Dealer may not exercise any Warrant hereunder, in no event shall Dealer be entitled to receive or take delivery of any Shares deliverable hereunder (or be deemed to so receive or so take delivery), and Automatic Exercise shall not apply with respect to any Warrant hereunder, in each case, to the extent (but only to the extent) that, after such receipt or delivery of any Shares upon the exercise of such Warrant or otherwise hereunder, (i) the Section 16 Percentage would exceed 8.5%, or (ii) the Share Amount would exceed the Applicable Share Limit.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery (i) the Section 16 Percentage would exceed 8.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed 8.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.

 

(m)                             Share Deliveries. Notwithstanding anything to the contrary herein, Company agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.

 

(n)                                 Waiver of Jury Trial.   Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction.  Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the

 

21

 

other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

 

(o)                                 Submission to Jurisdiction.  Section 13(b) of the Agreement is deleted in its entirety and replaced by the following:

 

“Each party hereby irrevocably and unconditionally submits for itself and its property in any suit, legal action or proceeding relating to the Agreement and/or any Transaction, or for recognition and enforcement of any judgment in respect thereof, (each, “Proceedings”) to the exclusive jurisdiction of the Supreme Court of the State of New York, sitting in New York County, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof.  Each party waives any objection which it may have at any time to the laying of venue of any Proceedings in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further wives the right to object, with respect to such Proceedings that such court does not have any jurisdiction over such party.  Nothing in this Confirmation or the Agreement precludes either party from bringing Proceedings in any other jurisdiction if (A) the courts of the State of New York or the United States of America for the Southern District of New York lack jurisdiction over the parties or the subject matter of the Proceedings or declines to accept the Proceedings on the grounds of lacking such jurisdiction; (B) the Proceedings are commenced by a party for the purpose of enforcing against the other party’s property, assets or estate any decision or judgment rendered by any court in which Proceedings may be brought as provided hereunder; (C) the Proceedings are commenced to appeal any such court’s decision or judgment to any higher court with competent appellate jurisdiction over that court’s decisions or judgments if that higher court is located outside the State of New York or Borough of Manhattan, such as a federal court of appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has been commenced in another jurisdiction by or against the other party or against its property, assets or estate and, in order to exercise or protect its rights, interests or remedies under the Agreement and this Confirmation, the party (1) joins, files a claim, or takes any other action, in any such suit, action or proceeding, or (2) otherwise commences any Proceeding in that other jurisdiction as the result of that other suit, action or proceeding having commenced in that other jurisdiction.”

 

(p)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Company 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 Company relating to such tax treatment and tax structure.

 

(q)                                 Maximum Share Delivery.

 

(i)                                     Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than two times the Number of Warrants times the Warrant Entitlement (the “Maximum Number of Shares”) to Dealer in connection with the Transaction.

 

(ii)                                  In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because Company has insufficient authorized but unissued Shares (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(q)(ii), when, and to the extent that, (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(q)(ii) to the extent that

 

22

 

such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

(r)                                    [Reserved.]

 

(s)                                   Right to Extend.  Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or other relevant market or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(t)                                    Status of Claims in Bankruptcy.   Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; 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 Company 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.

 

(u)                                 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.

 

(v)                                 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 statute containing any legal certainty provision similar to Section 739 of the WSTAA) or any regulation under the WSTAA (or any such statute), nor any requirement under WSTAA (or any statute containing any legal certainty provision similar to Section 739 of the WSTAA) or an amendment made by WSTAA (or any such statute), shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(w)                               Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last 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

 

23

 

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 Settlement 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 Settlement Prices, each in a manner that may be adverse to Company.

 

(x)                                 Early Unwind. In the event the sale of the “Firm Securities” (as defined in the Underwriting Agreement) is not consummated with the Underwriters for any reason, or Company 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 Company 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 Company represents and acknowledges to the other that, subject to the proviso included in this Section 9(x), upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(y)                                 Payment by Dealer.  In the event that (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, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, 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.

 

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

 

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

 

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

 

24

 

Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and immediately returning an executed copy to Goldman, Sachs & Co., Equity Derivatives Documentation Department, Facsimile No. (212) 428-1980/83.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GOLDMAN, SACHS & CO.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Daniel Kopper
    
	
 
    	
 
    	
Name: Daniel Kopper
    
	
 
    	
 
    	
Title:   Vice   President
    
	
 
    	
 
    
	
Accepted   and confirmed
    	
 
    
	
as   of the Trade Date:
    	
 
    
	
 
    	
 
    
	
Auxilium   Pharmaceuticals, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ James E.   Fickenscher
    	
 
    	
 
    
	
Authorized   Signatory
    	
 
    
	
Name:  James E. FickenscherExhibit 10.6

 

JPMorgan Chase Bank, National Association
 P.O. Box 161
 60 Victoria Embankment
 London EC4Y 0JP
 England

January 24, 2013

To:                             Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                         Jim Fickenscher, Chief Financial Officer
 Telephone No.:             (484) 321 – 5902
 Facsimile No.:                   (484) 321 – 5996 
 Email: jfickenscher@auxilium.com

 

Re:                             Base Warrants

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by Auxilium Pharmaceuticals, Inc.  (“Company”) to JPMorgan  Chase Bank, National Association, London Branch (“Dealer”) 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.

 

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.

