Document:

Exhibit 10.1

 

 

JPMorgan Chase Bank, National Association

London Branch

25 Bank Street

Canary Wharf

London E14 5JP

England

 

	
 
    	
January 25, 2016
    

 

	
To:
    	
Novavax, Inc.
    
	
 
    	
20 Firstfield Road
    
	
 
    	
Gaithersburg, Maryland   20878
    
	
 
    	
Attention:
    	
Chief Financial Officer
    
	
 
    	
Telephone No.:
    	
(240) 268-2030
    
	
 
    	
Facsimile No.:
    	
(240) 268-2100
    
	
 
    	
 
    
	
Re:
    	
Base Call Option   Transaction
    

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction entered into between JPMorgan Chase Bank, National Association, London Branch (“Dealer”) and Novavax, Inc. (“Counterparty”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated January 25, 2016 (the “Offering Memorandum”) relating to the Convertible Senior Notes due 2023 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD 300,000,000 (as increased by up to an aggregate principal amount of USD 30,000,000 if and to the extent that the Initial Purchasers (as defined herein) exercise their option to purchase additional Convertible Notes pursuant to the Purchase Agreement (as defined herein)) pursuant to an Indenture to be dated January 29, 2016 between Counterparty and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”).  In the event of any inconsistency between the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern.  The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture that are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum.  If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation.  The parties further acknowledge that the Indenture section numbers used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties.  Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended or supplemented following such date (other than any amendment or supplement (x) pursuant to Section 10.01(h) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Offering Memorandum or (y) pursuant to Section 14.07 of the Indenture, subject, in the case of this clause (y), to the second 

 

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 by the Office of the Comptroller of the Currency in the jurisdiction of the USA.

Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct

Authority and to limited regulation by the Prudential Regulation Authority. Details about the

extent of our regulation by the Prudential Regulation Authority are available from us on request.

 

 

paragraph under “Method of Adjustment” in Section 3), any such amendment or supplement will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

 

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

 

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

 

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

 

General Terms.

 

	
Trade Date:
    	
January 25, 2016
    
	
 
    	
 
    
	
Effective Date:
    	
Trade Date
    
	
 
    	
 
    
	
Option Style:
    	
“Modified American”, as described under “Procedures   for Exercise” below
    
	
 
    	
 
    
	
Option Type:
    	
Call
    
	
 
    	
 
    
	
Buyer:
    	
Counterparty
    
	
 
    	
 
    
	
Seller:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The common stock of Counterparty, par value USD 0.01   per share (Exchange symbol “NVAX”).
    
	
 
    	
 
    
	
Number of Options:
    	
300,000. For the avoidance of doubt, the Number of   Options shall be reduced by any Options exercised by Counterparty. In no   event will the Number of Options be less than zero.
    
	
 
    	
 
    
	
Applicable Percentage:
    	
60%
    
	
 
    	
 
    
	
Option Entitlement:
    	
A number equal to the product of the Applicable   Percentage and 146.8213
    
	
 
    	
 
    
	
Strike Price:
    	
USD 6.8110
    

 

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Cap Price:
    	
USD 9.7300
    
	
 
    	
 
    
	
Premium:
    	
USD 20,808,000
    
	
 
    	
 
    
	
Premium Payment Date:
    	
January 29, 2016
    
	
 
    	
 
    
	
Exchange:
    	
The NASDAQ Global Select Market
    
	
 
    	
 
    
	
Related Exchange(s):
    	
All Exchanges
    
	
 
    	
 
    
	
Excluded Provisions:
    	
Section 14.04(g) and Section 14.03 of   the Indenture.
    

 

Procedures for Exercise.

 

	
Conversion Date:
    	
With respect to any conversion of a Convertible Note   (other than any conversion of Convertible Notes with a Conversion Date   occurring prior to the Cut-Off Date (any such conversion, an “Early Conversion”), to which the provisions of   Section 9(i)(i) of this Confirmation shall apply), the date on   which the “Holder” (as such term is defined in the Indenture) of such   Convertible Note satisfies all of the requirements for conversion thereof as   set forth in Section 14.02(b) of the Indenture.
    
	
 
    	
 
    
	
Cut-Off Date:
    	
The 45th “Scheduled Trading Day” (as defined in the   Indenture) immediately preceding the “Maturity Date” (as defined in the   Indenture).
    
	
 
    	
 
    
	
Expiration Time:
    	
The Valuation Time
    
	
 
    	
 
    
	
Expiration Date:
    	
February 1, 2023, subject to earlier exercise.
    
	
 
    	
 
    
	
Multiple Exercise:
    	
Applicable, as described under “Automatic Exercise”   below.
    
	
 
    	
 
    
	
Automatic Exercise:
    	
Notwithstanding Section 3.4 of the Equity   Definitions, on each Conversion Date occurring on or after the Cut-Off Date   in respect of which a “Notice of Conversion” (as defined in the Indenture)   that is effective as to Counterparty has been delivered by the relevant   converting “Holder” (as such term is defined in the Indenture), a number of   Options equal to the number of Convertible Notes in denominations of USD   1,000 as to which such Conversion Date has occurred shall be deemed to be   automatically exercised; provided that   such Options shall be exercised or deemed exercised only if Counterparty has   provided a Notice of Exercise to Dealer in accordance with “Notice of   Exercise” below.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the foregoing, in no event shall the   number of Options that are exercised or deemed exercised hereunder exceed the   Number of Options.
    
	
 
    	
 
    
	
Notice of Exercise:
    	
Notwithstanding anything to the contrary in the   Equity Definitions or under “Automatic Exercise” above, in order to exercise   any Options relating to Convertible Notes with a Conversion Date occurring on   or after the Cut-Off Date, Counterparty must notify Dealer in writing
    

 

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before 5:00 p.m. (New York City time) on the   second Scheduled Valid Day immediately preceding the Expiration Date of the   number of such Options being exercised.
    
	
 
    	
 
    
	
Valuation Time:
    	
At the close of trading of the regular trading   session on the Exchange.
    
	
 
    	
 
    
	
Market Disruption   Event:
    	
Section 6.3(a) of the Equity Definitions   is hereby replaced in its entirety by the following:
    
	
 
    	
 
    
	
 
    	
“‘Market Disruption Event’ means, in respect of a   Share, (i) a failure by the principal United States national or regional   securities exchange or market on which the Shares are listed for trading to   open for trading or (ii) the occurrence or existence for more than one   half-hour period in the aggregate on any Scheduled Valid Day of any   suspension or limitation imposed on trading (by reason of movements in price   exceeding limits permitted by the relevant stock exchange or otherwise) in   the Shares or in any options contracts or futures contracts relating to the   Shares, and such suspension or limitation occurs or exists at any time before   1:00 p.m. (New York City time) on such Scheduled Valid Day.”
    
	
 
    	
 
    
	
Settlement   Terms.
    	
 
    
	
 
    	
 
    
	
Settlement Method:
    	
Net Share Settlement.
    
	
 
    	
 
    
	
Net Share Settlement:
    	
Dealer will deliver to Counterparty, on the relevant   Settlement Date, a number of Shares equal to the Net Shares in respect of any   Option exercised or deemed exercised hereunder. In no event will the Net   Shares be less than zero.
    
	
 
    	
 
    
	
Net Shares:
    	
In respect of any Option exercised or deemed   exercised, a number of Shares equal to the sum of the quotients, for each   Valid Day during the Settlement Averaging Period for such Option, of   (i) (A) the Option Entitlement on such Valid Day multiplied by (B) (1) the amount by which the   Cap Price exceeds the Strike Price, if the Relevant Price on such Valid Day   is equal to or greater than the Cap Price, (2) the amount by which such   Relevant Price exceeds the Strike Price, if such Relevant Price is greater than   the Strike Price but less than the Cap Price or (3) zero, if such   Relevant Price is less than or equal to the Strike Price, divided by (C) such Relevant Price, divided by (ii) the number of Valid Days in the   Settlement Averaging Period; provided that   in no event shall the Net Shares for any Option exceed a number of Shares   equal to the Applicable Limit for such Option divided by   the Applicable Limit Price on the Settlement Date for such Option.
    
	
 
    	
 
    
	
 
    	
Dealer will pay cash in lieu of delivering any   fractional Shares to be delivered with respect to any Net Shares
    

 

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valued at the Relevant Price for the last Valid Day   of the Settlement Averaging Period.
    
	
 
    	
 
    
	
Applicable Limit:
    	
For any Option, an amount of cash equal to the   Applicable Percentage multiplied by   the excess of (i) the number of Shares delivered to the Holder of the   related Convertible Note upon conversion of such Convertible Note multiplied by the Applicable Limit Price on the Settlement   Date for such Option, over (ii) USD 1,000.
    
	
 
    	
 
    
	
Applicable Limit Price:
    	
On any day, the opening price as displayed under the   heading “Op” on Bloomberg page NVAX <equity> (or any successor   thereto).
    
	
 
    	
 
    
	
Valid Day:
    	
A day on which (i) there is no Market   Disruption Event and (ii) the principal U.S. national or regional   securities exchange on which the Shares are listed or admitted for trading is   open for trading with a Scheduled Closing Time of 4:00 p.m. (New York City   time) or the then-standard closing time for regular trading on such exchange,   or, if the Shares are not listed on a U.S. national or regional securities   exchange, any Business Day.
    
	
 
    	
 
    
	
Scheduled Valid Day:
    	
A day that is scheduled to be a Valid Day on the   principal U.S. national or regional securities exchange on which the Shares   are listed or admitted for trading. If the Shares are not so listed or   admitted for trading, “Scheduled Valid Day” means a Business Day.
    
	
 
    	
 
    
	
Business Day:
    	
Any day other than a Saturday, a Sunday or a day on   which state or federally chartered banking institutions in New York, New York   are not required to be open.
    
	
 
    	
 
    
	
Relevant Price:
    	
On any Valid Day, the per Share volume-weighted   average price as displayed under the heading “Bloomberg VWAP” on Bloomberg   page “NVAX Equity AQR” (or its equivalent successor if such page is   not available) in respect of the period from the scheduled open of trading   until the Scheduled Closing Time of the Exchange on such Valid Day or, if   such volume-weighted average price is unavailable, the market value of one   Share on such Valid Day, as determined by the Calculation Agent using, if   practicable, a volume-weighted average price method. The Relevant Price will   be determined without regard to after-hours trading or any other trading   outside of the regular trading session trading hours.
    
