Document:

Exhibit 10.57

 

[         ]

 

[          ], 2019

 

To: Lannett Company, Inc. 

9000 State Road

Philadelphia, PA 19136

Attention: John Kozlowski, Chief Financial Officer

Telephone No.: (215) 333-9000

 

Re: [Base][Additional] Call Option Transaction

 

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

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  Certain defined terms used herein are based on terms that are defined in the Offering Circular dated [          ], 2019 (the “Offering Circular”) relating to the [  ]% Convertible Senior Notes due 2026 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD [     ] (as increased by [up to] an aggregate principal amount of USD [     ] [if and to the extent that] [pursuant to the exercise by] the Initial Purchaser (as defined herein) [exercises] [of] its option to purchase additional Convertible Notes pursuant to the Purchase Agreement (as defined herein)) pursuant to an Indenture [to be] dated [          ], 2019 between Counterparty and [     ], as trustee (the “Indenture”).  In the event of any inconsistency between the terms defined in the Offering Circular, the Indenture and this Confirmation, this Confirmation shall govern.  The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Circular.  If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Circular, the descriptions thereof in the Offering Circular 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] [Indenture as executed].  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 Circular 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 (other than as provided in Section 9(i)(iii) below) unless the parties agree otherwise in writing.

 

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

 

1.                                      This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for the election of the laws

 

 

of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date.  In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

 

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

 

	
General   Terms.
    	
 
    
	
 
    	
 
    
	
Trade Date:
    	
[          ],   2019
    
	
 
    	
 
    
	
Effective Date:
    	
The second Exchange Business Day immediately prior   to the Premium Payment 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   0.001 per share (Exchange symbol “LCI”).
    
	
 
    	
 
    
	
Number of   Options:
    	
[       ]. 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.
    
	
 
    	
 
    
	
Option   Entitlement:
    	
[      ].
    
	
 
    	
 
    
	
Strike Price:
    	
USD [      ]
    
	
 
    	
 
    
	
Cap Price:
    	
USD [      ]
    
	
 
    	
 
    
	
Premium:
    	
USD [      ]
    
	
 
    	
 
    
	
Premium Payment   Date:
    	
[          ],   2019
    
	
 
    	
 
    
	
Exchange:
    	
The New York Stock Exchange
    
	
 
    	
 
    
	
Related   Exchange(s):
    	
All Exchanges
    
	
 
    	
 
    
	
Excluded   Provisions:
    	
Section 14.03 and Section 14.04(h) 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.
    

 

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Cut-Off Date:
    	
July 1, 2026
    
	
 
    	
 
    
	
Expiration Time:
    	
The Valuation Time
    
	
 
    	
 
    
	
Expiration Date:
    	
October 1, 2026, subject to earlier exercise.
    
	
 
    	
 
    
	
Multiple   Exercise:
    	
Applicable, as described under “Automatic Exercise”   below.
    
	
 
    	
 
    
	
Automatic   Exercise:
    	
Notwithstanding Section 3.4 of the Equity   Definitions, on each Conversion Date occurring on or after the Cut-Off Date,   in respect of which a Notice of Conversion that is effective as to   Counterparty has been delivered by the relevant converting Holder, a number   of Options equal to [(i)] the number of Convertible Notes in denominations of   USD 1,000 as to which such Conversion Date has occurred [minus (ii) the   number of Options that are or are deemed to be automatically exercised on   such Conversion Date under the Base Call Option Transaction Confirmation   letter agreement dated   [          ], 2019 between   Dealer and Counterparty (the “Base Call Option   Confirmation”),] 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 Scheduled Valid Day immediately   preceding the Expiration Date (the “Notice Deadline”)   specifying the number of such Options being exercised; provided, that,   notwithstanding the foregoing, any Notice of Exercise and the related   automatic exercise of the related Options shall be effective if given after   the Notice Deadline, but prior to 5:00 p.m. (New York City time) on the   fifth Scheduled Valid Day following such Notice Deadline, except that with respect   to any Options in respect of which such Notice of Exercise is delivered after   such Notice Deadline pursuant to this proviso, the Calculation Agent shall   have the right to (i) postpone the Settlement Date and (ii) adjust   the number of Shares deliverable and/or amount of cash payable by Dealer with   respect to such Options in a commercially reasonable manner as appropriate to   reflect the additional costs (including, but not limited to, hedging   mismatches and market losses) and expenses incurred by Dealer in connection   with its hedging activities as a result
    

 

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of Dealer not having received such Notice of   Exercise on or prior to such Notice Deadline.
    