 

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 Company as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 1992 ISDA Master Agreement (Multicurrency—Cross Border) as if Dealer and Company had executed an agreement in such form on the date hereof (but without any Schedule except for (i) the election of Loss and Second Method and US Dollars (“USD”) as the Termination Currency, (ii) the replacement of the word “third” in the last line of Section 5(a)(i) of the Agreement with the word “first” and (iii) the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Company with a “Threshold Amount” of USD20 million (provided that Section 5(a)(vi) of the Agreement shall be amended and restated in its entirety to read: “If ‘Cross-Default’ is specified in the Schedule as applying to the party, default by such party or any of such party’s subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of USD 20 million (or its foreign currency equivalent) in the aggregate of such party and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal of any such debt when due and payable at its stated maturity, upon required purchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure to pay shall not have been cured, as the case may be, within 5 days after written notice of such acceleration or such failure to pay, as the case may be, has been received by such party or such subsidiary.”)). In the event of any inconsistency between provisions of that 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.

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

 

 

2.                                      The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions.  The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms.

 

	
Trade   Date:
    	
January 24,   2013
    
	
 
    	
 
    
	
Effective   Date:
    	
The   third Exchange Business Day immediately prior to the Premium Payment Date
    
	
 
    	
 
    
	
Warrants:
    	
Equity   call warrants, each giving the holder the right to purchase a number of   Shares equal to the Warrant Entitlement at a price per Share equal to the   Strike Price, subject to the terms set forth under the caption “Settlement   Terms” below. For the purposes of the Equity Definitions, each reference to a   Warrant herein shall be deemed to be a reference to a Call Option.
    
	
 
    	
 
    
	
Warrant   Style:
    	
European
    
	
 
    	
 
    
	
Seller:
    	
Company
    
	
 
    	
 
    
	
Buyer:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The   common stock of Company, par value USD 0.01 per Share (Exchange symbol   “AUXL”)
    
	
 
    	
 
    
	
Number   of Warrants:
    	
6,723,763.   For the avoidance of doubt, the Number of Warrants shall be reduced by any   Warrants exercised or deemed exercised hereunder. In no event will the Number   of Warrants be less than zero.
    
	
 
    	
 
    
	
Warrant   Entitlement:
    	
One   Share per Warrant
    
	
 
    	
 
    
	
Strike   Price:
    	
USD 27.36.
    
	
 
    	
 
    
	
 
    	
Notwithstanding   anything to the contrary in the Agreement, this Confirmation or the Equity   Definitions, in no event shall the Strike Price be subject to adjustment to   the extent that, after giving effect to such adjustment, the Strike Price   would be less than USD 18.24, except for any adjustment pursuant to the terms   of this Confirmation and the Equity Definitions in connection with stock   splits or similar changes to Company’s capitalization.
    
	
 
    	
 
    
	
Premium:
    	
USD19,256,250
    
	
 
    	
 
    
	
Premium   Payment Date:
    	
January 30,   2013
    
	
 
    	
 
    
	
Exchange:
    	
The   NASDAQ Global Select Market
    
	
 
    	
 
    
	
Related   Exchange(s):
    	
All   Exchanges
    
	
 
    	
 
    
	
Procedures for Exercise.
    	
 
    
	
 
    	
 
    
	
Expiration   Time:
    	
The   Valuation Time
    
	
 
    	
 
    
	
Expiration   Dates:
    	
Each   Scheduled Trading Day during the period from, and including, the First   Expiration Date to, but excluding, the
    

 

2

 

	
 
    	
140th Scheduled Trading Day following the First   Expiration Date shall be an “Expiration Date” for a number of Warrants equal   to the Daily Number of Warrants on such date; provided that, notwithstanding anything to the contrary in   the Equity Definitions, if any such date is a Disrupted Day in whole or in   part, the Calculation Agent shall make adjustments, if applicable, to the   Daily Number of Warrants or shall reduce such Daily Number of Warrants to   zero for which such day shall be an Expiration Date and shall designate a   Scheduled Trading Day or a number of Scheduled Trading Days as the Expiration   Date(s) for the remaining Daily Number of Warrants or a portion thereof   for the originally scheduled Expiration Date; and provided    further that if such Expiration Date   has not occurred pursuant to this clause as of the eighth Scheduled Trading   Day following the last scheduled Expiration Date under the Transaction, the   Calculation Agent shall have the right to declare such Scheduled Trading Day   to be the final Expiration Date and the Calculation Agent shall determine its   good faith estimate of the fair market value for the Shares as of the   Valuation Time on that eighth Scheduled Trading Day or on any subsequent   Scheduled Trading Day, as the Calculation Agent shall determine using   commercially reasonable means.
    
	
 
    	
 
    
	
First   Expiration Date:
    	
October 15,   2018 (or if such day is not a Scheduled Trading Day, the next following   Scheduled Trading Day), subject to Market Disruption Event below.
    
	
 
    	
 
    
	
Daily   Number of Warrants:
    	
For   any Expiration Date, the Number of Warrants that have not expired or been   exercised as of such day, divided by   the remaining number of Expiration Dates (including such day), rounded down   to the nearest whole number, subject to adjustment pursuant to the provisos   to “Expiration Dates”.
    
	
 
    	
 
    
	
Automatic   Exercise:
    	
Applicable;   and means that for each Expiration Date, a number of Warrants equal to the   Daily Number of Warrants for such Expiration Date will be deemed to be   automatically exercised at the Expiration Time on such Expiration Date,   unless Buyer notifies Seller (by telephone or in writing) prior to the   Expiration Time on such Expiration Date that it does not wish Automatic   Exercise to occur, in which case Automatic Exercise will not apply to such   Expiration Date.
    