	
 
    	
 
    
	
Settlement Averaging   Period:
    	
For any Option being exercised hereunder, the 40   consecutive Valid Days commencing on, and including, the 42nd Scheduled Valid   Day immediately prior to the Expiration Date.
    
	
 
    	
 
    
	
Settlement Date:
    	
For any Option, the third Business Day immediately   following the final Valid Day of the Settlement Averaging Period for such   Option.
    
	
 
    	
 
    
	
Settlement Currency:
    	
USD
    

 

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Other Applicable   Provisions:
    	
The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11   of the Equity Definitions will be applicable, except that all references in   such provisions to “Physically-settled” shall be read as references to “Net   Share Settled”. “Net Share Settled” in relation to any Option means that Net   Share Settlement is applicable to that Option.
    
	
 
    	
 
    
	
Representation and   Agreement:
    	
Notwithstanding anything to the contrary in the   Equity Definitions (including, but not limited to, Section 9.11   thereof), the parties acknowledge that (i) any Shares delivered to   Counterparty may be, upon delivery, subject to restrictions and limitations   arising from Counterparty’s status as issuer of the Shares under applicable   securities laws, (ii) Dealer may deliver any Shares required to be   delivered hereunder in certificated form in lieu of delivery through the   Clearance System and (iii) any Shares delivered to Counterparty may be   “restricted securities” (as defined in Rule 144 under the Securities Act   of 1933, as amended (the “Securities Act”)).
    

 

3.             Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
Potential Adjustment   Events:
    	
Notwithstanding Section 11.2(e) of the   Equity Definitions, a “Potential Adjustment Event” means an occurrence of any   event or condition, as set forth in any Dilution Adjustment Provision, that   would result in an adjustment under the Indenture to the “Conversion Rate” or   the composition of a “unit of Reference Property” or to any “Last Reported   Sale Price” , “Daily VWAP,” “Daily Conversion Value” or “Daily   Settlement Amount” (each as defined in the Indenture). For the avoidance of   doubt, Dealer shall not have any delivery or payment obligation hereunder,   and no adjustment shall be made to the terms of the Transaction, on account   of (x) any distribution of cash, property or securities by Counterparty   to “Holders” (as such term is defined in the Indenture) of the Convertible   Notes (upon conversion or otherwise) or (y) any other transaction in   which “Holders” (as such term is defined in the Indenture) of the Convertible   Notes are entitled to participate, in each case, in lieu of an adjustment   under the Indenture of the type referred to in the immediately preceding   sentence (including, without limitation, pursuant to the fourth sentence of   the second paragraph of Section 14.04(c) of the Indenture or the   fourth sentence of the second paragraph of Section 14.04(d) of the   Indenture).
    
	
 
    	
 
    
	
Method of Adjustment:
    	
Calculation Agent Adjustment, which means that,   notwithstanding Section 11.2(c) of the Equity Definitions, upon any   Potential Adjustment Event, the Calculation Agent shall make (A) an   adjustment corresponding to the adjustment to be made pursuant to the   Indenture (or, if no Convertible Notes are outstanding, that would have been   made if Convertible Notes were outstanding) to any one or more of the Strike   Price, Number of Options, and/or
    

 

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Option Entitlement and (B) proportionate   adjustment to the Cap Price to the extent any adjustment is made to the   Strike Price pursuant to clause (A) above (which adjustment, for the   avoidance of doubt, shall not prohibit Dealer from making any further adjustments   to the Cap Price in accordance with, and subject in all respects to,   Section 9(x)); provided that   in no event shall the Strike Price be adjusted to be greater than the Cap   Price.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the foregoing and “Consequences of   Merger Events / Tender Offers” below, if the Calculation Agent in good faith   disagrees with any adjustment to the Convertible Notes that involves an   exercise of discretion by Counterparty or its board of directors (including,   without limitation, pursuant to Section 14.05 of the Indenture,   Section 14.07 of the Indenture or any supplemental indenture entered   into thereunder or in connection with any proportional adjustment or the   determination of the fair value of any securities, property, rights or other   assets), then in each such case, the Calculation Agent will determine   (A) an adjustment to be made to any one or more of the Strike Price,   Number of Options, and/or Option Entitlement in a commercially reasonable   manner and (B) a proportionate adjustment to be made to the Cap Price to   the extent any adjustment is made to the Strike Price pursuant to clause   (A) above (which adjustment, for the avoidance of doubt, shall not   prohibit Dealer from making any further adjustments to the Cap Price in   accordance with, and subject in all respects to, Section 9(x)); provided that in no event shall the Strike Price be   adjusted to be greater than the Cap Price.
    
	
 
    	
 
    
	
 
    	
For the avoidance of doubt, whenever the Calculation   Agent or Determining Party, as the case may be, is called upon to make an   adjustment pursuant to the terms of this Confirmation or the Equity   Definitions (other than any adjustment required to be made by reference to   the terms of the Convertible Notes or the Indenture) to take into account the   effect of an event, the Calculation Agent or Determining Party, as the case   may be, shall make such adjustment by reference to the effect of such event   on the Hedging Party, assuming that the Hedging Party maintains a commercially   reasonable hedge position.
    
	
 
    	
 
    
	
Dilution Adjustment   Provisions:
    	
Sections 14.04(a), (b), (c), (d) and   (e) and Section 14.05 of the Indenture.
    
	
 
    	
 
    
	
Extraordinary   Events applicable to the Transaction:
    
	
 
    	
 
    
	
Merger Events:
    	
Applicable; provided that   notwithstanding Section 12.1(b) of the Equity Definitions, a   “Merger Event” means the occurrence of any event or condition set forth in   the definition of “Share Exchange Event” in Section 14.07 of the   Indenture.
    

 

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Tender Offers:
    	
Applicable; provided that   notwithstanding Section 12.1(d) of the Equity Definitions, a   “Tender Offer” means the occurrence of any event or condition set forth in   Section 14.04(e) of the Indenture.
    
	
 
    	
 
    
	
Consequences of Merger   Events / Tender Offers:
    	
 

Notwithstanding Section 12.2 and   Section 12.3 of the Equity Definitions, upon the occurrence of a Merger   Event or a Tender Offer that is required under the terms of the Indenture to   result in an adjustment to the terms of the Convertible Notes, the   Calculation Agent shall make (A) a corresponding adjustment to any one   or more of the nature of the Shares, Strike Price, Number of Options and   Option Entitlement, in each case, to the extent an analogous adjustment would   be made pursuant to the Indenture in connection with such Merger Event or   Tender Offer, or to the definitions of “Exchange”, “Relevant Price”, and   “Settlement Averaging Period” of this Confirmation and any other variable   relevant to the exercise, settlement or payment for the Transaction, subject   to the second paragraph under “Method of Adjustment” and (B) a   proportionate adjustment to the Cap Price to the extent any adjustment is   made to the Strike Price pursuant to clause (A) above (which adjustment,   for the avoidance of doubt, shall not prohibit Dealer from making any further   adjustments to the Cap Price in accordance with, and subject in all respects   to, Section 9(x)); provided that   in no event shall the Strike Price be adjusted to be greater than the Cap   Price; provided, however,   that such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to any Excluded Provision. Notwithstanding the   foregoing, if, with respect to a Merger Event or a Tender Offer, (i) the   consideration for the Shares includes (or, at the option of a holder of   Shares, may include) shares of an entity or person that is not a corporation   or is not organized under the laws of the United States, any State thereof or   the District of Columbia or (ii) the Counterparty to the Transaction   following such Merger Event or Tender Offer will not be a corporation or will   not be either (A) the Issuer following such Merger Event or Tender Offer   or (B) a wholly owned subsidiary of the Issuer (1) that is a corporation   organized under the laws of the United States, any State thereof or the   District of Columbia, (2) whose obligations under the Transaction are   fully and unconditionally guaranteed by the Issuer and (3) with respect   to which the Calculation Agent determines that treating such wholly owned   subsidiary as the Counterparty will not have a material adverse effect on   Dealer’s rights or obligations hereunder, Dealer’s hedging activities, or the   costs of engaging in any of the foregoing, then, in either case, Cancellation   and Payment (Calculation Agent Determination) may apply at Dealer’s sole   reasonable election; provided that   Dealer shall consult with Counterparty prior to declaring an Early   Termination Date with respect to the Transaction. For the
    

 

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avoidance of doubt, the foregoing provisions will   apply regardless of whether any Merger Event or Tender Offer gives rise to an   Early Conversion.
    
	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
 

Modified Calculation Agent Adjustment as set forth   in Section 12.3(d) of the Equity Definitions; provided   that, in respect of an Announcement Event, (v) references to “Tender   Offer” shall be replaced by references to “Announcement Event” and references   to “Tender Offer Date” shall be replaced by references to “date of such   Announcement Event”, (w) the word “shall” in the second line shall be   replaced with “may”, (x) the phrase “exercise, settlement, payment or   any other terms of the Transaction (including, without limitation, the   spread)” shall be replaced by the phrase “Cap Price (provided   that in no event shall the Cap Price be less than the Strike Price)”,   (y) the fifth and sixth lines shall be deleted in their entirety and   replaced with the words “effect, taken cumulatively on the Option, of such   Announcement Event solely to account for changes in volatility, expected   dividends, stock loan rate or liquidity relevant to the Shares or such   Option”, and (z) for the avoidance of doubt, the Calculation Agent may   adjust the terms of the Transaction for a single Announcement Event on one or   more occasions on or after the date of such Announcement Event up to, and   including, the Expiration Date, any Early Termination Date and/or any other   date of cancellation, it being understood that any adjustment in respect of   an Announcement Event shall take into account any earlier adjustment relating   to the same Announcement Event and any adjustment in respect of an   Announcement Event hereunder shall be without duplication in respect of any   other adjustment or cancellation valuation made pursuant to the Equity   Definitions or hereunder. An Announcement Event shall be an “Extraordinary   Event” for purposes of the Equity Definitions, to which Article 12 of   the Equity Definitions is applicable.
    
