Exhibit 10.2
Date: 17 July 2000
To: Trimeris, Inc. ("Party B")
Attention: Robert Bonczek
From: _________________ ("Party A")
Re: Equity Option Confirmation
Reference Number:
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The purpose of this communication is to confirm the terms and conditions of the
capped call option (the "Transaction") entered into between us on the Trade Date
specified below. This communication constitutes a "Confirmation" as referred to
in the Master Agreement specified below.
The definitions and provisions contained in the 1996 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 those definitions and
provisions and this Confirmation, this Confirmation will govern.
This Confirmation evidences a complete binding agreement between you and us as
to the terms of the Transaction to which this Confirmation relates. In addition,
you and we agree to use all reasonable efforts promptly to negotiate, execute
and deliver an agreement in the form of the ISDA Master Agreement
(Multicurrency-Cross Border) (the "ISDA Form"), with such modifications as you
and we will in good faith agree. Until such time as we execute and deliver the
ISDA Form, this Confirmation, together with all other documents referring to the
ISDA Form (each a "Confirmation"), shall supplement, form a part of, and be
subject to an agreement in the form of the ISDA Form as if we had executed an
agreement in such form (but without any Schedule) on the Trade Date of the first
such Transaction between us. In the event of any inconsistency between the
provisions of the ISDA Form and this Confirmation, this Confirmation will
prevail for the purpose of this Transaction. Upon the execution by you and us of
an agreement in the form of the ISDA Form, this Confirmation will supplement,
form a part of, and be subject to that agreement. All provisions contained or
incorporated by reference in that agreement upon its execution will govern this
Confirmation except as expressly modified below.
The terms of the Transaction to which this Confirmation relates are as follows:
Trade Date:
Option Style: European
Option Type: Call
Seller: Party B
Buyer: Party A
Shares: Common stock of Trimeris Inc. (Symbol: TRMS)
Number of Options:
Option Entitlement:
Strike Price:
Cap Price:
Premium:
Premium
Payment Date: Three currency Business Days following the
Trade Date
Exchange: Nasdaq National Market
Related Exchange(s): Any exchange or quotation system on which
the Shares or options or futures on the
Shares are listed or quoted.
Clearance System: The Depository Trust Company
Calculation Agent: Party A
Procedure for Exercise
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Expiration Time: At the 4:00p.m. close of trading on the
Exchange; without regard to any extended or
after hours trading.
Expiration Date:
Automatic Exercise: Applicable
Seller's Contact
Details for Notice:
Reference Price: The last reported sale price of a Share on
the Exchange at the Expiration Time on the
Expiration Date.
Settlement Terms
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Settlement: The Transaction shall be Physically Settled,
provided, however, that Party B may elect
that Cash Settlement or Net Share Settlement
be applicable to the Transaction by giving
notice to Party A of such election on a day
(the "Election Date") no later than (in the
case of Cash Settlement) five Exchange
Business Days, or (in the case of Net Share
Settlement) twenty Exchange Business Days,
before the Expiration Date.
Cash Settlement If Party B elects Cash Settlement,
Party B shall pay the Cash Settlement Amount
to Part A on the Cash Settlement Payment
Date.
Settlement Price If Net Share Settlement or Cash
Settlement is applicable, the Settlement
Price shall be the price determined in
accordance with Section 4.4(b)(i) of the
Equity Definitions.
Cash Settlement
Payment Date: Three currency Business Days after the
Valuation Date
Net Share Settlement: If Party B elects Net Share Settlement, the
Seller shall deliver to the Buyer the number
of whole Shares (the "Settlement Shares")
equal to (i) the Cash Settlement Amount (if
any) divided by (ii) the Closing Value, plus
cash in lieu of any fractional Share. At any
time following an election of Net Share
Settlement
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by Party B (as the settlement method
applicable to the exercise of the Transaction
on the Expiration Date) but no later than
five Exchange Business Days before the
Expiration Date, Party B may elect Cash
Settlement or Physical Settlement.
Closing Value: The closing price of a Share on the Exchange
Business Day immediately preceding the
Settlement Date, as reported by the Exchange.
Settlement Date: If Physical Settlement or Net Share
Settlement is applicable, the Settlement Date
shall be three Exchange Business Days after
the Valuation Date.