	
 
    	
 
    
	
Valuation Time:
    	
At the close of trading of the regular trading   session on the Exchange; provided that   if the principal trading session is extended, the Calculation Agent shall   determine the Valuation Time in its reasonable discretion.
    
	
 
    	
 
    
	
Market   Disruption Event:
    	
Section 6.3(a) of the Equity Definitions   is hereby replaced in its entirety by the following:
    
	
 
    	
 
    
	
 
    	
“‘Market Disruption Event’ means, in respect of a   Share, (i) a failure by the primary United States national or regional   securities exchange or market on which the Shares are listed or admitted for   trading to open for trading during its regular trading session or   (ii) the occurrence or existence prior to 1:00 p.m. (New York City   time) on any Scheduled Valid Day for the Shares for more than one half-hour   period in the aggregate during regular trading hours of any suspension or   limitation imposed on trading (by reason of movements in price exceeding   limits permitted by the relevant stock exchange or otherwise) in the Shares   or in any options contracts or futures contracts relating to the Shares, in   the case of each of clause (i) and (ii), that the Calculation Agent   determines, in good faith and in a commercially reasonable manner, is   material.”
    
	
 
    	
 
    
	
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.
    
	
 
    	
 
    
	
 
    	
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.
    
	
 
    	
 
    
	
Valid Day:
    	
A day on which (i) there is no Market   Disruption Event and (ii) trading in the Shares generally occurs on the   Exchange or, if the Shares are not then listed on the Exchange, on the   principal other United States national or regional securities exchange on   which the Shares are then listed or, if the Shares are not then listed on a   United States national or regional securities exchange, on the principal   other market on which the Shares are then listed or admitted for trading. If   the Shares are not so listed or admitted for trading, “Valid Day” means a   Business Day.
    
	
 
    	
 
    
	
Scheduled Valid   Day:
    	
A day that is scheduled to be a Valid Day on the   principal United States national or regional securities exchange or market on   which the Shares are listed or admitted for trading. If the Shares are not so   listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
    
	
 
    	
 
    
	
Business Day:
    	
Any day other than a Saturday, a Sunday or a day on   which the Federal Reserve Bank of New York is authorized or required by law   or executive order to close or be closed.
    
	
 
    	
 
    
	
Relevant Price:
    	
On any Valid Day, the per Share volume-weighted   average price as displayed under the heading “Bloomberg VWAP” on Bloomberg   page LCI <equity> AQR (or its equivalent successor if such   page is not available) in respect of the period from the scheduled   opening time of the Exchange to the Scheduled Closing Time of the Exchange on   such Valid Day (or if such volume-weighted average price is unavailable at   such time or erroneous, the market value of one Share on such Valid Day, as   determined by the Calculation Agent using, if practicable, a volume-weighted   average method). The Relevant Price will be determined without regard to   after-hours trading or any other trading outside of the regular trading session   trading hours.
    
	
 
    	
 
    
	
Settlement   Averaging Period:
    	
For any Option being exercised hereunder, the   [   ] consecutive Valid Days commencing on, and including, the   [   ]st Scheduled Valid Day immediately prior to the   Expiration Date.
    
	
 
    	
 
    
	
Settlement Date:
    	
For any Option, the second Business Day immediately   following the final Valid Day of the Settlement Averaging Period for such   Option.
    
	
 
    	
 
    
	
Settlement   Currency:
    	
USD
    
	
 
    	
 
    
	
Other Applicable   Provisions:
    	
The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11   of the Equity Definitions will be applicable, except that all references in   such provisions to “Physically-settled” shall be read as references to “Net   Share Settled”. “Net Share
    

 

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

 

3.                                      Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
Potential Adjustment   Events:
    	
Notwithstanding Section 11.2(e) of the   Equity Definitions, a “Potential Adjustment Event” means an occurrence of any   event or condition, as set forth in any Dilution Adjustment Provision, that   would result in an adjustment under the Indenture to the “Conversion Rate” or   the composition of a “unit of Reference Property” or to any “Last Reported   Sale Price” (each as defined in the Indenture). For the avoidance of doubt,   Dealer shall not have any delivery or payment obligation hereunder, and no   adjustment shall be made to the terms of the Transaction, on account of   (x) any distribution of cash, property or securities by Counterparty to   holders of the Convertible Notes (upon conversion or otherwise) or   (y) any other transaction in which holders of the Convertible Notes are   entitled to participate, in each case, in lieu of an adjustment under the   Indenture of the type referred to in the immediately preceding sentence   (including, without limitation, pursuant to the fourth sentence of the first   paragraph of Section 14.04(c) of the Indenture or the fourth   sentence of Section 14.04(d) of the Indenture).
    