	
 
    	
 
    
	
Announcement Event:
    	
(i) The public announcement by any entity of any   transaction or event that, if completed, would constitute a Merger Event or   Tender Offer, or (ii) any subsequent public announcement by any entity of a   change to a transaction that is the subject of an announcement of the type   described in clause (i) of this sentence (including, without limitation, a   new announcement, whether or not by the same party, relating to such a   transaction or the announcement of a withdrawal from, or the abandonment or   discontinuation of, such a transaction), as determined by the Calculation   Agent. For the avoidance of doubt, the occurrence of an Announcement Event   with respect to any transaction shall not preclude the occurrence of a later   Announcement Event with respect to such transaction. For purposes of this   definition of “Announcement Event,” (A) “Merger Event” shall mean such term   as defined under Section 12.1(b) of the Equity
    

 

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Definitions (but, for the avoidance of doubt, the   remainder of the definition of “Merger Event” in Section 12.1(b) of   the Equity Definitions following the definition of “Reverse Merger” therein   shall be disregarded) and (B) “Tender Offer” shall mean such term as   defined under Section 12.1(d) of the Equity Definitions.
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation and Payment (Calculation Agent   Determination); provided that, in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions,   it will also constitute a Delisting if the Exchange is located in the United   States and the Shares are not immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors); if the Shares are   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    
	
 
    	
 
    
	
Change in Law:
    	
Applicable; provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the word “Shares” with the phrase “Hedge Positions” in   clause (X) thereof; (ii) inserting the parenthetical “(including,   for the avoidance of doubt and without limitation, adoption or promulgation   of new regulations authorized or mandated by existing statute)” at the end of   clause (A) thereof; (iii) replacing the phrase “the interpretation”   in the third line thereof with the phrase “or announcement of the formal or   informal interpretation”; and (iv) immediately following the word   “Transaction” in clause (X) thereof, adding the phrase “in the manner   contemplated by the Hedging Party on the Trade Date”.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
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   language at the end of such Section:
    
	
 
    	
 
    
	
 
    	
“, provided   that any such inability that occurs solely due to the deterioration of the   creditworthiness of the Hedging Party shall not be deemed a Hedging   Disruption. 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
    

 

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referred to in phrases   (A) or (B) above must be available on commercially reasonable   pricing terms.”; and
    
	
 
    	
 
    
	
 
    	
(ii)   Section 12.9(b)(iii) of the   Equity Definitions is hereby amended by inserting in the third line thereof,   after the words “to terminate the Transaction”, the words “or a portion of   the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    
	
Hedging Party:
    	
For all applicable Additional Disruption Events,   Dealer; provided that all calculations and   determinations by the Hedging Party shall be made in good faith and in a   commercially reasonable manner; provided further   that nothing herein shall limit or alter, or be deemed to limit or alter, the   ability of Dealer (whether acting as Dealer, the Hedging Party, the   Determining Party or the Calculation Agent) to hedge its obligations under   the Transaction in a manner it deems appropriate, as determined by Dealer in   its sole discretion. The parties agree that they will comply with the   provisions set forth in the second paragraph under “Calculation Agent” below.
    
	
 
    	
 
    
	
Determining Party:
    	
For all applicable Extraordinary Events, Dealer; provided that all calculations and determinations by the   Determining Party shall be made in good faith and in a commercially   reasonable manner. The parties agree that they will comply with the   provisions set forth in the second paragraph under “Calculation Agent” below.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
 

Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.             Calculation Agent.
    	
Dealer; provided   that, following the occurrence and during the continuance of an Event of   Default of the type described in Section 5(a)(vii) of the Agreement   with respect to which Dealer is the sole Defaulting Party, Counterparty shall   have the right to designate a nationally recognized independent equity   derivatives dealer to replace Dealer as the Calculation Agent, and the   parties shall work in good faith to execute any appropriate documentation   required by such replacement Calculation Agent. All calculations, adjustments,   specifications, choices and determinations by the Calculation Agent shall be   made in good faith and in a commercially reasonable manner. The parties agree   that they will comply with the provisions set forth in the immediately   following paragraph.
    
	
 
    	
 
    
	
 
    	
In the case of any calculation, adjustment or   determination by the Determining Party or the Calculation Agent, as the case   may be, following any written request from Counterparty, the Determining   Party or the
    

 

11

 

	
 
    	
Calculation Agent, as the   case may be, shall promptly provide to Counterparty a written explanation   describing in reasonable detail the basis for such calculation, adjustment or   determination (including any quotation, market data or information from   internal or external sources used in making such calculation, adjustment or   determination), but without disclosing any proprietary or confidential models   used by it for such calculation, adjustment or determination or any information that is subject to an   obligation not to disclose such information.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Counterparty:

 

	
Bank:
    	
State Street Bank & Trust Company
    
	
ABA#:
    	
011000028
    
	
Acct No.:
    	
17039843
    
	
Acct Name:
    	
Custody Services
    
	
For final credit 
    	
Novavax Inc. DE2930
    
	
to account: 
    	
 
    

 

Account for delivery of Shares to Counterparty:

 

To be advised.

 

(b)                                 Account for payments to Dealer:

 

	
Bank:
    	
JPMorgan Chase Bank, N.A.
    
	
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 Counterparty for the Transaction is:  Inapplicable, Counterparty is not a Multibranch Party.

 

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

 

JPMorgan Chase Bank, National Association

London Branch

25 Bank Street

Canary Wharf

London E14 5JP

England

 

12

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Counterparty:

 

Novavax, Inc. 
 20 Firstfield Road
 Gaithersburg, Maryland 20878
 Attention:                                         Chief Financial Officer
 Telephone No.:             (240) 268-2030
 Facsimile No.:                   (240) 268-2100

Email:                                                            bphillips@Novavax.com

 

With a copy to:

 

Ropes & Gray LLP

Attention: Isabel Dische, Esq. and Thomas Holden, Esq.

Telephone No: (212) 596-9000

Facsimile No: (212) 596-9090

Email: isabel.dische@ropesgray.com; thomas.holden@ropesgray.com

 

(b)                                 Address for notices or communications to Dealer:

 

JPMorgan Chase Bank, National Association

EDG Marketing Support

Email:                                                            edg_notices@jpmorgan.com

edg.us.flow.corporates.mo@jpmorgan.com

Facsimile No:                      1-866-886-4506

 

With a copy to:

 

Attention:                                         Santosh Sreenivasan

Title:                                                                    Managing Director

Telephone No:                (212) 622-5604

Email:                                                            santosh.sreenivasan@jpmorgan.com

 

8.                                      Representations and Warranties of Counterparty.

 

Each of the representations and warranties of Counterparty set forth in Section 1 of the Purchase Agreement (the “Purchase Agreement”) dated as of January 25, 2016, among Counterparty, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the Initial Purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein, except to the extent that such representations and warranties, if not true or correct, would not have a material adverse effect on the power or ability of Company to execute and deliver this Confirmation or to perform its obligations hereunder.  Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:

 

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

 

13

 

(b)                                 Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of (i) the Certificate of Incorporation or the Amended and Restated By-Laws of Counterparty (or any equivalent documents), (ii) any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or (iii) any agreement or instrument filed as an exhibit to Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (as updated by any subsequent filings) to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument except, in the case of clause (iii) above, for any such conflict, breach, default or lien that would not, individually or in the aggregate, have a material adverse effect on (x) Counterparty and its subsidiaries, taken as a whole, (y) Dealer’s rights or obligations relating to the Transaction, or (z) the power or ability of Counterparty to execute and deliver this Confirmation or perform its obligations hereunder.

 

(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 Counterparty of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities laws.

 

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

 

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

 

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

 

(g)                                  The documents incorporated by reference in the Offering Memorandum, when they were filed with the U.S. Securities Exchange Commission (the “Commission”) conformed in all material respects to the requirements of the Exchange Act, and the Offering Memorandum does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(h)                                 To Counterparty’s knowledge, 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) by Dealer as a result of Dealer owning or holding (however defined) Shares except for the reporting requirements of the Exchange Act and the rules promulgated thereunder; provided that Counterparty makes no representation or warranty regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer solely as a result of it being a financial institution or broker-dealer.

 

(i)                                     Counterparty understands that no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations as of the date hereof are not guaranteed by any Affiliate of Dealer or any governmental agency.

 

(j)                                    COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS.

 

14

 

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

 

(l)                                     Counterparty is not as of the Trade Date, and Counterparty shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase 26,427,834 Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization.

 

(m)                             Counterparty understands, agrees and acknowledges that Dealer has no obligation or intention to register the Transaction under the Securities Act, any state securities law or other applicable federal securities law.

 

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

 

9.                                      Other Provisions.

 

(a)                                 [Reserved.]

 

(b)                                 Repurchase Notices.  Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 257.9 million (in the case of the first such notice) or (ii) thereafter more than 11.0 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all direct losses (including losses relating to Dealer’s commercially reasonable hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from commercially reasonable hedging activities or cessation of commercially reasonable hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and reasonable expenses (including commercially reasonable attorney’s fees of one outside counsel in each relevant jurisdiction), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the commercially reasonable fees and expenses of such counsel related to such proceeding.  Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Counterparty shall not, without the prior written consent of the Indemnified Person (such consent not to be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is a party and indemnity could have been sought 

 

15

 

hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

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

 

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

 

(e)                                  Transfer or Assignment.

 

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

 

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

 

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

 

(C)                               Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have been required to pay to Counterparty in the absence of such transfer and assignment;

 

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

 

(E)                                Counterparty shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that results described in clauses (C) and (D) will not occur upon or after such transfer and assignment; and

 

16

 

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

 

(ii)                                  Dealer may transfer or assign all or any part of its rights or obligations under the Transaction (A) without Counterparty’s consent to any affiliate of Dealer (1) that has a long-term issuer rating or a rating for its long term, unsecured and unsubordinated indebtedness, in either case, that is equal to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer or Dealer’s ultimate parent, or (B) with Counterparty’s consent (such consent not to be unreasonably withheld or delayed) to any other third party with a long-term issuer rating or a rating for its long term, unsecured and unsubordinated indebtedness, as the case may be, equal to or better than the lesser of (1) the credit rating of Dealer at the time of such transfer or assignment and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by Counterparty and Dealer; provided that any transfer or assignment described in clause (A) or (B) above shall not result in a deemed exchange by Counterparty within the meaning of Section 1001 of the Code; provided further that (x) Counterparty will not be required, as a result of such transfer or assignment, to pay the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than the amount, if any, that Counterparty would have been required to pay Dealer in the absence of such transfer or assignment and (y) Dealer shall cause the transferee or assignee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Counterparty to permit Counterparty to determine that the results described in clause (x) of this proviso will not occur upon or after such transfer and assignment.  If at any time at which (A) the Section 16 Percentage exceeds 8.5%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party). Dealer shall notify Counterparty of an Excess Ownership Position with respect to which it intends to seek a transfer or assignment as soon as reasonably practicable after becoming aware of such an Excess Ownership Position. The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange 

 

17

 

Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that would give rise to reporting or registration obligations (except for any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act) or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or is reasonably likely to result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

 

(iii)                               Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations; provided that Counterparty shall have recourse to Dealer in the event of failure by such assignee to perform any of such obligations hereunder.  Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance to Counterparty by such affiliate of Dealer.

