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CONTRACT A EXHIBIT 10.73
CONFIRMATION
Date: September 11, 1997
To: IDEC Pharmaceuticals Corporation ("Party B")
Attention: Phillip Schneider
From: Swiss Bank Corporation, London Branch ("Party A")
Re: Equity Option Confirmation
Reference Number 1262211/ 1262212
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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 August 26, 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 : *________*
Buyer : Party B
Seller : Party A
Option Style : European Option
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*________* Indicates that material has been omitted and confidential
treatment has been requested therefor. All such omitted material has been filed
separately with Secretary of the Commission in the Company's Application
Requesting Confidential Treatment pursuant to Rule 24b-2 under the Securities
Exchange Act of 1934, as amended.
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Option Type : Capped Call
Shares : Common Stock of IDEC Pharmaceuticals
Corporation (Symbol: IDPH)
Number of Options : 600,000
Contract Multiplier : 1.00
Strike Price : *________*
Cap Price : USD 46.40
Total Premium : *________*.
Expiration Date : *________*, 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
Pacific 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
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*________* Indicates that material has been omitted and confidential treatment
has been requested therefor. All such omitted material has been filed separately
with Secretary of the Commission in the Company's Application Requesting
Confidential Treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.
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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 Pacific 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
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 or
its agent (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, "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.
Telephone or
facsimile number
of Seller's agent
for purposes of
giving notice : Telephone: 312-554-5249
Fax: 312-554-6271
Attention: David P. Stowell
Settlement Terms
Settlement : The Transaction will be cash settled;
provided, however, that Party B may elect
to physically settle the Transaction by
giving notice to Party A no later than
twenty Exchange Business Days before the
Expiration Date.
Physical Settlement : If the Transaction is to be physically
settled, on the Settlement Date, the Seller
shall deliver to the Buyer the number of
Shares equal to the Contract Multiplier
multiplied by 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, adjusted
as hereinafter
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provided, multiplied by (b) the Contract
Multiplier multiplied by (c) the number of
Options exercised. If the Closing Value
exceeds the Cap Price, the Strike Price
shall be increased by the amount by which
the Closing Value exceeds the Cap Price; if
the Closing Value is equal to or less than
the Cap Price, no adjustment will be made
to the Strike Price. 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,
on the Settlement Date, Party A shall pay
to Party B the Cash Settlement Amount, if
any. The "Cash Settlement Amount" shall be
the greater of (a) zero and (b) an amount
calculated by the Calculation Agent equal
to (i) the Contract Multiplier multiplied
by (ii) the number of Options exercised
multiplied by (iii) the Price Differential.
"Price Differential" means (x) if the
Reference Price exceeds the Cap Price, the
result of subtracting the Strike Price from
the Cap Price, and (y) if the Reference
Price is equal to or less than the Cap
Price, the result of subtracting the Strike
Price from the Reference Price.
Reference Price : (a) If the Valuation Period contains *__*
Normal Trading Day, the Reference Price
shall be the arithmetic average of the
Share Prices on those *___* Normal Trade
Days.
(b) If the Valuation Period does not
contain *______* Normal Trading Days, the
parties shall jointly 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 *______* Share
Prices, and in such case the Reference
Price shall be the arithmetic average of
those *_______* Share Prices. If the
parties are unable to reach agreement on
the foregoing determination, then the
parties will negotiate in good faith to
agree on an independent third party that
will make such determination, and, if they
cannot agree within three Exchange Business
Days each of Party A and Party B will
promptly choose an independent third party
and instruct the parties so chosen to agree
on another independent third party that
will make such determination. The
determination of an independent third party
will be binding absent manifest error. The
costs of such independent third party will
be borne equally by Party A and Party B.
Share Price : The closing price of the Shares as reported
on the Exchange.
Valuation Period : The period from and including the * ____*
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 *______* Normal
Trading
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*________* Indicates that material has been omitted and confidential treatment
has been requested therefor. All such omitted material has been filed separately
with Secretary of the Commission in the Company's Application Requesting
Confidential Treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.
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Days, but in no event shall the last day of
the Valuation Period be later than the
*____* Exchange Business Day following 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.
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, the Settlement Date shall be three
Clearance System Business Days after the
Exercise Date.
Adjustment Events
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 ADJUSTMENT
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 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:
(a) If (i) an ordinary cash dividend is
declared or paid on the
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*________* Indicates that material has been omitted and confidential treatment
has been requested therefor. All such omitted material has been filed separately
with Secretary of the Commission in the Company's Application Requesting
Confidential Treatment pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934, as amended.
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Shares or (ii) 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 and the Contract Multiplier shall
each be adjusted for each Dividend Event in
accordance with the following formulas:
SP[0] (CP[0] - DA)
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SP[1] = CP[0]
SP[0]
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CM[1] = SP[1]
Where:
(i) SP[1] = Strike Price after the Dividend
Event
(ii) CM[1]= Contract Multiplier after the
Dividend Event
(iii) SP[0] = Strike Price on the Exchange
Business Day immediately preceding the
Ex-Dividend Date with respect to the
Dividend Event
(iv) 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
(vi) DA = The amount of the ordinary cash
dividend or the special cash dividend, as
the case may be
(b) If there occurs a tender offer, by the
issuer of the Shares (the "Issuer") or a
third party, for the Shares, and the date
of the expiration of such offer (the
"Termination Date") occurs during the
period from, and including, the Effective
Date to, but excluding, the Expiration Date
(an "Adjustment Event"), the Strike Price
and the Contract Multiplier shall each be
adjusted for each Adjustment Event in
accordance with the following formulas:
(CP[0] x N[0]) - C
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SP[1] = SP[0] x [CP[0] x (N[0]-N[1])]
SP[0]
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CM[1] = SP[1]
Where:
(i) SP[1] = Strike Price after the
Adjustment Event
(ii) CM[1] = Contract Multiplier after the
Adjustment Event
(iii) SP[0] = Strike Price on the
Completion Date (as hereinafter
defined)
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(iv) CP[0] = The closing price of the
Shares, as reported on the Exchange,
on the Completion Date
(v) N[0] = Total number of shares of
common stock of the Issuer
outstanding on the Completion Date
(vi) C = Price paid by the offeror per
share of common stock of the Issuer
multiplied by the total number of
shares purchased by the offeror
pursuant to the Adjustment Event
(vii) N[1] = Total number of shares of
common stock of the Issuer purchased
by the offer or pursuant to the
Adjustment Event
(viii) "Completion Date" means the
Termination Date; provided, however,
that if the period following the
Termination Date within which
delivery of tendered shares may be
guaranteed is less than the
customary settlement period for a
sale of the Shares executed through
the Clearance System, the Completion
Date shall be the date which
precedes the Termination Date by the
number of Exchange Business Days
equal to such difference
Miscellaneous
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: Previously provided
Payments and deliveries to Party B: Previously provided
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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: By:
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Name: Name:
Title: Title:
Confirmed as of the ___ day
of ____________, 199__
IDEC PHARMACEUTICALS CORPORATION
By:
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Name:
Title:
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