EXHIBIT 10.5
CONFIRMATION
Date: October 22, 1997
To: Myriad Genetics, Inc. ("Party B")
Attention: Jay Moyes
From: Swiss Bank Corporation, London Branch ("Party A")
Re: Equity Option Confirmation
Reference Number 1265546
_______________________________________________________________________________
The purpose of this communication is to confirm the terms and conditions of the
transaction (the "Transaction") entered into between us on the Trade Date
specified below.
The definitions and provisions contained in the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc. (formerly
known as the International Swap Dealers Association, Inc.) ("ISDA")) are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and provisions and this Confirmation, this Confirmation will
govern.
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement dated as of October 8, 1997, as amended and supplemented from time to
time (the "Agreement"), between you and Swiss Bank Corporation. All provisions
contained in the Agreement govern this Confirmation except as expressly modified
below.
The terms of the Transaction to which this Confirmation relates are as follows:
Trade Date : October 21, 1997
Buyer : Party A
Seller : Party B
Option Style : European Option
Option Type : Call
Shares : Common Stock of Myriad Genetics, Inc.
(Symbol: MYGN)
Number of Options : 400,000
Contract Multiplier : 1.00
Strike Price : USD 40.50
Total Premium : USD 100,000 and call options written by Party A on
400,000 shares of Party B's Common Stock. Premium
Payment Date : October 24, 1997
Expiration Date : December 11 1998, or, if that date is not an
Exchange Business Day, the following day that is an
Exchange Business Day.
Currency
Business Day : Any day on which commercial banks are open for
business (including dealings in foreign exchange and
foreign currency deposits) in the cities from which
and in which a payment is to be made.
Exchange
Business Day : A day that is (or but for the occurrence of a Market
Disruption Event, would have been) a trading day on
the Exchange and the Philadelphia Stock Exchange
(other than a day on which trading on any such
exchange is scheduled to close prior to its regular
weekday closing time, first announced on the day of
such closing).
Normal
Trading Day : An Exchange Business Day on which no Market
Disruption Event has occurred or is continuing.
Market
Disruption Event : The occurrence or existence on any Exchange Business
Day during the one-half hour period that ends at the
close of business of any suspension of or limitation
imposed on trading (by reason of movements in price
exceeding levels permitted by the relevant exchange
or otherwise), provided that any such event is
material in the reasonable determination of the
Calculation Agent, on: (i) the Exchange in the
Shares; or (ii) the Philadelphia Stock Exchange in
options contracts on the Shares.
Exchange : Nasdaq National Market
Clearance System
Business Day : Any day on which the Clearance System is open for
the acceptance and execution of settlement
instructions.
Clearance System : Depository Trust Company, or any successor to or
transferee of such clearance system.
Calculation Agent : Party A, whose calculations shall be binding absent
manifest error.
Procedure for Exercise
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Exercise Date : The Expiration Date.
Expiration Time : 5:00 p.m. local time in New York City.
Automatic Exercise : The Transaction will be deemed to be automatically
exercised if it is In-the-Money on the Expiration
Date, unless (i) the Buyer has notified the Seller
(by telephone or in writing) prior to 5:00 p.m.
local time in New York City on the Expiration Date
that it does not wish to exercise the Transaction;
or (ii) the Closing Value cannot be determined on
the Expiration Date. If the Transaction is to be
cash settled or net share settled, "In-the-Money"
means that the Cash Settlement Amount is greater
than zero. If the Transaction is to be physically
settled, "In-the-Money" means that the Closing Value
is greater than the Strike Price. "Closing Value"
means the closing price of the Shares, as reported
on the Exchange, on the Expiration Date.
Seller's telephone
or facsimile number
for purposes of
giving notice : Telephone: 801-584-3633
Fax: 801-584-3640
Attention: Jay Moyes
Settlement Terms
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Settlement : The Transaction will be physically settled;
provided, however, that Party B may elect to cash
settle or net share
settle the Transaction by giving notice to Party A
no later than 20 Exchange Business Days before the
Expiration Date (determined without regard to the
parenthetical in the definition of Exchange Business
Day) (the date of such notice, the "Election Date").
Notwithstanding the foregoing, if on the Initial
Date (as defined below) the registration statement
referred to in Section 4.1 of the Agreement
Regarding Registration Rights and Related
Obligations (the "Registration Agreement") attached
hereto as Exhibit I has not become effective, the
Transaction will be cash settled and the parties
shall have no further obligations under the
Registration Agreement.
Physical Settlement : If the Transaction is to be physically settled:
(a) within three Exchange Business Days after the
Election Date, Party A and Party B will enter into
the Registration Agreement attached hereto as
Exhibit I; and
(b) on the Settlement Date, the Seller shall
deliver to the Buyer the number of Shares equal to
the number of Options exercised against payment by
the Buyer to the Seller of an amount equal to the
product of (A) the Strike Price multiplied by (B)
the number of Options exercised. Such payment and
such delivery will be made through the Clearance
System at the accounts specified below, on a
delivery versus payment basis.