 

(f)                                   Staggered Settlement.  If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) only to the extent reasonably necessary, as reasonably determined by Dealer in good faith, to avoid an Excess Ownership Position as follows:

 

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

 

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

 

(iii)                              the Net Share Settlement terms will apply on each Staggered Settlement Date, except that the Net Shares will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause (i) above.

 

(g)                                  Role of Agent.  Each party agrees and acknowledges that (i) J.P. Morgan Securities LLC, an affiliate of Dealer (“JPMS”), has acted solely as agent for Dealer and not as principal with respect to the Transaction and (ii) JPMS has no obligation or liability, by way of guaranty, endorsement or

 

18

 

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. For the avoidance of doubt, any performance by Dealer of its obligations hereunder solely to JPMS shall not relieve Dealer of such obligations. Any performance by Counterparty of its obligations (including notice obligations) through or by means of JPMS’ agency for Dealer shall constitute good performance of Counterparty’s obligations hereunder to Dealer.

 

(h)                                 [Reserved.]

 

(i)                                     Additional Termination Events.

 

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

 

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

 

(B)                               upon receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for such Affected Convertible Notes) with respect to the portion of the Transaction corresponding to a number of Options (the “Affected Number of Options”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Options as of the Conversion Date for such Early Conversion;

 

(C)                               any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the Affected Number of Options, (y) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (z) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this Section 9(i)(i) as if Counterparty were not the Affected Party) (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the Conversion Rate pursuant to any Excluded Provision); provided that the amount payable with respect to such termination shall not be greater than (1) the Applicable Percentage, multiplied by (2) the Affected Number of Options, multiplied by (3) the excess of (I) the Conversion Rate (after taking into account any applicable adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture), multiplied by the Applicable Limit Price on the settlement date for the Shares to be delivered pursuant to the Indenture in respect of the Affected Convertible Note, minus (II) USD 1,000;

 

(D)                               for the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement, the Calculation Agent shall assume that (x) the relevant Early Conversion and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of 

 

19

 

Counterparty leading thereto had not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Excluded Provision and (z) the corresponding Convertible Notes remain outstanding; and

 

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

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, and such event of default results in the Convertible Notes becoming or being declared due and payable pursuant to the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement (which Early Termination Date shall be on or as promptly as reasonably practicable after Dealer becomes aware of the occurrence of such acceleration).

 

(iii)                               Promptly (but in any event within five Scheduled Trading Days) following any Repurchase Event (as defined below), Counterparty may notify Dealer of such Repurchase Event and the aggregate principal amount of Convertible Notes subject to such Repurchase Event (any such notice, a “Convertible Notes Repurchase Notice”); provided that any such Convertible Notes Repurchase Notice shall contain an acknowledgment by Counterparty of its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of such Repurchase Event and the delivery of such Convertible Notes Repurchase Notice. The receipt by Dealer from Counterparty of any Convertible Notes Repurchase Notice shall constitute an Additional Termination Event as provided in this Section 9(i)(iii). Upon receipt of any such Convertible Notes Repurchase Notice, Dealer shall designate an Exchange Business Day following receipt of such Convertible Notes Repurchase Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for the relevant Repurchase Event) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Repurchase Options”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Convertible Notes Repurchase Notice, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repurchase Options. Any payment hereunder with respect to such termination (the “Repurchase Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repurchase Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this Section 9(i)(iii) as if Counterparty was not the Affected Party). “Repurchase Event” means that (i) any Convertible Notes are repurchased (whether pursuant to Section 15.02 of the Indenture or otherwise) by Counterparty or any of its subsidiaries, (ii) any Convertible Notes are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (iii) any principal of any of the Convertible Notes is repaid prior to the final maturity date of the Convertible Notes (other than upon acceleration of the Convertible Notes described in Section 9(i)(ii)), or (iv) any Convertible Notes are exchanged by or for the benefit of the Holders (as defined in the Indenture) thereof for any other securities of Counterparty or any of its Affiliates

 

20

 

(or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that neither (i) any conversion of Convertible Notes pursuant to the terms of the Indenture, nor (ii) any exchange of Convertible Notes pursuant to Section 15.06 of the Indenture, shall in either case constitute a Repurchase Event.

 

(j)                                    Amendments to Equity Definitions.

 

(i)                                     Section 11.2(e)(vii) of the Equity Definitions is hereby amended by (x) inserting the words “similar corporate” immediately prior to the word “event” and (y) deleting the words “diluting or concentrative” and replacing them with the word “material”; and adding the phrase “or the Options” at the end of the sentence.

 

(ii)                                  Section 12.9(b)(i) of the Equity Definitions is hereby amended by replacing “either party may elect” with “Dealer may elect or, if Counterparty represents that it and its officers and directors are not aware of any material nonpublic information with respect to Counterparty or the Shares, Counterparty may elect,”.

 

(k)                                 No Collateral or Setoff.  Neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

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

 

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

 

 

21

 

	
Share Termination Delivery Property:
    	
A number of Share Termination Delivery Units, as   calculated by the Calculation Agent, equal to the Payment Obligation divided   by the Share Termination Unit Price. The Calculation Agent shall adjust the   Share Termination Delivery Property by replacing any fractional portion of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    
	
Share Termination Unit Price:
    	
The value to Dealer of property contained in one   Share Termination Delivery Unit, as determined by the Calculation Agent in   good faith and by commercially reasonable means and notified by the   Calculation Agent to Dealer at the time of notification of the Payment   Obligation. For the avoidance of doubt, the parties agree that in determining   the Share Termination Delivery Unit Price the Calculation Agent may consider   the purchase price paid in connection with the purchase of Share Termination   Delivery Property.
    
	
 
    	
 
    
	
Share Termination Delivery Unit:
    	
One Share or, if the Shares have changed into cash   or any other property or the right to receive cash or any other property as   the result of a Nationalization, Insolvency or Merger Event (any such   cash or other property, the “Exchange Property”),   a unit consisting of the type and amount of such Exchange Property received   by a holder of one Share (without consideration of any requirement to pay cash   or other consideration in lieu of fractional amounts of any securities) in   such Nationalization, Insolvency or Merger Event, as determined by the   Calculation Agent.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
Other applicable provisions:
    	
If Share Termination Alternative is applicable, the   provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity   Definitions and the provisions set forth opposite the caption “Representation   and Agreement” in Section 2 will be applicable, except that all references   in such provisions to “Physically-settled” shall be read as references to   “Share Termination Settled” and all references to “Shares” shall be read as   references to “Share Termination Delivery Units”. “Share Termination Settled”   in relation to the Transaction means that the Share Termination Alternative   is applicable to the Transaction.
    

 

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

 

22

 

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

 

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

 

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

 

(p)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably determines, in its commercially reasonable judgment and, in respect of clause (ii) below, based on the advice of counsel, that such action is reasonably necessary or advisable (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only if there is a material decrease in liquidity relative to Dealer’s expectations on the Trade Date) or (ii) to enable Dealer to effect transactions in 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 or regulatory requirements, requirements of self-regulatory organizations with jurisdiction over Dealer or its affiliates, or related policies and procedures adopted in good faith by Dealer (so long as such policies and procedures would generally be applicable to counterparties similar to Counterparty and transactions similar to the Transaction); provided that no such Valid Day or other date of valuation, payment or delivery may be postponed or added more than 50 Valid Days after the original Valid Day or other date of valuation, payment or delivery, as the case may be.

 

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

 

(r)                                    Securities Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code, and the parties 

 

23

 

hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

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

 

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

 

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

 

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

 

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

 

(v)                                 Early Unwind. In the event the sale of the “Firm Securities” (as defined in the Purchase Agreement) is not consummated with the Initial Purchasers for any reason by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date, the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”) on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date.  Each of Dealer and Counterparty 

 

24

 

represents and acknowledges to the other that, upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

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

 

(x)                                 Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in this Confirmation, solely for purposes of this Section 9(x), the terms “Potential Adjustment Event,” “Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions (as amended by Section 9(j)(i)), and upon the occurrence of a Merger Date, the occurrence of a Tender Offer Date, or the declaration by Counterparty of the terms of any Potential Adjustment Event, respectively, as such terms are defined in the Equity Definitions, the Calculation Agent may, in its sole discretion, adjust the Cap Price to preserve the fair value of the Options to Dealer; provided that in no event shall the Cap Price be less than the Strike Price; provided further that any adjustment to the Cap Price made pursuant to this Section 9(x) shall be made without duplication of any other adjustment or determination hereunder (including, for the avoidance of doubt, adjustments or determinations made in accordance with “Method of Adjustment,” “Consequences of Merger Events / Tender Offers” and “Consequences of Announcement Events” in Section 3 above).

 

(y)                                 Tax Forms. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service (“IRS”) Form W-9 on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-9 or applicable IRS Form W-8 if the previously tendered IRS Form W-9 becomes incorrect as a result of a change in facts. Dealer shall provide Counterparty a valid IRS Form W-9 or applicable IRS Form W-8 on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-9 or applicable IRS Form W-8 if the previously tendered IRS Form W-9 or applicable IRS Form W-8 becomes incorrect as a result of a change in facts.