	
 
    	
 
    
	
Method of Adjustment:
    	
Calculation Agent Adjustment, which means that,   notwithstanding Section 11.2(c) of the Equity Definitions, upon any   Potential Adjustment Event, the Calculation Agent shall make an adjustment   corresponding to the adjustment made under the Indenture to any one or more   of the Strike Price, Number of Options, Option Entitlement and any other   variable relevant to the exercise, settlement or payment for the Transaction.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the foregoing and “Consequences of   Merger Events / Tender Offers” below:
    
	
 
    	
 
    
	
 
    	
(i)                                   if   the Calculation Agent, acting in good faith and in a commercially reasonable   manner, disagrees with any adjustment to the Convertible Notes
    

 

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pursuant to the terms   and provisions of the Indenture that is the basis of any calculations   hereunder and that involves an exercise of discretion by Counterparty or its   board of directors (including, without limitation, pursuant to   Section 14.05 of the Indenture, Section 14.07 of the Indenture or   any supplemental indenture entered into thereunder or in connection with any   proportional adjustment or the determination of the fair value of any   securities, property, rights or other assets), then in each such case, the   Calculation Agent will, acting in good faith and in a commercially reasonable   manner, determine the adjustment to be made to any one or more of the Strike   Price, Number of Options, Option Entitlement and any other variable relevant   to the exercise, settlement or payment for the Transaction in a commercially   reasonable manner;
    
	
 
    	
 
    
	
 
    	
(ii)                                in   connection with any Potential Adjustment Event as a result of an event or   condition set forth in Section 14.04(b) of the Indenture or   Section 14.04(c) of the Indenture where, in either case, the period   for determining “Y” (as such term is used in Section 14.04(b) of   the Indenture) or “SP0”   (as such term is used in Section 14.04(c) of the Indenture), as the   case may be, begins before Counterparty has publicly announced the event or   condition giving rise to such Potential Adjustment Event, then the   Calculation Agent shall have the right, acting in good faith and in a   commercially reasonable manner, to adjust any variable relevant to the   exercise, settlement or payment for the Transaction as appropriate to reflect   the costs (including, but not limited to, hedging mismatches and market   losses) and expenses incurred by Dealer in connection with its hedging   activities as a result of such event or condition not having been publicly   announced prior to the beginning of such period; and
    
	
 
    	
 
    
	
 
    	
(iii)                             if   any Potential Adjustment Event is declared and (a) the event or   condition giving rise to such Potential Adjustment Event is subsequently   amended, modified, cancelled or abandoned, (b) the “Conversion Rate” (as   defined in the Indenture) is otherwise not adjusted at the time or in the   manner contemplated by the relevant Dilution Adjustment Provision based on   such declaration or (c) the “Conversion Rate” (as defined in the   Indenture) is adjusted as a result of such Potential Adjustment Event and   subsequently re-adjusted (each of clauses (a), (b) and (c), a “Potential Adjustment Event
    

 

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Change”)   then, in each case, the Calculation Agent, acting in good faith and in a   commercially reasonable manner, shall have the right to adjust any variable   relevant to the exercise, settlement or payment for the Transaction as   appropriate to reflect the costs (including, but not limited to, hedging   mismatches and market losses) and expenses incurred by Dealer in connection   with its hedging activities as a result of such Potential Adjustment Event   Change.
    