	
 
    	
 
    
	
Market   Disruption Event:
    	
Section 6.3(a) of   the Equity Definitions is hereby amended by (A) deleting the words “during   the one hour period that ends at the relevant Valuation Time, Latest Exercise   Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,”   in clause (ii) thereof and (B) by replacing the words “or   (iii) an Early Closure.” therein with “(iii) an Early Closure, or   (iv) a Regulatory Disruption; in each case, that the Calculation Agent   determines is material.”
    

 

3

 

	
 
    	
Section 6.3(d) of   the Equity Definitions is hereby amended by deleting the remainder of the   provision following the words “Scheduled Closing Time” in the fourth line   thereof.
    
	
 
    	
 
    
	
Regulatory   Disruption:
    	
Any   event that Dealer, in its reasonable discretion, based upon the advice of   counsel, determines makes it appropriate, with regard to any legal,   regulatory or self-regulatory requirements or related policies and   procedures, for Dealer to refrain from or decrease any market activity in connection   with the Transaction.
    
	
 
    	
 
    
	
Valuation Terms.
    	
 
    
	
 
    	
 
    
	
Valuation   Time:
    	
Scheduled   Closing Time; provided that if the principal   trading session is extended, the Calculation Agent shall determine the   Valuation Time in its reasonable discretion.
    
	
 
    	
 
    
	
Valuation   Date:
    	
Each   Exercise Date.
    
	
 
    	
 
    
	
Settlement Terms.
    	
 
    
	
 
    	
 
    
	
Settlement   Method:
    	
Net   Share Settlement.
    
	
 
    	
 
    
	
Net   Share Settlement:
    	
On   the relevant Settlement Date, Company shall deliver to Dealer a number of   Shares equal to the Share Delivery Quantity for such Settlement Date to the   account specified herein free of payment through the Clearance System, and   Dealer shall be treated as the holder of record of such Shares at the time of   delivery of such Shares or, if earlier, at 5:00 p.m. (New York City   time) on such Settlement Date, and Company shall pay to Dealer cash in lieu   of any fractional Share based on the Settlement Price on the relevant   Valuation Date.
    
	
 
    	
 
    
	
Share   Delivery Quantity:
    	
For   any Settlement Date, a number of Shares, as calculated by the Calculation Agent,   equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the Valuation Date for   such Settlement Date.
    
	
 
    	
 
    
	
 
    	
The   Share Delivery Quantity shall be delivered by Company to Dealer no later than   12:00 noon (local time in New York City) on the relevant Settlement Date.
    
	
 
    	
 
    
	
Net   Share Settlement Amount:
    	
For   any Settlement Date, an amount equal to the product of (i) the number of   Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant   Valuation Date and (iii) the Warrant Entitlement.
    
	
 
    	
 
    
	
Settlement   Price:
    	
For   any Valuation Date, the per Share volume-weighted average price as displayed   under the heading “Bloomberg VWAP” on Bloomberg page AUXL <equity> AQR (or   any successor thereto) in respect of the regular trading session (including   any extensions thereof but without regard to pre-open or after hours trading   outside of such regular trading session) on such Valuation Date (or if such   volume-weighted average price is unavailable or
    

 

4

 

	
 
    	
manifestly   incorrect, the market value of one Share on such Valuation Date, as   determined by the Calculation Agent using a volume-weighted methodology). Notwithstanding the   foregoing, if (i) any Expiration Date is a Disrupted Day and   (ii) the Calculation Agent determines that such Expiration Date shall be   an Expiration Date for fewer than the Daily Number of Warrants, as described   above, then the Settlement Price for the relevant Valuation Date shall be the   volume-weighted average price per Share on such Valuation Date on the   Exchange, as determined by the Calculation Agent based on such sources as it   deems appropriate using a volume-weighted methodology, for the portion of   such Valuation Date for which the Calculation Agent determines there is no   Market Disruption Event.
    
	
 
    	
 
    
	
Settlement   Dates:
    	
As   determined pursuant to Section 9.4 of the Equity Definitions, subject to   Section 9(k)(i) hereof.
    
	
 
    	
 
    
	
Other   Applicable Provisions:
    	
The   provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity   Definitions will be applicable, except that all references in such provisions   to “Physically-settled” shall be read as references to “Net Share Settled.”   “Net Share Settled” in relation to any Warrant means that Net Share   Settlement is applicable to that Warrant.
    
	
 
    	
 
    
	
Representation   and Agreement:
    	
Notwithstanding   Section 9.11 of the Equity Definitions, the parties acknowledge that any   Shares delivered to Dealer may be, upon delivery, subject to restrictions and   limitations arising from Company’s status as issuer of the Shares under   applicable securities laws.
    
	
 
    	
 
    
	
3.                                      Additional   Terms applicable to the Transaction.
    	
 
    
	
 
    	
 
    
	
Adjustments   applicable to the Transaction:
    	
 
    
	
 
    	
 
    
	
Method   of Adjustment:
    	
Calculation   Agent Adjustment. For the avoidance of doubt, in making any adjustments under   the Equity Definitions, the Calculation Agent may make adjustments, if any,   to any one or more of the Strike Price, the Number of Warrants, the Daily   Number of Warrants and the Warrant Entitlement. Notwithstanding the   foregoing, any cash dividends or distributions on the Shares, whether or not   extraordinary, shall be governed by Section 9(f) of this Confirmation   in lieu of Article 10 or Section 11.2(c) of the Equity Definitions.   For the avoidance of doubt, Calculation Agent Adjustment and the provisions   is Section 9(f) of this Confirmation shall continue to apply until the   obligations of the parties (including any obligations of Company pursuant to   Section 9(q)(ii) of this Confirmation) under the Transaction have been   satisfied in full.
    