 

(z)                                  Certain Withholding Taxes. “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include any tax imposed or collected pursuant to Section 871(m) of the Code or Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

25

 

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

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
J.P.   MORGAN SECURITIES LLC, as agent for JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Santosh Sreenivasan
    
	
 
    	
Authorized Signatory
    
	
 
    	
Name:
    	
Santosh Sreenivasan
    
	
 
    	
 
    
	
 
    	
 
    
	
Accepted and confirmed
    	
 
    
	
as of the Trade Date:
    	
 
    
	
 
    	
 
    
	
NOVAVAX, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Stanley C. Erck
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    
	
Name:
    	
Stanley C. ErckExhibit 10.2

 

Morgan Stanley & Co. LLC

1585 Broadway, 5th Floor

New York, NY 10036

 

	
 
    	
January 25, 2016
    

 

	
To:
    	
Novavax, Inc.
    
	
 
    	
20 Firstfield Road
    
	
 
    	
Gaithersburg, Maryland   20878
    
	
 
    	
Attention:
    	
Chief Financial Officer
    
	
 
    	
Telephone No.:
    	
(240) 268-2030
    
	
 
    	
Facsimile No.:
    	
(240) 268-2100
    
	
 
    	
 
    
	
Re:
    	
Base Call Option   Transaction
    

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction entered into between Morgan Stanley & Co. LLC (“Dealer”) and Novavax, Inc. (“Counterparty”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  Certain defined terms used herein are based on terms that are defined in the Offering Memorandum dated January 25, 2016 (the “Offering Memorandum”) relating to the Convertible Senior Notes due 2023 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD 300,000,000 (as increased by up to an aggregate principal amount of USD 30,000,000 if and to the extent that the Initial Purchasers (as defined herein) exercise their option to purchase additional Convertible Notes pursuant to the Purchase Agreement (as defined herein)) pursuant to an Indenture to be dated January 29, 2016 between Counterparty and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”).  In the event of any inconsistency between the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern.  The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture that are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum.  If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation.  The parties further acknowledge that the Indenture section numbers used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties.  Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended or supplemented following such date (other than any amendment or supplement (x) pursuant to Section 10.01(h) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Offering Memorandum or (y) pursuant to Section 14.07 of the Indenture, subject, in the case of this clause (y), to the second paragraph under “Method of Adjustment” in Section 3), any such amendment or supplement will be disregarded for purposes of this Confirmation unless the parties agree otherwise in writing.

 

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

 

1.             This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and

 

 

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

 

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

 

General Terms.

 

	
Trade Date:
    	
January 25, 2016
    
	
 
    	
 
    
	
Effective Date:
    	
Trade Date
    
	
 
    	
 
    
	
Option Style:
    	
“Modified American”, as   described under “Procedures for Exercise” below
    
	
 
    	
 
    
	
Option Type:
    	
Call
    
	
 
    	
 
    
	
Buyer:
    	
Counterparty
    
	
 
    	
 
    
	
Seller:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The common stock of   Counterparty, par value USD 0.01 per share (Exchange symbol “NVAX”).
    
	
 
    	
 
    
	
Number of Options:
    	
300,000. For the   avoidance of doubt, the Number of Options shall be reduced by any Options   exercised by Counterparty. In no event will the Number of Options be less   than zero.
    
	
 
    	
 
    
	
Applicable Percentage:
    	
40%
    
	
 
    	
 
    
	
Option Entitlement:
    	
A number equal to the   product of the Applicable Percentage and 146.8213
    
	
 
    	
 
    
	
Strike Price:
    	
USD 6.8110
    
	
 
    	
 
    
	
Cap Price:
    	
USD 9.7300
    
	
 
    	
 
    
	
Premium:
    	
USD 13,872,000
    
	
 
    	
 
    
	
Premium Payment Date:
    	
January 29, 2016
    
	
 
    	
 
    
	
Exchange:
    	
The NASDAQ Global   Select Market
    
	
 
    	
 
    
	
Related Exchange(s):
    	
All Exchanges
    

 

2

 

	
Excluded Provisions:
    	
Section 14.04(g) and   Section 14.03 of the Indenture.
    

 

Procedures for Exercise.

 

	
Conversion Date:
    	
With respect to any   conversion of a Convertible Note (other than any conversion of Convertible   Notes with a Conversion Date occurring prior to the Cut-Off Date (any such   conversion, an “Early Conversion”),   to which the provisions of Section 9(i)(i) of this Confirmation   shall apply), the date on which the “Holder” (as such term is defined in the   Indenture) of such Convertible Note satisfies all of the requirements for   conversion thereof as set forth in Section 14.02(b) of the   Indenture.
    
	
 
    	
 
    
	
Cut-Off Date:
    	
The 45th “Scheduled   Trading Day” (as defined in the Indenture) immediately preceding the   “Maturity Date” (as defined in the Indenture).
    
	
 
    	
 
    
	
Expiration Time:
    	
The Valuation Time
    
	
 
    	
 
    
	
Expiration Date:
    	
February 1, 2023,   subject to earlier exercise.
    
	
 
    	
 
    
	
Multiple Exercise:
    	
Applicable, as   described under “Automatic Exercise” below.
    
	
 
    	
 
    
	
Automatic Exercise:
    	
Notwithstanding   Section 3.4 of the Equity Definitions, on each Conversion Date occurring   on or after the Cut-Off Date in respect of which a “Notice of Conversion” (as   defined in the Indenture) that is effective as to Counterparty has been   delivered by the relevant converting “Holder” (as such term is defined in the   Indenture), a number of Options equal to the number of Convertible Notes in   denominations of USD 1,000 as to which such Conversion Date has occurred   shall be deemed to be automatically exercised; provided that   such Options shall be exercised or deemed exercised only if Counterparty has   provided a Notice of Exercise to Dealer in accordance with “Notice of   Exercise” below.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the   foregoing, in no event shall the number of Options that are exercised or   deemed exercised hereunder exceed the Number of Options.
    
	
 
    	
 
    
	
Notice of Exercise:
    	
Notwithstanding   anything to the contrary in the Equity Definitions or under “Automatic   Exercise” above, in order to exercise any Options relating to Convertible   Notes with a Conversion Date occurring on or after the Cut-Off Date,   Counterparty must notify Dealer in writing before 5:00 p.m. (New York   City time) on the second Scheduled Valid Day immediately preceding the   Expiration Date of the number of such Options being exercised.
    
	
 
    	
 
    
	
Valuation Time:
    	
At the close of trading   of the regular trading session on the Exchange.
    
	
 
    	
 
    
	
Market Disruption   Event:
    	
Section 6.3(a) of   the Equity Definitions is hereby replaced in its entirety by the following:
    

 

3

 

	
 
    	
“‘Market Disruption   Event’ means, in respect of a Share, (i) a failure by the principal   United States national or regional securities exchange or market on which the   Shares are listed for trading to open for trading or (ii) the occurrence   or existence for more than one half-hour period in the aggregate on any   Scheduled Valid Day of any suspension or limitation imposed on trading (by   reason of movements in price exceeding limits permitted by the relevant stock   exchange or otherwise) in the Shares or in any options contracts or futures   contracts relating to the Shares, and such suspension or limitation occurs or   exists at any time before 1:00 p.m. (New York City time) on such   Scheduled Valid Day.”
    

 

Settlement Terms.

 

	
Settlement Method:
    	
Net Share Settlement.
    
	
 
    	
 
    
	
Net Share Settlement:
    	
Dealer will deliver to   Counterparty, on the relevant Settlement Date, a number of Shares equal to   the Net Shares in respect of any Option exercised or deemed exercised   hereunder. In no event will the Net Shares be less than zero.
    
	
 
    	
 
    
	
Net Shares:
    	
In respect of any   Option exercised or deemed exercised, a number of Shares equal to the sum of   the quotients, for each Valid Day during the Settlement Averaging Period for   such Option, of (i) (A) the Option Entitlement on such Valid Day multiplied by (B) (1) the   amount by which the Cap Price exceeds the Strike Price, if the Relevant Price   on such Valid Day is equal to or greater than the Cap Price, (2) the   amount by which such Relevant Price exceeds the Strike Price, if such   Relevant Price is greater than the Strike Price but less than the Cap Price   or (3) zero, if such Relevant Price is less than or equal to the Strike   Price, divided by (C) such   Relevant Price, divided by   (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net   Shares for any Option exceed a number of Shares equal to the Applicable Limit   for such Option divided by the   Applicable Limit Price on the Settlement Date for such Option.
    
	
 
    	
 
    
	
 
    	
Dealer will pay cash in   lieu of delivering any fractional Shares to be delivered with respect to any   Net Shares valued at the Relevant Price for the last Valid Day of the   Settlement Averaging Period.
    
	
 
    	
 
    
	
Applicable Limit:
    	
For any Option, an   amount of cash equal to the Applicable Percentage multiplied by the excess of (i) the number of Shares   delivered to the Holder of the related Convertible Note upon conversion of   such Convertible Note multiplied by   the Applicable Limit Price on the Settlement Date for such Option, over   (ii) USD 1,000.
    

 

4

 

	
Applicable Limit Price:
    	
On any day, the opening   price as displayed under the heading “Op” on Bloomberg page NVAX   <equity> (or any successor thereto).
    
	
 
    	
 
    
	
Valid Day:
    	
A day on which   (i) there is no Market Disruption Event and (ii) the principal U.S.   national or regional securities exchange on which the Shares are listed or   admitted for trading is open for trading with a Scheduled Closing Time of   4:00 p.m. (New York City time) or the then-standard closing time for   regular trading on such exchange, or, if the Shares are not listed on a U.S.   national or regional securities exchange, any Business Day.
    
	
 
    	
 
    
	
Scheduled Valid Day:
    	
A day that is scheduled   to be a Valid Day on the principal U.S. national or regional securities   exchange on which the Shares are listed or admitted for trading. If the   Shares are not so listed or admitted for trading, “Scheduled Valid Day” means   a Business Day.
    
	
 
    	
 
    
	
Business Day:
    	
Any day other than a   Saturday, a Sunday or a day on which state or federally chartered banking   institutions in New York, New York are not required to be open.
    
	
 
    	
 
    
	
Relevant Price:
    	
On any Valid Day, the   per Share volume-weighted average price as displayed under the heading   “Bloomberg VWAP” on Bloomberg page “NVAX Equity AQR” (or its equivalent   successor if such page is not available) in respect of the period from   the scheduled open of trading until the Scheduled Closing Time of the   Exchange on such Valid Day or, if such volume-weighted average price is unavailable,   the market value of one Share on such Valid Day, as determined by the   Calculation Agent using, if practicable, a volume-weighted average price   method. The Relevant Price will be determined without regard to after-hours   trading or any other trading outside of the regular trading session trading   hours.
    