Cash Settlement : If the Transaction is to be cash settled:
(a) within one Currency Business Day after written
notice by Party A, Party B will pay to Party A the
Prepayment Amount. The "Prepayment Amount" shall be
an amount calculated by the Calculation Agent equal
to (i) the number of Options to be exercised
multiplied by (ii) the result of subtracting the
Strike Price from the closing price of the Shares,
as reported on the Exchange, on the Election Date.
(b) on the Settlement Date, the following payment
shall be made:
(i) if a Prepayment Amount has been paid by
Party B, then (A) if the Final Payment Amount
is a positive number, Party B shall pay to
Party A an amount equal to the Final Payment
Amount and (B) if the Final Payment Amount is a
negative number,
Party A shall pay to Party B an amount equal to
the absolute value of the Final Payment Amount.
The "Final Payment Amount" shall be an amount,
which may be less than zero, calculated by the
Calculation Agent equal to (A) the Cash
Settlement Amount minus (B) the Prepayment
Amount minus (C) the Interest Amount. The "Cash
Settlement Amount" shall be the greater of (A)
zero and (B) an amount calculated by the
Calculation Agent equal to (1) the number of
Options exercised multiplied by (2) the result
of subtracting the Strike Price from the
Reference Price. The "Interest Amount" shall be
an amount calculated by the Calculation Agent
equal to the aggregate sum of the amounts of
interest calculated for each day in the period
from (and including) the date the Prepayment
Amount is received by Party A to (but
excluding) the Settlement Date, determined as
follows: (A) the Prepayment Amount multiplied
by (B) the overnight Federal Funds Rate for
such day as reported in Federal Reserve
Publication H.15-519 divided by (C) 360.
(ii) if a Prepayment Amount has not been paid
by Party B, Party B shall pay to Party A the
Cash Settlement Amount, if any.
Reference Price : (a) If the Valuation Period contains fifteen Normal
Trading Days, the Reference Price shall be the
arithmetic average of the Share Prices on those
fifteen Normal Trading Days.
(b) If the Valuation Period does not contain fifteen
Normal Trading Days, the Calculation Agent shall
determine the Share Price for the Valuation Date and
as many Exchange Business Days immediately preceding
the Valuation Date as shall be necessary, when such
Share Prices are taken together with the Share
Prices on all Normal Trading Days occurring within
the Valuation Period, to provide fifteen Share
Prices, and in such case the Reference Price shall
be the arithmetic average of those fifteen Share
Prices.
Share Price : The closing price of the Shares as reported on the
Exchange.
Valuation Period : The period from and including the fourteenth
Exchange
Business Day immediately preceding the Expiration
Date (the "Initial Date") to and including the
Expiration Date, provided that if any Exchange
Business Day in the Valuation Period as so
determined, shall not be a Normal Trading Day, the
Valuation Period shall be extended so that the
Valuation Period includes fifteen Normal Trading
Days , but in no event shall the last day of the
Valuation Period be later than the fifteenth
Exchange Business Day after the Expiration Date, and
in no event shall the Valuation Period include any
day before the Initial Date.
Valuation Date : The last day of the Valuation Period.
Net Share
Settlement : If a Transaction is to be net share settled,
(a) within three Exchange Business Days after the
Election Date, Party A and Party B will enter into
the Registration Agreement attached hereto as
Exhibit I; and
(b) on the Settlement Date, Party B shall deliver to
Party A the number of whole Shares (the "Settlement
Shares") equal to (i) the Cash Settlement Amount
divided by (ii) the Closing Value, plus cash in lieu
of any fractional Shares. If within ten Exchange
Business Days after the Settlement Date, Party A
resells all or any portion of the Settlement Shares
and the net proceeds received by the Party A upon
resale of such Shares exceed the Cash Settlement
Amount (or if less than all of the Settlement Shares
are resold, the applicable pro rata portion of the
Cash Settlement Amount), Party A shall promptly
refund in cash such difference to Party B. In the
event that such net proceeds are less than the Cash
Settlement Amount (or if less than all of the
Settlement Shares are resold, the applicable pro
rata portion of the Cash Settlement Amount), Party B
shall pay in cash or additional Shares such
difference (the "Make-whole Amount") to Party A
promptly after receipt of notice thereof. In the
event that Party B elects to pay the Make-whole
Amount in additional Shares, Party B shall deliver
to Party A the number of whole Shares (the "Make-
whole Shares") equal to (i) the Make-whole Amount
divided by (ii) the closing price of the Shares as
reported on the Exchange on the Exchange Business
Day prior to delivery of such Shares. If within ten
Exchange Business Days after the delivery of the
Make-whole Shares to Party A, Party A resells all or
any portion of such Shares and the net
proceeds received by Party A exceed or are less than
the Make-whole Amount (or if less than all of the
Make-whole Shares are resold, the applicable pro
rata portion of the Make-whole Amount), the
provisions set forth above with respect to payment
of the Settlement Payment in Shares, including Make-
whole requirements, shall apply.
Settlement Date : If the Transaction is to be cash settled, the
Settlement Date shall be three Currency Business
Days after the Valuation Date. If the Transaction is
to be physically settled or net share settled, the
Settlement Date shall be three Clearance System
Business Days after the Exercise Date.