	
 
    	
 
    
	
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 “Merger 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, the Calculation Agent (acting in good faith and in a   commercially reasonable manner and by reference to the relevant provisions of   the Indenture) shall make a corresponding adjustment in respect of any   adjustment under the Indenture to any one or more of the nature of the Shares   (in the case of a Merger Event), Strike Price, Number of Options, Option   Entitlement and any other variable relevant to the exercise, settlement or   payment for the Transaction, subject to the second paragraph under “Method of   Adjustment”; provided, however,   that such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to any Excluded Provision; provided   further that if, with respect to a Merger Event or a Tender Offer,   (i) the consideration for the Shares includes (or, at the option of a   holder of Shares, may include) shares of an entity or person that is not a   corporation or is not organized under the laws of the United States, any   State thereof or the District of Columbia or (ii) the Counterparty to   the Transaction following such Merger Event or Tender Offer will not be a   corporation organized under the laws of the United States, any State thereof   or the District of Columbia, then, in either case, Cancellation and Payment   (Calculation Agent Determination) may apply at Dealer’s sole election; provided further that, for the avoidance of
    

 

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doubt, adjustments shall be made pursuant to the   provisions set forth above regardless of whether any Merger Event or Tender   Offer gives rise to an Early Conversion.
    
	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
Modified Calculation Agent Adjustment as set forth   in Section 12.3(d) of the Equity Definitions; provided that, in   respect of an Announcement Event, (x) references to “Tender Offer” shall   be replaced by references to “Announcement Event” and references to “Tender   Offer Date” shall be replaced by references to “date of such Announcement   Event”, (y) the word “shall” in the second line shall be replaced with   “may” and the phrase “exercise, settlement, payment or any other terms of the   Transaction (including, without limitation, the spread)” shall be replaced   with the phrase “Cap Price (provided that in no event shall the Cap Price be   less than the Strike Price)”, and (z) for the avoidance of doubt, the   Calculation Agent may determine whether the relevant Announcement Event has   had a material effect on the Transaction (and, if so, may adjust the Cap   Price accordingly) on one or more occasions on or after the date of the   Announcement Event up to, and including, the Expiration Date, any Early   Termination Date and/or any other date of cancellation, it being understood   that any adjustment in respect of an Announcement Event shall take into   account any earlier adjustment relating to the same Announcement Event. An   Announcement Event shall be an “Extraordinary Event” for purposes of the   Equity Definitions, to which Article 12 of the Equity Definitions is   applicable.
    
	
 
    	
 
    
	
Announcement Event:
    	
(i) The public announcement by any entity of   (x) any transaction or event that, if completed, would constitute a   Merger Event or Tender Offer, (y) any potential acquisition by Issuer   and/or its subsidiaries where the aggregate consideration exceeds 20% of the   market capitalization of Issuer as of the date of such announcement (an “Acquisition Transaction”) or (z) the intention to   enter into a Merger Event or Tender Offer or an Acquisition Transaction,   (ii) the public announcement by Issuer of an intention to solicit or   enter into, or to explore strategic alternatives or other similar undertaking   that may include, a Merger Event or Tender Offer or an Acquisition   Transaction or (iii) any subsequent public announcement by any entity of   a change to a transaction or intention that is the subject of an announcement   of the type described in clause (i) or (ii) of this sentence   (including, without limitation, a new announcement, whether or not by the   same party, relating to such a transaction or intention or the announcement   of a withdrawal from, or the abandonment or discontinuation of, such a   transaction or intention), as determined by the Calculation Agent. For the   avoidance of doubt, the occurrence of an Announcement Event with respect to   any transaction or intention shall not preclude the
    

 

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occurrence of a later Announcement Event with   respect to such transaction or intention. For purposes of this definition of   “Announcement Event,” (A) “Merger Event” shall mean such term as defined   under Section 12.1(b) of the Equity Definitions (but, for the   avoidance of doubt, the remainder of the definition of “Merger Event” in   Section 12.1(b) of the Equity Definitions following the definition   of “Reverse Merger” therein shall be disregarded) and (B) “Tender Offer”   shall mean such term as defined under Section 12.1(d) of the Equity   Definitions.
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation and Payment (Calculation Agent   Determination); provided that, in addition to   the provisions of Section 12.6(a)(iii) of the Equity Definitions,   it will also constitute a Delisting if the Exchange is located in the United   States and the Shares are not immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors); if the Shares are   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
 
    	
 
    
	
Additional Disruption   Events:
    	
 
    
	
 
    	
 
    
	
Change in Law:
    	
Applicable; provided that   Section 12.9(a)(ii) of the Equity Definitions is hereby amended by   (i) replacing the phrase “the interpretation” in the third line thereof   with the phrase “, or public announcement of, the formal or informal   interpretation”, (ii) replacing the word “Shares” where it appears in   clause (X) thereof with the words “Hedge Position” and   (iii) replacing the parenthetical beginning after the word “regulation”   in the second line thereof the words “(including, for the avoidance of doubt   and without limitation, (x) any tax law or (y) adoption,   effectiveness or promulgation of new regulations authorized or mandated by   existing statute)”.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
Hedging Disruption:
    	