	
 
    	
 
    
	
Settlement Averaging   Period:
    	
For any Option being   exercised hereunder,   the 40   consecutive Valid Days commencing on, and including, the 42nd Scheduled   Valid Day immediately prior to the Expiration Date.
    
	
 
    	
 
    
	
Settlement Date:
    	
For any Option, the   third Business Day immediately following the final Valid Day of the   Settlement Averaging Period for such Option.
    
	
 
    	
 
    
	
Settlement Currency:
    	
USD
    
	
 
    	
 
    
	
Other Applicable   Provisions:
    	
The provisions of   Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be   applicable, except that all references in such provisions to   “Physically-settled” shall be read as references to “Net Share Settled”. “Net   Share Settled” in relation to any Option means that Net Share Settlement is   applicable to that Option.
    
	
 
    	
 
    
	
Representation and   Agreement:
    	
 

Notwithstanding   anything to the contrary in the Equity Definitions (including, but not   limited to, Section 9.11 
    

 

5

 

	
 
    	
thereof), the parties   acknowledge that (i) any Shares delivered to Counterparty may be, upon   delivery, subject to restrictions and limitations arising from Counterparty’s   status as issuer of the Shares under applicable securities laws,   (ii) Dealer may deliver any Shares required to be delivered hereunder in   certificated form in lieu of delivery through the Clearance System and   (iii) any Shares delivered to Counterparty may be “restricted   securities” (as defined in Rule 144 under the Securities Act of 1933, as   amended (the “Securities Act”)).
    

 

3.                                      Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
Potential Adjustment   Events:
    	
Notwithstanding   Section 11.2(e) of the Equity Definitions, a “Potential Adjustment   Event” means an occurrence of any event or condition, as set forth in any   Dilution Adjustment Provision, that would result in an adjustment under the   Indenture to the “Conversion Rate” or the composition of a “unit of Reference   Property” or to any “Last Reported Sale Price” , “Daily VWAP,” “Daily   Conversion Value” or “Daily Settlement Amount” (each as defined in the   Indenture). For the avoidance of doubt, Dealer shall not have any delivery or   payment obligation hereunder, and no adjustment shall be made to the terms of   the Transaction, on account of (x) any distribution of cash, property or   securities by Counterparty to “Holders” (as such term is defined in the   Indenture) of the Convertible Notes (upon conversion or otherwise) or   (y) any other transaction in which “Holders” (as such term is defined in   the Indenture) of the Convertible Notes are entitled to participate, in each   case, in lieu of an adjustment under the Indenture of the type referred to in   the immediately preceding sentence (including, without limitation, pursuant   to the fourth sentence of the second paragraph of   Section 14.04(c) of the Indenture or the fourth sentence of the   second paragraph of Section 14.04(d) of the Indenture).
    
	
 
    	
 
    
	
Method of Adjustment:
    	
Calculation Agent   Adjustment, which means that, notwithstanding Section 11.2(c) of   the Equity Definitions, upon any Potential Adjustment Event, the Calculation   Agent shall make (A) an adjustment corresponding to the adjustment to be   made pursuant to the Indenture (or, if no Convertible Notes are outstanding,   that would have been made if Convertible Notes were outstanding) to any one   or more of the Strike Price, Number of Options, and/or Option Entitlement and   (B) proportionate adjustment to the Cap Price to the extent any   adjustment is made to the Strike Price pursuant to clause (A) above   (which adjustment, for the avoidance of doubt, shall not prohibit Dealer from   making any further adjustments to the Cap Price in accordance with, and   subject in all respects to, Section 9(x)); provided that in no event shall the Strike Price be   adjusted to be greater than the Cap Price.
    

 

6

 

	
 
    	
Notwithstanding the   foregoing and “Consequences of Merger Events / Tender Offers” below, if the   Calculation Agent in good faith disagrees with any adjustment to the   Convertible Notes that involves an exercise of discretion by Counterparty or   its board of directors (including, without limitation, pursuant to   Section 14.05 of the Indenture, Section 14.07 of the Indenture or   any supplemental indenture entered into thereunder or in connection with any   proportional adjustment or the determination of the fair value of any   securities, property, rights or other assets), then in each such case, the   Calculation Agent will determine (A) an adjustment to be made to any one   or more of the Strike Price, Number of Options, and/or Option Entitlement in   a commercially reasonable manner and (B) a proportionate adjustment to   be made to the Cap Price to the extent any adjustment is made to the Strike   Price pursuant to clause (A) above (which adjustment, for the avoidance   of doubt, shall not prohibit Dealer from making any further adjustments to   the Cap Price in accordance with, and subject in all respects to,   Section 9(x)); provided   that in no event shall the Strike Price be adjusted to be greater than the   Cap Price.
    
	
 
    	
 
    
	
 
    	
For the avoidance of   doubt, whenever the Calculation Agent or Determining Party, as the case may   be, is called upon to make an adjustment pursuant to the terms of this   Confirmation or the Equity Definitions (other than any adjustment required to   be made by reference to the terms of the Convertible Notes or the Indenture)   to take into account the effect of an event, the Calculation Agent or   Determining Party, as the case may be, shall make such adjustment by   reference to the effect of such event on the Hedging Party, assuming that the   Hedging Party maintains a commercially reasonable hedge position.
    
	
 
    	
 
    
	
Dilution Adjustment   Provisions:
    	
 

Sections 14.04(a), (b),   (c), (d) and (e) and Section 14.05 of the Indenture.
    
	
 
    	
 
    
	
Extraordinary Events   applicable to the Transaction:
    	
 
    
	
 
    	
 
    
	
Merger Events:
    	
Applicable; provided that notwithstanding Section 12.1(b) of   the Equity Definitions, a “Merger Event” means the occurrence of any event or   condition set forth in the definition of “Share Exchange Event” in   Section 14.07 of the Indenture.
    
	
 
    	
 
    
	
Tender Offers:
    	
Applicable; provided that notwithstanding Section 12.1(d) of   the Equity Definitions, a “Tender Offer” means the occurrence of any event or   condition set forth in Section 14.04(e) of the Indenture.
    
	
 
    	
 
    
	
Consequences of Merger   Events / Tender Offers:
    	
 

Notwithstanding   Section 12.2 and Section 12.3 of the Equity Definitions, upon the   occurrence of a Merger Event or a Tender Offer that is required under the   terms of the Indenture to result in an adjustment to the terms of 
    

 

7

 

	
 
    	
the Convertible Notes,   the Calculation Agent shall make (A) a corresponding adjustment to any   one or more of the nature of the Shares, Strike Price, Number of Options and   Option Entitlement, in each case, to the extent an analogous adjustment would   be made pursuant to the Indenture in connection with such Merger Event or   Tender Offer, or to the definitions of “Exchange”, “Relevant Price”, and   “Settlement Averaging Period” of this Confirmation and any other variable   relevant to the exercise, settlement or payment for the Transaction, subject   to the second paragraph under “Method of Adjustment” and (B) a   proportionate adjustment to the Cap Price to the extent any adjustment is   made to the Strike Price pursuant to clause (A) above (which adjustment,   for the avoidance of doubt, shall not prohibit Dealer from making any further   adjustments to the Cap Price in accordance with, and subject in all respects   to, Section 9(x)); provided   that in no event shall the Strike Price be adjusted to be greater than the   Cap Price; provided, however,   that such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to any Excluded Provision. Notwithstanding the   foregoing, if, with respect to a Merger Event or a Tender Offer, (i) the   consideration for the Shares includes (or, at the option of a holder of   Shares, may include) shares of an entity or person that is not a corporation   or is not organized under the laws of the United States, any State thereof or   the District of Columbia or (ii) the Counterparty to the Transaction   following such Merger Event or Tender Offer will not be a corporation or will   not be either (A) the Issuer following such Merger Event or Tender Offer   or (B) a wholly owned subsidiary of the Issuer (1) that is a   corporation organized under the laws of the United States, any State thereof   or the District of Columbia, (2) whose obligations under the Transaction   are fully and unconditionally guaranteed by the Issuer and (3) with   respect to which the Calculation Agent determines that treating such wholly   owned subsidiary as the Counterparty will not have a material adverse effect   on Dealer’s rights or obligations hereunder, Dealer’s hedging activities, or   the costs of engaging in any of the foregoing, then, in either case,   Cancellation and Payment (Calculation Agent Determination) may apply at   Dealer’s sole reasonable election; provided   that Dealer shall consult with Counterparty prior to declaring an Early   Termination Date with respect to the Transaction. For the avoidance of doubt,   the foregoing provisions will apply regardless of whether any Merger Event or   Tender Offer gives rise to an Early Conversion.
    
	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
 

Modified Calculation   Agent Adjustment as set forth in Section 12.3(d) of the Equity   Definitions; provided that, in   respect of an Announcement Event, (v) references to “Tender Offer” shall   be replaced by references to “Announcement Event” and references to “Tender   Offer Date” shall be replaced by references to “date of such 
    

 

8

 

	
 
    	
Announcement Event”,   (w) the word “shall” in the second line shall be replaced with “may”,   (x) the phrase “exercise, settlement, payment or any other terms of the   Transaction (including, without limitation, the spread)” shall be replaced by   the phrase “Cap Price (provided   that in no event shall the Cap Price be less than the Strike Price)”,   (y) the fifth and sixth lines shall be deleted in their entirety and   replaced with the words “effect, taken cumulatively on the Option, of such   Announcement Event solely to account for changes in volatility, expected   dividends, stock loan rate or liquidity relevant to the Shares or such   Option”, and (z) for the avoidance of doubt, the Calculation Agent may   adjust the terms of the Transaction for a single Announcement Event on one or   more occasions on or after the date of such Announcement Event up to, and   including, the Expiration Date, any Early Termination Date and/or any other   date of cancellation, it being understood that any adjustment in respect of   an Announcement Event shall take into account any earlier adjustment relating   to the same Announcement Event and any adjustment in respect of an   Announcement Event hereunder shall be without duplication in respect of any   other adjustment or cancellation valuation made pursuant to the Equity   Definitions or hereunder. An Announcement Event shall be an “Extraordinary   Event” for purposes of the Equity Definitions, to which Article 12 of   the Equity Definitions is applicable.
    