Change in Expiration Date
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Delay of Expiration
Date : At any time prior to fifteen days prior to the date
that otherwise would have been the Expiration Date,
Party B may notify Party A that it would like to
delay the Expiration Date to a date (the
"Termination Date") not less than ten Exchange
Business Days after the date of such notice and not
more than 180 days after the original Expiration
Date. Promptly after receipt of such notice, Party A
shall notify Party B of the additional amount, if
any, required to be paid (the "Settlement Amount")
by the Buyer of the Transaction to compensate the
Seller of the Transaction for such delay. The
Settlement Amount shall be reasonably determined by
Party A based upon Party A's then current
methodology for pricing options. Within five
Exchange Business Days after receipt of notice of
the Settlement Amount from Party A, Party B shall
notify Party A whether it agrees to the Settlement
Amount (the date of such notice, the "Agreement
Date"). If Party B agrees to the Settlement Amount
(i) the Termination Date shall be deemed to be the
Expiration Date for all purposes of this
Confirmation; and (ii) the Settlement Amount, which
shall be in addition to any payment or delivery, if
any, otherwise required to be made under the terms
of the Transaction, shall be paid by the Buyer on
the third Currency Business Day after the Agreement
Date. If Party B does not agree to the Settlement
Amount, the Expiration Date shall not be delayed.
Adjustment Events
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Adjustments : During the life of the Transaction, if any
adjustment is made
by The Options Clearing Corporation or its
successors ("OCC") in the terms of outstanding OCC-
issued options ("OCC Options") on the Shares which
are the subject of the Transactions, an equivalent
adjustment shall be made in the terms of the
Transaction. Except as provided in the following
paragraph and in the "Additional Adjustment
Provisions" below, no adjustment shall be made in
the terms of the Transaction for any event that does
not result in an adjustment to the terms of
outstanding OCC Options on the Shares. Without
limiting the generality of the foregoing, NO
ADJUSTMENT SHALL BE MADE IN THE TERMS OF THE
TRANSACTIONS FOR ORDINARY CASH DIVIDENDS ON THE
SHARES EXCEPT AS PROVIDED IN THE "ADDITIONAL
ADJUSTMENTS" PROVISIONS BELOW.
If at any time during the life of the Transaction
there shall be no outstanding OCC Options on the
Shares, and an event shall occur for which an
adjustment might otherwise be made under the By-
Laws, Rules, and stated policies of the OCC
applicable to the adjustment of OCC Options (the
"OCC Adjustment Rules"), the parties shall use their
best efforts, applying the principles set forth in
the OCC Adjustment Rules, to jointly determine
whether to adjust the terms of the Transaction and
the nature of any such adjustment.
Additional
Adjustments : Notwithstanding the foregoing, if upon the
occurrence of the following events during the life
of the Transaction no adjustment is required to be
made to the terms of the Transaction in accordance
with the foregoing provisions or if an adjustment
has been made but such adjustment is, in the
reasonable determination of the Calculation Agent,
insufficient to preserve the economic benefit of the
Transaction for the parties, the following
additional adjustments shall be made to the terms of
the Transaction:
If (a) an ordinary cash dividend is declared or paid
on the Shares or (b) a special cash dividend is
declared or paid on the Shares and in either case
the Ex-Dividend Date with respect to such dividend
occurs during the period from, and including, the
Effective Date to, but excluding, the Expiration
Date (each, a "Dividend Event"), the Strike Price
shall be adjusted for each Dividend Event in
accordance with the following formula:
SP\\0\\ (CP\\0\\ - DA)
----------------------
SP\\1 \\ = CP\\0\\
Where:
(i) SP\\1\\ = Strike Price after the Dividend
Event
(ii) SP\\0\\ = Strike Price on the Exchange
Business Day immediately preceding the Ex-
Dividend Date with respect to the Dividend
Event
(iii) CP\\0\\ = The closing price of the Shares, as
reported on the Exchange, on the Exchange
Business Day immediately preceding the Ex-
Dividend Date with respect to the Dividend
Event
(iv) DA = The amount of the ordinary cash dividend
or the special cash dividend, as the case may
be
Miscellaneous
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Transfer : Neither party may transfer the Transaction, in whole
or in part, without the prior written consent of the
non-transferring party.
Account Details
- ---------------
Payments and deliveries to Party A:
Account for payments: Previously Provided
Delivery instructions: Previously Provided
Payments and deliveries to Party B:
Account for payments: Previously Provided
Delivery instructions: Previously Provided
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates your agreement
to those terms.
Yours sincerely,
SWISS BANK CORPORATION, LONDON BRANCH
By: /s/ Victoria Harkness Sotgiu By: /s/ John Marshall
----------------------------- ----------------------------
Name: Victoria Harkness Sotgiu Name: John Marshall
Title: Authorised Signatory Title: Authorised Signatory
Confirmed as of the 22nd day
of October, 1997
MYRIAD GENETICS, INC.
By: /s/ Jay M. Moyes
------------------------------
Name: Jay M. Moyes
Title: C.F.O.