Applicable; provided   that:
    
	
 
    	
 
    
	
 
    	
(i)                                   Section 12.9(a)(v) of   the Equity Definitions is hereby amended by (a) inserting the following   words at the end of clause (A) thereof: “in the manner contemplated by   the Hedging Party on the Trade Date” and (b) inserting the following two   phrases at the end of such Section:
    
	
 
    	
 
    
	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be limited to, stock price and volatility risk. And, for
    

 

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the further avoidance   of doubt, any such transactions or assets referred to in phrases (A) or   (B) above must be available on commercially reasonable pricing terms.”;   and
    
	
 
    	
 
    
	
 
    	
(ii)                                Section 12.9(b)(iii) of   the Equity Definitions is hereby amended by inserting in the third line   thereof, after the words “to terminate the Transaction”, the words “or a   portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    
	
Increased Cost of Hedging:
    	
Applicable
    
	
 
    	
 
    
	
Hedging Party:
    	
For all applicable Additional Disruption Events,   Dealer.
    
	
 
    	
 
    
	
Determining Party:
    	
For all applicable Extraordinary Events, Dealer.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.                                      Calculation Agent.
    	
Dealer; provided that   following the occurrence and during the continuation of an Event of Default   pursuant to Section 5(a)(vii) of the Agreement with respect to   which Dealer is the Defaulting Party, (i) Dealer may designate a   nationally or internationally recognized third-party dealer with expertise in   over-the-counter corporate equity derivatives (an “Equity   Derivatives Dealer”) that is not an affiliate of Dealer and with   respect to which no event of the type described in   Section 5(a)(vii) of the Agreement is ongoing to replace Dealer as   Calculation Agent, or (ii) if Dealer does not so designate any   replacement Calculation Agent by the 10th Exchange Business Day following the   date a calculation or determination is required to be made hereunder by the   Calculation Agent and no such calculation or determination is made,   Counterparty shall have the right to designate an independent Equity   Derivatives Dealer to replace Dealer as Calculation Agent and, in each case,   the parties shall work in good faith to execute any appropriate documentation   required by such replacement Calculation Agent.
    
	
 
    	
 
    
	
 
    	
Any judgment, determination and calculation made   hereunder by Dealer as Calculation Agent shall be made in good faith and in a   commercially reasonable manner. Following any determination or calculation by   the Calculation Agent hereunder, upon a written request by Counterparty, the   Calculation Agent shall promptly (but in any event within five Scheduled   Trading Days) provide to Counterparty by email to the email address provided   by Counterparty in such request a report (in a commonly used file format for   the storage and manipulation of financial data) displaying in reasonable   detail the basis for
    

 

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such determination or calculation (including any   assumptions used in making such determination or calculation), it being   understood that the Calculation Agent shall not be obligated to disclose any   proprietary or confidential data or information or any proprietary or   confidential models used by it for such determination or calculation.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Counterparty:

 

	
Bank:
    	
[   ]
    
	
ABA#:
    	
[   ]
    
	
Acct No.:
    	
[   ]
    
	
Beneficiary:
    	
[   ]
    
	
Ref:
    	
[   ]
    

 

Account for delivery of Shares to Counterparty:

 

To be provided by Counterparty.

 

(b)                                 Account for payments to Dealer:

 

[   ]

 

Account for delivery of Shares from Dealer:

 

To be provided by Dealer.

 

6.                                      Offices.

 

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

 

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

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Counterparty:

 

Lannett Company, Inc.

9000 State Road

Philadelphia, PA 19136

Attention: John Kozlowski, Chief Financial Officer

Telephone No.: (215) 333-9000

 

(b)                                 Address for notices or communications to Dealer:

 

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

 

[   ]

 

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8.                                      Representations and Warranties of Counterparty.

 

Each of the representations and warranties of Counterparty set forth in Section [   ] of the Purchase Agreement (the “Purchase Agreement”) dated as of [          ], 2019, between Counterparty and [   ], as Initial Purchaser (the “Initial Purchaser”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:

 

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

 

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

 

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

 

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

 

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9.                                      Other Provisions.