	
 
    	
 
    
	
Announcement Event:
    	
(i) The public   announcement by any entity of any transaction or event that, if completed,   would constitute a Merger Event or Tender Offer, or (ii) any subsequent   public announcement by any entity of a change to a transaction that is the   subject of an announcement of the type described in clause (i) of this   sentence (including, without limitation, a new announcement, whether or not   by the same party, relating to such a transaction or the announcement of a   withdrawal from, or the abandonment or discontinuation of, such a   transaction), as determined by the Calculation Agent. For the avoidance of   doubt, the occurrence of an Announcement Event with respect to any   transaction shall not preclude the occurrence of a later Announcement Event   with respect to such transaction. For purposes of this definition of   “Announcement Event,” (A) “Merger Event” shall mean such term as defined   under Section 12.1(b) of the Equity Definitions (but, for the   avoidance of doubt, the remainder of the definition of “Merger Event” in   Section 12.1(b) of the Equity Definitions following the definition   of “Reverse Merger” therein shall be disregarded) and (B) “Tender Offer”   shall mean such term as defined under Section 12.1(d) of the Equity   Definitions.
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
 

Cancellation and   Payment (Calculation Agent Determination); provided   that, in addition to the provisions of Section 12.6(a)(iii) of the   Equity Definitions, it will also constitute a Delisting if the Exchange is   located in the United States and the Shares 
    

 

9

 

	
 
    	
are not immediately   re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The   NASDAQ Global Select Market or The NASDAQ Global Market (or their respective   successors); if the Shares are immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors), such exchange or   quotation system shall thereafter be deemed to be the Exchange.
    
	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    
	
 
    	
 
    
	
Change in Law:
    	
Applicable; provided that Section 12.9(a)(ii) of the Equity   Definitions is hereby amended by (i) replacing the word “Shares” with   the phrase “Hedge Positions” in clause (X) thereof; (ii) inserting   the parenthetical “(including, for the avoidance of doubt and without   limitation, adoption or promulgation of new regulations authorized or   mandated by existing statute)” at the end of clause (A) thereof;   (iii) replacing the phrase “the interpretation” in the third line thereof   with the phrase “or announcement of the formal or informal interpretation”;   and (iv) immediately following the word “Transaction” in clause   (X) thereof, adding the phrase “in the manner contemplated by the   Hedging Party on the Trade Date”.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
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   language at the end of such Section:
    
	
 
    	
 
    
	
 
    	
“, provided that any such inability that   occurs solely due to the deterioration of the creditworthiness of the Hedging   Party shall not be deemed a Hedging Disruption. For the avoidance of doubt,   the term “equity price risk” shall be deemed to include, but shall not be   limited to, stock price and volatility risk. And, for the further avoidance   of doubt, any such transactions or assets referred to in phrases (A) or   (B) above must be available on commercially reasonable pricing terms.”;   and
    
	
 
    	
 
    
	
 
    	
(ii)          Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof, after the words “to terminate the Transaction”, the words “or a   portion of the Transaction affected by such Hedging Disruption”.
    

 

10

 

	
Hedging Party:
    	
For all applicable   Additional Disruption Events, Dealer; provided   that all calculations and determinations by the Hedging Party shall be made   in good faith and in a commercially reasonable manner; provided further that nothing herein   shall limit or alter, or be deemed to limit or alter, the ability of Dealer   (whether acting as Dealer, the Hedging Party, the Determining Party or the   Calculation Agent) to hedge its obligations under the Transaction in a manner   it deems appropriate, as determined by Dealer in its sole discretion. The   parties agree that they will comply with the provisions set forth in the   second paragraph under “Calculation Agent” below.
    
	
 
    	
 
    
	
Determining Party:
    	
For all applicable   Extraordinary Events, Dealer; provided   that all calculations and determinations by the Determining Party shall be   made in good faith and in a commercially reasonable manner. The parties agree   that they will comply with the provisions set forth in the second paragraph   under “Calculation Agent” below.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.                                      Calculation Agent.
    	
Dealer; provided that, following the occurrence   and during the continuance of an Event of Default of the type described in   Section 5(a)(vii) of the Agreement with respect to which Dealer is   the sole Defaulting Party, Counterparty shall have the right to designate a   nationally recognized independent equity derivatives dealer to replace Dealer   as the Calculation Agent, and the parties shall work in good faith to execute   any appropriate documentation required by such replacement Calculation Agent.   All calculations, adjustments, specifications, choices and determinations by   the Calculation Agent shall be made in good faith and in a commercially   reasonable manner. The parties agree that they will comply with the   provisions set forth in the immediately following paragraph.
    
	
 
    	
 
    
	
 
    	
In the case of any calculation, adjustment or determination by the   Determining Party or the Calculation Agent, as the case may be, following any   written request from Counterparty, the Determining Party or the Calculation   Agent, as the case may be, shall promptly provide to Counterparty a written   explanation describing in reasonable detail the basis for such calculation,   adjustment or determination (including any quotation, market data or   information from internal or external sources used in making such calculation,   adjustment or determination), but without disclosing any proprietary or   confidential models used by it for such calculation, adjustment or   determination or any information that is subject to an obligation not to   disclose such information.
    

 

11

 

5.                                      Account Details.

 

(a)                                 Account for payments to Counterparty:

 

	
Bank:
    	
State Street   Bank & Trust Company
    
	
ABA#:
    	
011000028
    
	
Acct No.:
    	
17039843
    
	
Acct Name:
    	
Custody Services
    
	
For final credit to   account:
    	
Novavax Inc. DE2930
    

 

Account for delivery of Shares to Counterparty:

 

To be advised.

 

(b)                                 Account for payments to Dealer:

 

	
Bank:
    	
Citibank, N.A.
    
	
SWIFT:
    	
CITIUS33
    
	
Bank Routing:
    	
021-000-089
    
	
Acct No:
    	
Morgan Stanley and Co.
    
	
Acct Name:
    	
30632076
    

 

Account for delivery of Shares from Dealer:

 

To be advised.

 

6.                                      Offices.

 

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

 

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

 

Morgan Stanley & Co. LLC

1585 Broadway, 5th Floor

New York, NY 10036

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Counterparty:

 

Novavax, Inc. 
 20 Firstfield Road
 Gaithersburg, Maryland 20878

	
Attention:
    	
Chief Financial Officer
    
	
Telephone No.:
    	
(240) 268-2030
    
	
Facsimile No.:
    	
(240) 268-2100
    
	
Email:
    	
bphillips@Novavax.com
    

 

With a copy to:

 

Ropes & Gray LLP

Attention: Isabel Dische, Esq. and Thomas Holden, Esq.

Telephone No: (212) 596-9000

Facsimile No: (212) 596-9090

Email: isabel.dische@ropesgray.com; thomas.holden@ropesgray.com

 

12

 

(b)                                 Address for notices or communications to Dealer:

 

	
To:
    	
Morgan   Stanley & Co. LLC
    
	
 
    	
1585 Broadway, 4th   Floor
    
	
 
    	
New York, NY 10036
    
	
Attention:
    	
Usman Khan
    
	
Telephone:
    	
(212) 761-0955
    
	
Email:
    	
Usman.S.Khan@morganstanley.com
    
	
 
    	
 
    
	
With a copy to:
    	
Morgan   Stanley & Co. LLC
    
	
 
    	
1221 Avenue of the   Americas, 34th Floor
    
	
 
    	
New York, NY 10020
    
	
Attention:
    	
Anthony Cicia
    
	
Telephone:
    	
(212) 762-4828
    
	
Facsimile:
    	
(212) 507-4338
    
	
Email:
    	
Anthony.Cicia@morganstanley.com
    

 

8.                                      Representations and Warranties of Counterparty.

 

Each of the representations and warranties of Counterparty set forth in Section 1 of the Purchase Agreement (the “Purchase Agreement”) dated as of January 25, 2016, among Counterparty, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the Initial Purchasers party thereto (the “Initial Purchasers”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein, except to the extent that such representations and warranties, if not true or correct, would not have a material adverse effect on the power or ability of Company to execute and deliver this Confirmation or to perform its obligations hereunder.  Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:

 

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

 

(b)                                 Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of (i) the Certificate of Incorporation or the Amended and Restated By-Laws of Counterparty (or any equivalent documents), (ii) any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or (iii) any agreement or instrument filed as an exhibit to Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 (as updated by any subsequent filings) to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument except, in the case of clause (iii) above, for any such conflict, breach, default or lien that would not, individually or in the aggregate, have a material adverse effect on (x) Counterparty and its subsidiaries, taken as a whole, (y) Dealer’s rights or obligations relating to the Transaction, or (z) the power or ability of Counterparty to execute and deliver this Confirmation or perform its obligations hereunder.

 

(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 Counterparty 

 

13

 

of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities laws.

 

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

 

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

 

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

 

(g)                                  The documents incorporated by reference in the Offering Memorandum, when they were filed with the U.S. Securities Exchange Commission (the “Commission”) conformed in all material respects to the requirements of the Exchange Act, and the Offering Memorandum does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(h)                                 To Counterparty’s knowledge, 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) by Dealer as a result of Dealer owning or holding (however defined) Shares except for the reporting requirements of the Exchange Act and the rules promulgated thereunder; provided that Counterparty makes no representation or warranty regarding any such requirement that is applicable generally to the ownership of equity securities by Dealer solely as a result of it being a financial institution or broker-dealer.

 

(i)                                     Counterparty understands that no obligations of Dealer to it hereunder will be entitled to the benefit of deposit insurance and that such obligations as of the date hereof are not guaranteed by any Affiliate of Dealer or any governmental agency.

 

(j)                                    COUNTERPARTY UNDERSTANDS THAT THE TRANSACTION IS SUBJECT TO COMPLEX RISKS THAT MAY ARISE WITHOUT WARNING AND MAY AT TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS.

 

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

 

(l)                                     Counterparty is not as of the Trade Date, and Counterparty shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase 17,618,556 Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation or organization.

 

(m)                             Counterparty understands, agrees and acknowledges that Dealer has no obligation or intention to register the Transaction under the Securities Act, any state securities law or other applicable federal securities law.

 

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

 

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9.                                      Other Provisions.

 

(a)                                 [Reserved.]