Valuation for Cash Settlement
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Valuation Date: As defined in Section 4.2 of the Equity
Definitions
Valuation Time: At the 4:00pm close of trading on the
Exchange, without regard to any after-hours
trading.
Relevant Price: The last reported sale price on the Exchange
as of the Valuation Time on the Valuation
Date
Averaging Dates: The Valuation Date and each of the four
Exchange Business Days preceding the
Valuation Date
Averaging Date
Market Disruption: Modified Postponement
Adjustment Events
Method of
Adjustment: Calculation Agent Adjustment
Extraordinary Events
Consequences of Merger Events:
(a) Share-for-Share: Cancellation and Payment
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Cancellation and Payment
Nationalization or Insolvency: Cancellation and Payment
Miscellaneous
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Conditions on Physical and:
Net Share Settlement: If Party B elects Physical Settlement or Net
Share Settlement, the following conditions
must be met: (i) Party B will enter into a
Registration Rights Agreement with Party A in
form and substance reasonably acceptable to
Party A not later than the Election Date,
which agreement will contain, among other
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things, the representations and warranties,
indemnification and contribution provisions
and the obligation of Party B to deliver
customary opinions of counsel and
accountant's comfort letters and officers'
certificates, in each case, consistent with
those that Party A would require in the case
of a primary issuance of common stock, and
obligations of Party A and Party B relating
to the registration of the Settlement Shares
and the Make-Whole Shares (the "Registered
Shares"); (ii) the Shelf Registration (as
hereinafter defined) shall have been declared
effective by the Securities and Exchange
Commission not less than five Exchange
Business Days prior to the Expiration Date;
and (iii) Party B shall maintain the
effectiveness of the Shelf Registration and a
prospectus covering the Registered Shares
available for use by Party A until all
Registered Shares have been sold by Party A.
"Shelf Registration" means a registration
statement in form and substance reasonably
acceptable to Party A for an offering to be
made on a continuous basis pursuant to Rule
415 under the Securities Act of 1933, as
amended, registering Party A's resale in the
manner or manners designated by Party A of
all the Settlement Shares, plus any
Make-whole Shares, in the manner(s)
designated by Party A.
Make-Whole
Provision: If Party B delivers Settlement Shares to
Party A pursuant to Net Share Settlement of
the Transaction and 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 Party A upon resale of such
Shares exceed the Cash Settlement Amount (or
if less than all of the 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, the requirements
set forth above with respect to payment of
the Cash Settlement Amount in Shares,
including Make-whole requirements, shall
apply, such that Party A shall pay to Party B
any such excess and Party B shall pay to
Party A in cash or additional Make-whole
Shares any additional Make-whole Amount. In
calculating the net proceeds from the resale
of any Settlement Shares there shall be
deducted from such proceeds any amount equal
to the underwriting discount or commission
determined by the Calculation Agent
multiplied by the total number of Shares sold
pursuant to a Shelf Registration or (in the
case of restricted Shares), the total number
of Shares delivered by Party B to Party A
pursuant to Net Share Settlement.
Title to Shares: If the Transaction is to be physically
settled or net share settled, the party
obligated to deliver Shares (if not the
issuer of the Shares) represents, warrants
and agrees that (a) it is the legal and
beneficial owner of the Shares it is required
to deliver; (b) it has the right to transfer
those Shares; and (c) it will convey good
title to the Shares it is required to
deliver, free from all liens, charges,
equities, rights of pre-emption or other
security interests or encumbrances
whatsoever.
If the Transaction is Net-Share Settled or
Physically Settled, Party B represents to
Party A that all Settlement Shares and
Make-whole Shares delivered to Party A will,
at the time of delivery, be duly authorized,
validly issued and fully paid and
non-assessable.
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Transfer: Neither party may transfer any rights nor
delegate any obligations in respect of the
Transaction, in whole or in part, directly or
indirectly, without the prior written consent
of the non-transferring party.
Special Provisions
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1. Governing Law and Consent to Jurisdiction:
The Transaction will be governed by and construed in accordance with the laws of
New York (without reference to choice of law doctrine). Solely as between the
parties hereto, and relating solely to matters arising concerning this
Transaction, each party irrevocably submits to the non-exclusive jurisdiction of
the courts of the state of New York and the United States District Court located
in the Borough of Manhattan in the City of New York, and waives any objection
which it may have at any time to the laying of venue of any proceedings
concerning this transaction brought in such court, waives any claim that such
proceedings have been brought in an inconvenient forum and further waives the
right to object that such court does not have jurisdiction over any party.