 

(a)                                 Opinions.  Counterparty shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a) through (c) of this Confirmation; provided that such opinion may contain all customary exceptions and qualifications.  Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

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

 

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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 may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.

 

(ii)                                Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction (A) to any affiliate of Dealer (1) that has a long-term issuer rating that is equal to or better than Dealer’s credit rating at the time of such transfer or 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) to any other third party with a long-term issuer rating equal to or better than the lesser of (1) the credit rating of Dealer at the time of the transfer and (2) A- by Standard and Poor’s Rating Group, Inc. or its successor (“S&P”), or A3 by Moody’s Investor Service, Inc. (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by Counterparty and Dealer; provided, in either of the foregoing subclause (A) or (B), only if (x) an Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer or assignment, (y) as a result of such transfer or assignment, Counterparty (I) will not be required to pay the transferee or assignee on any payment date an amount under Section 2(d)(i)(4) of the Agreement, as applicable, greater than the amount that Counterparty would have been required to pay to Dealer in the absence of such transfer or assignment and (II) will not, as a result of any withholding or deduction made by the transferee or assignee as a result of any Tax, receive from the transferee or assignee on any payment date an amount (after accounting for amounts paid by the transferee or assignee under Section 2(d)(i)(4) of the Agreement as well as such withholding or deduction) with respect to the rights or obligations so transferred or assigned that is less than the amount that Counterparty would have been entitled to receive with respect to such rights or obligations in the absence of such transfer or assignment and (z) either (I) the transferee or assignee in any such transfer or assignment is a “dealer in securities” within the meaning of Section 475(c)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) or otherwise a “dealer” within the meaning of Treasury Regulations Section 1.1001-4(b) or any successor provision or (II) such transfer or assignment will not result in a deemed exchange for Counterparty within the meaning of Section 1001 of the Code.  If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (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)

 

15

 

Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

 

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

 

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

 

(i)                                   in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (the first of which will be such Nominal Settlement Date and the last of which will be no later than the twentieth (20th) Exchange Business Day following such Nominal Settlement Date) and the number of Shares that it will deliver on each Staggered Settlement Date;

 

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

 

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

 

(g)                                  Role of Agent.  [   ]

 

(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 that is effective as to Counterparty has been delivered by the relevant converting Holder:

 

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

 

(B)                               upon receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be no earlier than one Scheduled Trading Day following the Conversion Date for such Early Conversion) 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 [minus the “Affected Number of Options” (as defined in the Base Call Option Confirmation), if any, that relate to such 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;

 

(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.

 

17

 

(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, 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.

 

(iii)                             Notwithstanding anything to the contrary in this Confirmation, the occurrence of an Amendment Event shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement. “Amendment Event” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Notes governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term relating to conversion of the Convertible Notes (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Notes to amend (other than, in each case, any amendment or supplement (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 Circular or (y) pursuant to Section 14.07 of the Indenture), in each case, without the consent of Dealer.

 

(j)                                    Amendments to Equity Definitions.

 

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

 

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

 

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

 

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

 

(k)                                 No Collateral, Netting or Setoff.  Notwithstanding any provision of the Agreement, or any other agreement between the parties, to the contrary, no collateral is transferred in connection with the Transaction.  Obligations under the Transaction shall not be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be netted, recouped or set off (including pursuant to Section 6 of the Agreement) against obligations under the Transaction, whether arising under the Agreement, this Confirmation, under any other

 

18

 

agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff, netting or recoupment.

 

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

 

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

 

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

 

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

 

19

 

purchase price paid in connection with the purchase of Share Termination Delivery Property.

 

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

 

Failure to Deliver:                                                                                                                                                Applicable

 

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

 

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

 

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

 

20

 

judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from Dealer at the then-current market price on such Exchange Business Days, and in the amounts and at such time(s), 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 discretion with respect to clause (i) below and upon the advice of counsel with respect to clause (ii) below, that such action is reasonably necessary or appropriate (i) to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only in the case of a material decrease in liquidity relative to Dealer’s expectations as of the Trade Date) or (ii) to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer (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 40 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 (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)                                 Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in this Confirmation, solely for the purpose of adjusting the Cap Price, the terms “Potential Adjustment Event,” “Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions (as amended by Section 9(j)(i)), and upon the occurrence of a

 

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Merger Date, the occurrence of a Tender Offer Date, or declaration by Counterparty of the terms of any Potential Adjustment Event, respectively, as such terms are defined in the Equity Definitions, the Calculation Agent may, acting in good faith and in a commercially reasonable manner, adjust the Cap Price to preserve the fair value of the Options to Dealer; provided that in no event shall the Cap Price be less than the Strike Price.