	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    	
 
    
	
 
    	
 
    
	
New   Shares:
    	
Section 12.1(i) of   the Equity Definitions is hereby amended (a) by deleting the text in   clause (i) thereof in its entirety (including the word “and” following   clause (i))
    

 

5

 

	
 
    	
and   replacing it with the phrase “publicly quoted, traded or listed (or whose   related depositary receipts are publicly quoted, traded or listed) on any of   the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market (or their respective successors)” and (b) by inserting   immediately prior to the period the phrase “and (iii) of an entity or   person that is a corporation organized under the laws of the United States,   any State thereof or the District of Columbia.
    
	
 
    	
 
    
	
Consequence   of Merger Events:
    	
 
    
	
 
    	
 
    
	
Merger   Event:
    	
Applicable; provided that if an event   occurs that constitutes both a Merger Event under   Section 12.1(b) of the Equity Definitions and an Additional   Termination Event under Section 9(h)(ii)(B) of this Confirmation,   the provisions set forth in Section 9(h)(ii)(B) shall apply in lieu   of the provisions of Section 12.2 of the Equity Definitions.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Cancellation   and Payment (Calculation Agent Determination)
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Cancellation   and Payment (Calculation Agent Determination); provided   that Dealer may elect, in its commercially reasonable judgment, Component   Adjustment (Calculation Agent Determination) for all or any portion of the   Transaction.
    
	
 
    	
 
    
	
Consequence   of Tender Offers:
    	
 
    
	
 
    	
 
    
	
Tender   Offer:
    	
Applicable;   provided that if an event occurs that   constitutes both a Tender Offer under Section 12.1(d) of the Equity   Definitions and Additional Termination Event under   Section 9(h)(ii)(A) of this Confirmation, the provisions set forth   in Section 9(h)(ii)(A) shall apply in lieu of the provisions of   Section 12.3 of the Equity Definitions.
    
	
 
    	
 
    
	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Other:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Share-for-Combined:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    
	
Modified   Calculation
    	
 
    
	
Agent   Adjustment:
    	
If,   in respect of any Merger Event to which Modified Calculation Agent Adjustment   applies, the adjustments to be made in accordance with   Section 12.2(e)(i) of the Equity Definitions would result in Company   being different from the issuer of the Shares, then with respect to such   Merger Event, as a condition precedent to the adjustments contemplated in   Section 12.2(e)(i) of the Equity Definitions, Company and the issuer of   the Shares shall, prior to the Merger Date, have entered into such   documentation containing representations, warranties and agreements relating   to securities law and other issues as requested by Dealer that Dealer has   determined, in its
    

 

6

 

	
 
    	
reasonable   discretion, to be reasonably necessary or appropriate to allow Dealer to   continue as a party to the Transaction, as adjusted under   Section 12.2(e)(i) of the Equity Definitions, and to preserve its   hedging or hedge unwind activities in connection with the Transaction in a   manner compliant with applicable legal, regulatory or self-regulatory   requirements, or with related policies and procedures applicable to Dealer,   and if such conditions are not met or if the Calculation Agent determines   that no adjustment that it could make under Section 12.2(e)(i) of the   Equity Definitions will produce a commercially reasonable result, then the   consequences set forth in Section 12.2(e)(ii) of the Equity Definitions   shall apply.
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation   and Payment (Calculation Agent Determination); provided that, in addition to the provisions of   Section 12.6(a)(iii) of the Equity Definitions, it will also   constitute a Delisting if the Exchange is located in the United States and   the Shares are not immediately re-listed, re-traded or re-quoted on any of   the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ   Global Market (or their respective successors); if the Shares are immediately   re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The   NASDAQ Global Select Market or The NASDAQ Global Market (or their respective   successors), such exchange or quotation system shall thereafter be deemed to   be the Exchange.
    
	
 
    	
 
    
	
Additional   Disruption Events:
    	
 
    
	
 
    	
 
    
	
Change   in Law:
    	
Applicable;   provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “, or public announcement of, the formal or informal   interpretation”, (ii) by adding the phrase “and/or Hedge Position” after   the word “Shares” in clause (X) thereof and (iii) by immediately   following the word “Transaction” in clause (X) thereof, adding the   phrase “in the manner contemplated by the Hedging Party on the Trade Date”; provided, further that Section 12.9(a)(ii) of   the Equity Definitions is hereby amended by replacing the parenthetical   beginning after the word “regulation” in the second line thereof with the   phrase “(including, for the avoidance of doubt and without limitation,   (x) any tax law or (y) adoption or promulgation of new regulations   authorized or mandated by existing statute)”.
    
	
 
    	
 
    
	
Failure   to Deliver:
    	
Not   Applicable
    
	
 
    	
 
    
	
Insolvency   Filing:
    	
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
    

 

7

 

	
 
    	
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 terms that do   not result in Dealer incurring a materially increased cost, as determined by   the Calculation Agent.”; 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:
    	
Applicable
    
	
 
    	
 
    
	
Loss   of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Maximum   Stock Loan Rate:
    	
200   basis points
    
	
 
    	
 
    
	
Increased   Cost of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    
	
Initial   Stock Loan Rate:
    	
25   basis points
    
	
 
    	
 
    
	
Hedging   Party:
    	
For   all applicable Additional Disruption Events, Dealer.
    