 

(b)                                 Repurchase Notices.  Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 257.9 million (in the case of the first such notice) or (ii) thereafter more than 11.0 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all direct losses (including losses relating to Dealer’s commercially reasonable hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from commercially reasonable hedging activities or cessation of commercially reasonable hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and reasonable expenses (including commercially reasonable attorney’s fees of one outside counsel in each relevant jurisdiction), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the commercially reasonable fees and expenses of such counsel related to such proceeding.  Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Counterparty shall not, without the prior written consent of the Indemnified Person (such consent not to be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty hereunder, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

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

 

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

 

(e)                                  Transfer or Assignment.

 

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

 

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

 

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

 

(C)                               Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have been required to pay to Counterparty in the absence of such transfer and assignment;

 

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

 

(E)                                Counterparty shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that results described in clauses (C) and (D) will not occur upon or after such transfer and assignment; and

 

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

 

(ii)                                  Dealer may transfer or assign all or any part of its rights or obligations under the Transaction (A) without Counterparty’s consent to any affiliate of Dealer (1) that has a long-term issuer rating or a rating for its long term, unsecured and unsubordinated indebtedness, in either case, that is equal to or better than Dealer’s credit rating at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer or Dealer’s ultimate parent, or (B) with Counterparty’s consent (such consent not to be unreasonably withheld or delayed) to any other third party with a long-term issuer rating or a rating for its long term, unsecured and unsubordinated indebtedness, as the case may be, equal to or better than the lesser of (1) the credit rating of Dealer at the time of such transfer or assignment and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by 

 

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Counterparty and Dealer; provided that any transfer or assignment described in clause (A) or (B) above shall not result in a deemed exchange by Counterparty within the meaning of Section 1001 of the Code; provided further that (x) Counterparty will not be required, as a result of such transfer or assignment, to pay the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than the amount, if any, that Counterparty would have been required to pay Dealer in the absence of such transfer or assignment and (y) Dealer shall cause the transferee or assignee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Counterparty to permit Counterparty to determine that the results described in clause (x) of this proviso will not occur upon or after such transfer and assignment.  If at any time at which (A) the Section 16 Percentage exceeds 8.5%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party). Dealer shall notify Counterparty of an Excess Ownership Position with respect to which it intends to seek a transfer or assignment as soon as reasonably practicable after becoming aware of such an Excess Ownership Position. The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that would give rise to reporting or registration obligations (except for any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act) or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or is 

 

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reasonably likely to result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

 

(iii)                               Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations; provided that Counterparty shall have recourse to Dealer in the event of failure by such assignee to perform any of such obligations hereunder.  Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance to Counterparty by such affiliate of Dealer.

 

(f)                                   Staggered Settlement.  If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) only to the extent reasonably necessary, as reasonably determined by Dealer in good faith, to avoid an Excess Ownership Position as follows:

 

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

 

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

 

(iii)                               the Net Share Settlement terms will apply on each Staggered Settlement Date, except that the Net Shares will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause (i) above.

 

(g)                                  [Reserved.]

 

(h)                                 [Reserved.]

 

(i)                                     Additional Termination Events.

 

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

 

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

 

(B)                               upon receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for such Affected Convertible Notes) with respect to the

 

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portion of the Transaction corresponding to a number of Options (the “Affected Number of Options”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Options as of the Conversion Date for such Early Conversion;

 

(C)                               any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the Affected Number of Options, (y) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (z) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this Section 9(i)(i) as if Counterparty were not the Affected Party) (and, in determining the amount payable pursuant to Section 6 of the Agreement, the Calculation Agent shall not take into account any adjustments to the Conversion Rate pursuant to any Excluded Provision); provided that the amount payable with respect to such termination shall not be greater than (1) the Applicable Percentage, multiplied by (2) the Affected Number of Options, multiplied by (3) the excess of (I) the Conversion Rate (after taking into account any applicable adjustments to the Conversion Rate pursuant to Section 14.03 of the Indenture), multiplied by the Applicable Limit Price on the settlement date for the Shares to be delivered pursuant to the Indenture in respect of the Affected Convertible Note, minus (II) USD 1,000;

 

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

 

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

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.01 of the Indenture, and such event of default results in the Convertible Notes becoming or being declared due and payable pursuant to the Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement (which Early Termination Date shall be on or as promptly as reasonably practicable after Dealer becomes aware of the occurrence of such acceleration).

 

(iii)                               Promptly (but in any event within five Scheduled Trading Days) following any Repurchase Event (as defined below), Counterparty may notify Dealer of such Repurchase Event and the aggregate principal amount of Convertible Notes subject to such Repurchase Event (any such notice, a “Convertible Notes Repurchase Notice”); provided that any such Convertible Notes Repurchase Notice shall contain an acknowledgment by Counterparty of its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of such Repurchase Event and the delivery of such 

 

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Convertible Notes Repurchase Notice. The receipt by Dealer from Counterparty of any Convertible Notes Repurchase Notice shall constitute an Additional Termination Event as provided in this Section 9(i)(iii). Upon receipt of any such Convertible Notes Repurchase Notice, Dealer shall designate an Exchange Business Day following receipt of such Convertible Notes Repurchase Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for the relevant Repurchase Event) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Repurchase Options”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Convertible Notes Repurchase Notice, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repurchase Options. Any payment hereunder with respect to such termination (the “Repurchase Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repurchase Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this Section 9(i)(iii) as if Counterparty was not the Affected Party). “Repurchase Event” means that (i) any Convertible Notes are repurchased (whether pursuant to Section 15.02 of the Indenture or otherwise) by Counterparty or any of its subsidiaries, (ii) any Convertible Notes are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (iii) any principal of any of the Convertible Notes is repaid prior to the final maturity date of the Convertible Notes (other than upon acceleration of the Convertible Notes described in Section 9(i)(ii)), or (iv) any Convertible Notes are exchanged by or for the benefit of the Holders (as defined in the Indenture) thereof for any other securities of Counterparty or any of its Affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that neither (i) any conversion of Convertible Notes pursuant to the terms of the Indenture, nor (ii) any exchange of Convertible Notes pursuant to Section 15.06 of the Indenture, shall in either case constitute a Repurchase Event.

 

(j)                                    Amendments to Equity Definitions.

 

(i)                                     Section 11.2(e)(vii) of the Equity Definitions is hereby amended by (x) inserting the words “similar corporate” immediately prior to the word “event” and (y) deleting the words “diluting or concentrative” and replacing them with the word “material”; and adding the phrase “or the Options” at the end of the sentence.

 

(ii)                                  Section 12.9(b)(i) of the Equity Definitions is hereby amended by replacing “either party may elect” with “Dealer may elect or, if Counterparty represents that it and its officers and directors are not aware of any material nonpublic information with respect to Counterparty or the Shares, Counterparty may elect,”.

 

(k)                                 No Collateral or Setoff.  Neither party shall have the right to set off any obligation that it may have to the other party under the Transaction against any obligation such other party may have to it, whether arising under the Agreement, this Confirmation or any other agreement between the parties hereto, by operation of law or otherwise.

 

(l)                                     Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.  If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of 

 

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

 

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

 

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

 

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

 

Share Termination Delivery Unit:                                                             One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without 

 

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consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent.

 

Failure to Deliver:                                                                                                                                                Applicable

 

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

 

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

 

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

 

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

 

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(p)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if Dealer reasonably determines, in its commercially reasonable judgment and, in respect of clause (ii) below, based on the advice of counsel, that such action is reasonably necessary or advisable (i) to preserve Dealer’s hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only if there is a material decrease in liquidity relative to Dealer’s expectations on the Trade Date) or (ii) to enable Dealer to effect transactions in 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 or regulatory requirements, requirements of self-regulatory organizations with jurisdiction over Dealer or its affiliates, or related policies and procedures adopted in good faith by Dealer (so long as such policies and procedures would generally be applicable to counterparties similar to Counterparty and transactions similar to the Transaction); provided that no such Valid Day or other date of valuation, payment or delivery may be postponed or added more than 50 Valid Days after the original Valid Day or other date of valuation, payment or delivery, as the case may be.

 

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

 

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

 

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

 

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

 

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

 

(t)                                    Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, 

 

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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, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

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

 

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

 

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

 

(x)                                 Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in this Confirmation, solely for purposes of this Section 9(x), the terms “Potential Adjustment Event,” “Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions (as amended by Section 9(j)(i)), and upon the occurrence of a Merger Date, the occurrence of a Tender Offer Date, or the declaration by Counterparty of the terms of any Potential Adjustment Event, respectively, as such terms are defined in the Equity Definitions, the Calculation Agent may, in its sole discretion, adjust the Cap Price to preserve the fair value of the Options to Dealer; provided that in no event shall the Cap Price be less than the Strike Price; provided further that any adjustment to the Cap Price made pursuant to this Section 9(x) shall be made without duplication of any other adjustment or determination hereunder (including, for the avoidance of doubt, adjustments or determinations made in accordance with “Method of Adjustment,” “Consequences of Merger Events / Tender Offers” and “Consequences of Announcement Events” in Section 3 above).

 

(y)                                 Tax Forms. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service (“IRS”) Form W-9 on or before the date of execution of this Confirmation and will promptly tender an updated IRS Form W-9 or applicable IRS Form W-8 if the previously tendered IRS Form W-9 becomes incorrect as a result of a change in facts. Dealer shall provide Counterparty a valid IRS Form W-9 or applicable IRS Form W-8 on or before the date of execution of this Confirmation 

 

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and will promptly tender an updated IRS Form W-9 or applicable IRS Form W-8 if the previously tendered IRS Form W-9 or applicable IRS Form W-8 becomes incorrect as a result of a change in facts.

 

(z)                                  Certain Withholding Taxes. “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include any tax imposed or collected pursuant to Section 871(m) of the Code or Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”).  For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

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

 

Very truly yours,

 

	
 
    	
MORGAN   STANLEY & CO. LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Sebastian   Crapanzano
    
	
 
    	
Authorized Signatory
    
	
 
    	
Name: Sebastian   Crapanzano
    

 

 

	
Accepted and confirmed
   as of the Trade Date:
    	
 
    
	
 
    	
 
    
	
NOVAVAX, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Stanley C. Erck
    	
 
    
	
Authorized Signatory
    	
 
    
	
Name:  Stanley C. Erck

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