 

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

 

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

 

(z)                                  Tax Matters.

 

(i)                                   Withholding Tax imposed on payments to non-U.S. counterparties under provisions commonly known as the United States Foreign Account Tax Compliance Act.  “Tax” and “Indemnifiable Tax”, each as defined in Section 14 of the Master Agreement, shall not include any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”).  For the avoidance of doubt, a FATCA

 

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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 Master Agreement.

 

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

 

(iii)                             Tax documentation. Counterparty shall provide to Dealer a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Counterparty has become obsolete or incorrect.  Additionally, Counterparty shall, promptly upon request by Dealer, provide such other tax forms and documents reasonably requested by Dealer.  Dealer shall provide to Counterparty a valid U.S. Internal Revenue Service Form W-9, or any successor thereto, (i) on or before the date of execution of this Confirmation and (ii) promptly upon learning that any such tax form previously provided by Dealer has become obsolete or incorrect.  Additionally, Dealer shall, promptly upon request by Counterparty, provide such other tax forms and documents reasonably requested by Counterparty.

 

(iv)                            Tax Representations.  Each party represents to the other that: it is a “U.S. person” (as that term is used in Treasury Regulations Section 1.1441-4(a)(3)(ii)) for U.S. federal income tax purposes and an exempt recipient under Treasury Regulation Section 1.6049-4(c)(1)(ii).

 

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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 us.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[   ]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[   ] AS AGENT FOR [   ]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page to LCI — [Base][Additional] Call Option Confirmation]

 

 

	
Accepted and confirmed
    	
 
    
	
as of the Trade Date:
    	
 
    
	
 
    	
 
    
	
LANNETT COMPANY, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    
	
Name:
    	
 
    
			

 

[Signature Page to LCI — [Base][Additional] Call Option Confirmation]Exhibit 4.4

DESCRIPTION OF REGISTRANT’S
SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

References to “BioVie” and the “Company”
herein are, unless the context otherwise indicates, only to BioVie Inc. and not to any of its subsidiaries.

 

The following description of the Company’s
capital stock and provisions of the Company’s Articles of Incorporation, bylaws and the Nevada corporations law are summaries
and are qualified in their entirety by reference to our Articles of Incorporation and our bylaws. We have filed copies of these
documents with the SEC as exhibits to the Annual Report on Form 10-K to which this description has been filed as an exhibit. Pursuant
to our Articles of Incorporation, as amended, our authorized capital stock consists of 800,000,000 shares of Class A common stock,
par value of $0.0001 per share (referred to as the Company’s common stock), and 10,000,000 shares of preferred stock, par
value $0.001 per share, to be designated from time to time by the Company’s Board of Directors.

 

Common Stock

 

BioVie is authorized to issue up to 800,000,000
shares of Class A common stock, par value $0.0001 per share. Each outstanding share of common stock entitles the holder thereof
to one vote per share on all matters. The Company’s bylaws provide that elections for directors shall be by a plurality of
votes. Stockholders do not have preemptive rights to purchase shares in any future issuance of common stock. Upon our liquidation,
dissolution or winding up, and after payment of creditors and preferred stockholders, if any, the Compay’s assets will be
divided pro-rata on a share-for-share basis among the holders of the shares of common stock.

 

The holders of shares of common stock are entitled
to dividends out of funds legally available when and as declared by BioVie’s Board of Directors. The Company’s Board
of Directors has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future.

 

All of the issued and outstanding shares of
common stock are duly authorized, validly issued, fully paid and non-assessable. To the extent that additional shares of our common
stock are issued, the relative interests of existing stockholders will be diluted.

 

As of September 24, 2019, there were 647,930,147
shares of common stock outstanding.

 

Preferred Stock

 

BioVie is authorized to issue up to 10,000,000
shares of preferred stock, par value $0.001 per share, in one or more classes or series within a class as may be determined by
the Company’s Board of Directors, who may establish, from time to time, the number of shares to be included in each class
or series, may fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications,
limitations or restrictions thereof. Any preferred stock so issued by the Board of Directors may rank senior to the common stock
with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up of BioVie, or both. Moreover, under
certain circumstances, the issuance of preferred stock or the existence of the unissued preferred stock might tend to discourage
or render more difficult a merger or other change of control.