	
 
    	
 
    
	
Determining   Party:
    	
For   all applicable Extraordinary Events, Dealer.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable.
    
	
 
    	
 
    
	
Agreements   and Acknowledgments
    	
 
    
	
Regarding   Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.                            Calculation   Agent.
    	
Dealer;   provided that (x) Calculation   Agent shall make all calculations, adjustments and determinations required   pursuant to the Transaction in good faith and in a commercially reasonable   manner and (y) if an Event of Default described in   Section 5(a)(vii) of the Agreement has occurred and is continuing   with respect to Dealer, the Calculation Agent shall be a leading recognized   dealer in equity derivatives designated in good faith by Counterparty for so   long as such Event of Default is continuing.
    

 

5.                                     Account Details.

 

(a)                                 Account for payments to Company:  To be advised.

 

Account for delivery of Shares from Company:  To be advised.

 

(b)                                 Account for payments to Dealer:

 

Bank:                                          JPMorgan Chase Bank, N.A.

 

8

 

ABA#:                                       021000021

Acct No.:                          099997979

Beneficiary:          JPMorgan Chase Bank, N.A. New York

Ref:                                                     Derivatives

 

Account for delivery of Shares from Dealer:

 

DTC 0060

 

6.                                      Offices.

 

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

 

(b)                                 The Office of Dealer for the Transaction is:

 

London

 

JPMorgan Chase Bank, National Association
 London Branch
 P.O. Box 161
 60 Victoria Embankment
 London EC4Y 0JP
 England

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Company:

 

Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                         Jim Fickenscher, Chief Financial Officer

Telephone No.:             (484) 321 – 5902

Facsimile No.:                   (484) 321 – 5996 

Email: jfickenscher@auxilium.com

 

With a copy to:

 

Auxilium Pharmaceuticals, Inc.
 640 Lee Road 
 Chesterbrook, PA 19087
 Attention:                                         Andrew Koven, Chief Administrative Officer and General Counsel

Telephone No.:             (484) 321 – 5907

Facsimile No.:                   (484) 321 – 5996 

Email: akoven@auxilium.com

 

(b)                                 Address for notices or communications to Dealer:

 

JPMorgan Chase Bank, National Association
 EDG Marketing Support
  Email:                                                            EDG_OTC_HEDGING_MS@jpmorgan.com

Facsimile No:                      1-866-886-4506

 

With a copy to:

 

9

 

Attention:                                         Jason Wood

Title:                                                                    Managing Director

Telephone No:                212-622-8783

Facsimile No:                      415-226-0616

 

8.                                      Representations, Warranties and Covenants of Company.

 

Each of the representations and warranties of Company set forth in Section 1 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of January 24, 2013, among Company, Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as representatives of the underwriters party thereto (the “Underwriters”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Company hereby further represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(d), at all times until termination of the Transaction, that:

 

(a)                                 Company 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 Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.

 

(b)                                 Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company 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.

 

(c)                                  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 Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “Securities Act”) or state securities laws.

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants, will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights. Company represents and warrants to Dealer that the Maximum Number of Shares is equal to or less than the number of authorized but unissued Shares of the Company that are not reserved for future issuance in connection with transactions in the Shares (other than the Transaction) on the date of the determination of the Maximum Number of Shares (such Shares, the “Available Shares”).  Company shall not take any action to decrease the number of Available Shares below the Maximum Number of Shares.

 

(e)                                  Company 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.

 

10

 

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

 

(g)                                  Company and each of its affiliates is not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.

 

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

 

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

 

(j)                                    Company (i) is an “institutional account” as defined in FINRA Rule 4512(c); (ii) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and will exercise independent judgment in evaluating the recommendations of Dealer or its associated persons; and (iii) will notify Dealer if any of the statements contained in clause (i) or (ii) of this Section 8(j) ceases to be true.

 

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

 

(l)                                     Prior to the Trade Date, Company shall deliver to Dealer a resolution of Company’s board of directors authorizing the Transaction and such other certificate or certificates as Dealer shall reasonably request.

 

(m)                             Company is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(n)                                 On the Trade Date and the Premium Payment Date (i) the assets of Company at their fair valuation exceed the liabilities of Company, including contingent liabilities, (ii) the capital of Company is adequate to conduct the business of Company and (iii) Company has the ability to pay its debts and obligations as such debts mature and does not intend to, or does not believe that it will, incur debt beyond its ability to pay as such debts mature.

 

(o)                                 (i) During the period starting on the first Expiration Date and ending on the last Expiration Date (the “Settlement Period”), the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as defined in Regulation M unless Company has provided written notice to Dealer of such “restricted period” no later than the Scheduled Trading Day immediately preceding the first day of such “restricted period.” Company acknowledges that any such notice may give rise to a Regulatory Disruption and/or a right for Dealer, pursuant to Section 9(s), to postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants.

 

(p)                                 During the Settlement Period and on any other Exercise Date, neither Company nor any “affiliate” or “affiliated purchaser” (each as defined in Rule 10b-18 of the Exchange Act (“Rule 10b-18”)) shall directly or indirectly (including, without limitation, by means of any cash-settled or other

 

11

 

derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares, except through Dealer; provided that this clause shall not apply to any purchase that does not constitute a “Rule 10b-18 purchase” (as such term is defined in Rule 10b-18(a)(13)).

 

(q)                                 Company agrees that it (A) will not during the Settlement Period make, or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction unless such public announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares; (B) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify Dealer following any such announcement that such announcement has been made; and (C) shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) provide Dealer with written notice specifying (i) Company’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the announcement date that were not effected through Dealer or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the announcement date.  Such written notice shall be deemed to be a certification by Company to Dealer that such information is true and correct.  In addition, Company shall promptly notify Dealer of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.  “Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

 

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

 

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

 

9.                                      Other Provisions.

 

(a)                                 Incumbency Certificate and Opinions.  Company shall deliver to Dealer an incumbency certificate, dated as of the Trade Date, of Company in customary form. Company shall also deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (e) of this Confirmation.  Delivery of such incumbency certificate and 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.

 

12

 

(b)                                 Repurchase Notices.  Company shall, on any day on which Company 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 on such day, subject to any adjustments provided herein, is (i) less than 47,795,215 (in the case of the first such notice) or (ii) thereafter more than 1,527,005 less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and reasonable expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually incurs as a result of Company’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 asserted against the Indemnified Person as a result of Company’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Company in writing, and Company, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Company may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding.  Company shall be relieved from liability to the extent that the Indemnified Person fails promptly to notify Company of any action commenced against it in respect of which indemnity may be sought hereunder;  provided that failure to notify Company (x) shall not relieve Company from any liability hereunder to the extent it is not materially prejudiced as a result thereof and (y) shall not, in any event, relieve Company from any liability that it may have otherwise than on account of the Transaction.  Company 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, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  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 Company, in lieu of indemnifying such Indemnified Person hereunder, 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 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.  Company is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Exchange Act, of any securities of Company, other than (x) a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M and (y) the distribution of the Company’s 1.50% Convertible Senior Notes due 2018.  Company shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.

 

(d)                                 No Manipulation.  Company 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

 

13

 

raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)                                  Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party.  If at any time at which (A) the Section 16 Percentage exceeds 8.5%, (B) the Warrant Equity Percentage exceeds 15.15%, 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 Warrants 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 Terminated Portion, 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 Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company 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(j) shall apply to any amount that is payable by Company to Dealer pursuant to this sentence as if Company 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 each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding.  The “Warrant 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 Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, 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 Company 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 (other than any Schedule 13D or Schedule 13G filing under the Exchange Act) 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.  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 Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or 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 Company to the extent of any such performance.

 

(f)                                   Dividends.  If at any time during the period from and including the Effective Date, to and including the last Expiration Date (or, if any Deficit Shares are owed pursuant to Section 9(q)(ii) of this Confirmation, such later date on which Company’s obligations under this Transaction have been satisfied in full), an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise,

 

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settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend.

 

(g)                                  Role of Agent.  Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of JPMorgan (“JPMS”), has acted solely as agent and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or otherwise, in any manner in respect of the Transaction (including, if applicable, in respect of the settlement thereof). Each party agrees it will look solely to the other party (or any guarantor in respect thereof) for performance of such other party’s obligations under the Transaction.

 

(h)                                 Additional Provisions.

 

(i)                                     Amendments to the Equity Definitions:

 

(A)                               Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “an”; and adding the phrase “or Warrants” at the end of the sentence.

 

(B)                               Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “an” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

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

 

(D)                               [Reserved.]

 

(E)                                Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); (B) replacing “will lend” with “lends” in subsection (B); and (C) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence; “Lending Party” means a third party that is not Company or an affiliate of Company that Dealer considers to be an acceptable counterparty (acting in good faith and in a reasonable manner in light of (x) other transactions that Dealer (or its agent or affiliate) may have entered into with such party and (y) any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements or related policies and procedures are imposed by law or have been voluntarily adopted by Dealer) that apply generally to transactions of a nature and kind similar to the transactions contemplated with such party).

 

(F)                                 Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

 

(x)                                 adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(y)                                 (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging

 

15

 

Party will determine the Cancellation Amount payable by one party to the other.” and (4) deleting clause (X) in the final sentence.

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its sole discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:

 

(A)                               A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its wholly owned subsidiaries or its or their employee benefit plans, files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the common equity of Company representing more than 50% of the voting power of such common equity.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (A) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock, depositary receipts representing common equity interests or other certificates representing common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights.

 

(B)                               The consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision or combination) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets or (II) any share exchange, consolidation, merger or similar transaction involving Company pursuant to which the Shares will be converted into cash, securities or other property or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s subsidiaries.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights, in connection with such transaction or transactions consists of shares of common stock, depositary receipts representing common equity interests or other certificates representing common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or

 

16

 

exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares or pursuant to statutory appraisal rights.

 

(C)                               The stockholders of Company approve any plan or proposal for the liquidation or dissolution of Company; or

 

(D)                               The Shares ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors).

 

(E)                                Default by Company or any of its subsidiaries with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of USD 25 million (or its foreign currency equivalent) in the aggregate of Company and/or any such subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal of any such debt when due and payable at its stated maturity, upon required purchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure shall not have been cured, as the case may be, within 30 days after written notice of such acceleration has been received by Company or such subsidiary.

 

(F)                                 A final judgment for the payment of USD 25 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against Company or any of its subsidiaries, which judgment is not discharged or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished.