 

As of September 24, 2019, there were no shares
of our preferred stock outstanding.

 

    	-1- 

    	 

    

Anti-Takeover Effects of Our Articles of
Incorporation and Bylaws

 

The Company’s Articles of Incorporation
and bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party
from acquiring control of us or changing BioVie’s Board of Directors and management. According to the Company’s Articles
of Incorporation and bylaws, neither the holders of common stock nor the holders of any preferred stock that may be issued in the
future have cumulative voting rights in the election of directors. The combination of the present ownership by a few stockholders
of a significant portion of our issued and outstanding common stock and lack of cumulative voting makes it more difficult for other
stockholders to replace BioVie’s Board of Directors or for a third party to obtain control of the Company by replacing its
Board of Directors.

 

Anti-Takeover Effects of Nevada Law

 

Business Combinations

 

The “business combination” provisions
of Sections 78.411 to 78.444, inclusive, of the Nevada Revised Statutes, or NRS, generally prohibit a Nevada corporation with at
least 200 stockholders from engaging in various “combination” transactions with any interested stockholder for a period
of two years after the date of the transaction in which the person became an interested stockholder, unless the transaction is
approved by the board of directors prior to the date the interested stockholder obtained such status or the combination is approved
by the board of directors and thereafter is approved at a meeting of the stockholders by the affirmative vote of stockholders representing
at least 60% of the outstanding voting power held by disinterested stockholders, and extends beyond the expiration of the two-year
period, unless:

 

	the combination was approved by the board of directors prior to the
person becoming an interested stockholder or the transaction by which the person first became an interested stockholder was approved
by the board of directors before the person became an interested stockholder or the combination is later approved by a majority
of the voting power held by disinterested stockholders; or

	if the consideration to be paid by the interested stockholder is at
least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the two years immediately
preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever
is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested
stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the
preferred stock, if it is higher.
	 

A “combination” is generally defined
to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition, in one transaction
or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal to 5% or
more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate
market value of all outstanding shares of the corporation, (c) 10% or more of the earning power or net income of the corporation,
and (d) certain other transactions with an interested stockholder or an affiliate or associate of an interested stockholder.

 

In general, an “interested stockholder”
is a person who, together with affiliates and associates, owns (or within two years, did own) 10% or more of a corporation’s
voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may
discourage attempts to acquire the Company even though such a transaction may offer our stockholders the opportunity to sell their
stock at a price above the prevailing market price.

 

    	-2- 

    	 

    

Control Share Acquisitions

 

The “control share” provisions
of Sections 78.378 to 78.3793, inclusive, of the NRS apply to “issuing corporations” that are Nevada corporations with
at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and that conduct business directly
or indirectly in Nevada. The control share statute prohibits an acquirer, under certain circumstances, from voting its shares of
a target corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval
of the target corporation’s disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Generally, once an
acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become
“control shares” and such control shares are deprived of the right to vote until disinterested stockholders restore
the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired
a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control
shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for
dissenters’ rights.

 

A corporation may elect to not be governed
by, or “opt out” of, the control share provisions by making an election in its articles of incorporation or bylaws,
provided that the opt-out election must be in place on the 10th day following the date an acquiring person has acquired a controlling
interest, that is, crossing any of the three thresholds described above. We have not opted out of the control share statutes, and
will be subject to these statutes if we are an “issuing corporation” as defined in such statutes.

 

The effect of the Nevada control share statutes
is that the acquiring person, and those acting in association with the acquiring person, will obtain only such voting rights in
the control shares as are conferred by a resolution of the stockholders at an annual or special meeting. The Nevada control share
law, if applicable, could have the effect of discouraging takeovers of the Company.

 

Trading Market

 

The Company’s common stock trades on
the OTCQB Marketplace under the ticker “BIVI.”

 

Transfer Agent and Registrar

 

The Company’s independent stock transfer
agent is West Coast Stock Transfer, Inc., located at 721 N. Vulcan Ave., Suite 205, Encinitas, California 92024. Their phone number
is (619) 664-4780.

 

Disclosure of Commission Position on Indemnification
for Securities Act Liabilities

 

Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the SEC such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

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