 

(G)                               Dealer reasonably determines that it is advisable to terminate a portion of the Transaction so that Dealer’s related hedging activities will comply with applicable securities laws, rules or regulations or related policies and procedures of Dealer (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer), or Dealer, despite using commercially reasonable efforts, is unable or reasonably determines that it is impractical or illegal to hedge its obligations pursuant to this Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(iii)                               Notwithstanding anything to the contrary in the Equity Definitions, if, as a result of an Extraordinary Event, any Transaction would be cancelled or terminated (whether in whole or in part) pursuant to Article 12 of the Equity Definitions, an Additional Termination Event (with such terminated Transaction(s) (or portions thereof) being the Affected Transaction(s) and Counterparty being the sole Affected Party) shall be deemed to occur, and, in lieu of Sections 12.7, 12.8 and 12.9 of the Equity Definitions, Section 6 of the Agreement shall apply to such Affected Transaction(s).

 

(i)                                     No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not secured by any collateral.  For the avoidance of doubt, in the event of bankruptcy or liquidation of either Company 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,

 

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whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(j)                                    Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

If, in respect of the Transaction, an amount is payable by Company to Dealer, (A) pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or (B) pursuant to Section 6(d)(ii) of the Agreement (any such amount, a “Payment Obligation”), Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company 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) Company remakes the representation set forth in Section 8(g) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

	
Share   Termination Alternative:
    	
If   applicable, Company shall deliver to Dealer the Share Termination Delivery   Property on the date (the “Share Termination   Payment Date”) on which the Payment Obligation would otherwise be   due pursuant to Section 12.7 or Section 12.9 of the Equity   Definitions or Section 6(d)(ii) of the Agreement, as applicable,   subject to Section 9(k)(i) below, in satisfaction, subject to   Section 9(k)(ii) below, of the relevant Payment Obligation, in the   manner reasonably requested by Dealer free of payment.
    
	
 
    	
 
    
	
 
    	
 
    
	
Share   Termination Delivery Property:
    	

   A number of Share Termination Delivery Units, as calculated by the   Calculation Agent, equal to the relevant Payment Obligation divided by the Share Termination Unit Price. The   Calculation Agent shall adjust the amount of 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 (without giving   effect to any discount pursuant to Section 9(k)(i)).
    
	
 
    	
 
    
	
Share   Termination Unit Price:
    	
The   value to Dealer of property contained in one Share Termination Delivery Unit   on the date such Share Termination Delivery Units are to be delivered as   Share Termination Delivery Property, as determined by the Calculation Agent   in its discretion by commercially reasonable means. In the case of a Private   Placement of Share Termination Delivery Units that are Restricted Shares (as   defined below), as set forth in Section 9(k)(i) below, the Share   Termination Unit Price shall be determined by the discounted price applicable   to such Share Termination Delivery Units. In the case of a Registration   Settlement of Share Termination Delivery Units that are Restricted Shares (as   defined below) as set forth in Section 9(k)(ii) below,   notwithstanding the foregoing, the Share Termination Unit Price shall be the   Settlement Price 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. The Calculation   Agent shall notify Company of the Share
    

 

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Termination   Unit Price at the time of notification of such Payment Obligation to Company   or, if applicable, at the time the discounted price applicable to the   relevant Share Termination Units is determined pursuant to Section 9(k)(i).
    
	
 
    	
 
    
	
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 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. If such   Nationalization, Insolvency or Merger Event involves a choice of   Exchange Property to be received by holders, such holder shall be deemed to   have elected to receive the maximum possible amount of cash.
    
	
 
    	
 
    
	
Failure   to Deliver:
    	
Inapplicable
    
	
 
    	
 
    
	
Other   applicable provisions:
    	
If   Share Termination Alternative is applicable, the provisions of Sections 9.8,   9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be   applicable, except that all references in such provisions to   “Physically-settled” shall be read as references to “Share Termination   Settled” and all references to “Shares” shall be read as references to “Share   Termination Delivery Units”. “Share Termination Settled” in relation to the   Transaction means that the Share Termination Alternative is applicable to the   Transaction.
    

 

(k)                                 Registration/Private Placement Procedures.  If, in the reasonable opinion of Dealer, based upon the advice of counsel, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Company, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below.  Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the first Settlement Date for the first applicable Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants.  The Calculation Agent shall make reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.

 

(i)                                     If Company elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Company shall be effected in customary private placement procedures with respect to such Restricted

 

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Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Company to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements for transactions of similar size, all reasonably acceptable to Dealer.  In the case of a Private Placement Settlement, Dealer shall reasonably determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of such Restricted Shares to be delivered to Dealer hereunder; provided that in no event shall such number be greater than the Maximum Number of Shares (defined below).  Notwithstanding anything to the contrary in the Agreement or this Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Dealer to Company, of such applicable discount and the number of Restricted Shares to be delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be due on the Share Termination Payment Date (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or on the Settlement Date for such Restricted Shares (in the case of settlement in Shares pursuant to Section 2 above).

 

(ii)                                  If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the earliest of (i) the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above), (ii) the date upon which all Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act and (iii) the date upon which all Restricted Shares may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act.  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Trading Day

 

20

 

immediately following such resale the amount of such excess (the “Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”) in an amount that, based on the Settlement Price on such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares.  If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)          Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 of the Securities Act or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court change after the Trade Date, the agreements of Company herein shall be deemed modified to the extent necessary, in the opinion of outside counsel of Company, to comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the relevant Shares or Share Termination Delivery Property.

 

(iv)          If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Company shall be the Defaulting Party.

 

(l)                                     Limit on Beneficial Ownership.  Notwithstanding anything to the contrary in the Agreement, the Equity Definitions or this Confirmation, Dealer may not exercise any Warrant hereunder, in no event shall Dealer be entitled to receive or take delivery of any Shares deliverable hereunder (or be deemed to so receive or so take delivery), and Automatic Exercise shall not apply with respect to any Warrant hereunder, in each case, to the extent (but only to the extent) that, after such receipt or delivery of any Shares upon the exercise of such Warrant or otherwise hereunder, (i) the Section 16 Percentage would exceed 8.5%, or (ii) the Share Amount would exceed the Applicable Share Limit.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery, (i) the Section 16 Percentage would exceed 8.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed 8.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.

 

(m)                             Share Deliveries. Notwithstanding anything to the contrary herein, Company agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.

 

21

 

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

 

(o)                                 Submission to Jurisdiction.  Section 13(b) of the Agreement is deleted in its entirety and replaced by the following:

 

“Each party hereby irrevocably and unconditionally submits for itself and its property in any suit, legal action or proceeding relating to the Agreement and/or any Transaction, or for recognition and enforcement of any judgment in respect thereof, (each, “Proceedings”) to the exclusive jurisdiction of the Supreme Court of the State of New York, sitting in New York County, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof.  Each party waives any objection which it may have at any time to the laying of venue of any Proceedings in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further wives the right to object, with respect to such Proceedings that such court does not have any jurisdiction over such party.  Nothing in this Confirmation or the Agreement precludes either party from bringing Proceedings in any other jurisdiction if (A) the courts of the State of New York or the United States of America for the Southern District of New York lack jurisdiction over the parties or the subject matter of the Proceedings or declines to accept the Proceedings on the grounds of lacking such jurisdiction; (B) the Proceedings are commenced by a party for the purpose of enforcing against the other party’s property, assets or estate any decision or judgment rendered by any court in which Proceedings may be brought as provided hereunder; (C) the Proceedings are commenced to appeal any such court’s decision or judgment to any higher court with competent appellate jurisdiction over that court’s decisions or judgments if that higher court is located outside the State of New York or Borough of Manhattan, such as a federal court of appeals or the U.S. Supreme Court; or (D) any suit, action or proceeding has been commenced in another jurisdiction by or against the other party or against its property, assets or estate and, in order to exercise or protect its rights, interests or remedies under the Agreement and this Confirmation, the party (1) joins, files a claim, or takes any other action, in any such suit, action or proceeding, or (2) otherwise commences any Proceeding in that other jurisdiction as the result of that other suit, action or proceeding having commenced in that other jurisdiction.”

 

(p)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Company 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 Company relating to such tax treatment and tax structure.

 

(q)                                 Maximum Share Delivery.

 

(i)            Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than two times the Number of Warrants times the Warrant Entitlement (the “Maximum Number of Shares”) to Dealer in connection with the Transaction.

 

(ii)           In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because Company has insufficient authorized but unissued Shares (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(q)(ii), when, and to the extent that, (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for

 

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cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(q)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

(r)                                    [Reserved.]

 

(s)                                   Right to Extend.  Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer determines, in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, the stock loan market or other relevant market or to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(t)                                    Status of Claims in Bankruptcy.   Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; 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 Company 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.

 

(u)                                 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.

 

(v)                                 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 statute containing any legal certainty provision similar to Section 739 of the WSTAA) or any regulation under the WSTAA (or any such statute), nor any requirement under WSTAA (or any statute containing any legal certainty provision similar to Section 739 of the WSTAA) or an amendment made by WSTAA (or any such statute), shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

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(w)                               Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last 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 Settlement 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 Settlement Prices, each in a manner that may be adverse to Company.

 

(x)                                 Early Unwind. In the event the sale of the “Firm Securities” (as defined in the Underwriting Agreement) is not consummated with the Underwriters for any reason, or Company 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 Company 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 Company represents and acknowledges to the other that, subject to the proviso included in this Section 9(x), upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(y)                                 Payment by Dealer.  In the event that (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, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, 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.

 

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

 

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

 

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

 

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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 EDG Confirmation Group, J.P. Morgan Securities LLC, 277 Park Avenue, 11th Floor, New York, NY 10172-3401, or by fax to (212) 622 8519.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
J.P. Morgan Securities LLC, as agent for JPMorgan Chase Bank, National   Association
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Tim Oeljeschlager
    
	
 
    	
Authorized Signatory
    
	
 
    	
Name:
    	
Tim Oeljeschlager
    
	
 
    	
 
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted   and confirmed
    	
 
    
	
as   of the Trade Date:
    	
 
    
	
 
    	
 
    
	
Auxilium   Pharmaceuticals, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ James E. Fickenscher
    	
 
    	
 
    
	
Authorized   Signatory
    	
 
    
	
Name:
    	
  James E. Fickenscher
    	
 
    
					

 

JPMorgan Chase Bank, National Association

Organised under the laws of the United States as a National Banking Association.

Main Office 1111 Polaris Parkway, Columbus, Ohio 43240

Registered as a branch in England & Wales branch No. BR000746

Registered Branch Office 25 Bank Street, Canary Wharf, London, E14 5JP

Authorised and regulated by the Financial Services Authority

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