Notwithstanding the foregoing, nothing in this Confirmation precludes either
party from bringing proceedings in any other jurisdiction nor will the bringing
of proceedings in any one or more jurisdictions preclude the brining of
proceedings in another jurisdiction.
2. Representations and Warranties:
Party A and Party B each hereby represents, warrants and agrees as follows: (i)
it is duly organized and validly existing under the laws of the jurisdiction of
its organization or incorporation and, if relevant under such laws, in good
standing; (ii) it has the corporate power to execute and deliver this
Confirmation and to perform its obligations under this Confirmation and the
Transaction evidenced hereby; (iii) such execution, delivery and performance do
not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgement of any court or other agency of
government binding upon it or any material contract binding on or affecting it
or any of its assets; (iv) all governmental and other consents that are required
to have been obtained by it with respect to this Confirmation and the
Transaction evidenced hereby have been obtained and are in full force and effect
and all material conditions of any such consents have been complied with; (v)
its obligations under this Confirmation and the Transaction evidenced hereby
constitute its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)); (vi) it is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any relevant
jurisdiction to make any deduction or withholding for or on account of any tax
from any payment to be made by it to the other party under this Confirmation and
the Transaction evidenced hereby; (vii) its payment obligations hereunder rank
and will rank at all times at least pari passu in all respects with all of its
other unsecured obligations (except for those which are preferred by operation
of law); and (viii) it is entering into this Confirmation and the Transaction
evidenced hereby as principal (and not as agent or in any other capacity,
fiduciary or otherwise); and (ix) (a) it is an "accredited investor," as such
term is defined in Regulation D promulgated under the Securities Act of 1933,
(b) it has had access to such information regarding the Transaction and the
other party as it requested, (c) it has knowledge and experience in financial
and business matters and is capable of evaluating the merits and risks of the
Transaction and is able to bear the economic risk of its investment, including
without limitation the risk of complete loss on the investment, and (d) it
acquired its interest herein and in the Transaction evidenced hereby for its own
account for investment and not with a view to, or in connection with, any
distribution of such interests.
Representations and warranties set forth in section (ix) above will be correct
and complied with in all respects at all times so long as the parties continue
to have obligations and duties to each other hereunder as if repeated then, by
reference to then existing circumstances.
3. Elections and Modifications Under the ISDA Form
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For purposes of the Transaction evidenced by this Confirmation, Party A and
Party B have made the following elections and modifications to the ISDA Form:
(a) "Specified Entity" means in relation to Party A for the purpose of:
Section 5(a)(v), Any Affiliate of Party A
Section 5(a)(vi), NONE
Section 5(a)(vii), NONE
Section 5(b)(iv), NONE
and in relation to Party B for the purpose of:
Section 5(a)(v), Any Affiliate of Party B
Section 5(a)(vi), Any Affiliate of Party B
Section 5(a)(vii), Any Affiliate of Party B
Section 5(b)(iv), Any Affiliate of Party B
(b) The "Cross Default" provisions of Section 5(a)(vi) of the ISDA Form, as
modified below, will apply to Party A and to Party B. Section 5(a)(vi) of ISDA
Form is hereby amended by the addition of the following at the end thereof:
"provided, however, that notwithstanding the foregoing, an Event
of Default shall not occur under either (1) or (2) above if, as demonstrated to
the reasonable satisfaction of the other party, (a) the event or condition
referred to in (1) or the failure to pay referred to in (2) is a failure to pay
caused by an error or omission of an administrative or operational nature; and
(b) funds were available to such party to enable it to make the relevant payment
when due; and (c) such relevant payment is made within three Business Days
following receipt of written notice from an interested party of such failure to
pay."
"Specified Indebtedness" means any obligation (whether present or
future, contingent or otherwise, as principal or surety or otherwise) for the
payment or repayment of any money.
"Threshold Amount" means, with respect to Party B or any Specified
Entity USD10,000,000 or, if lower, the amount in US Dollars of debt which the
failure of Party B to pay will constitute on default or event of default under
Party B's principal credit agreement with banks or other lending institutions
and, with respect to Party A, shall mean 2% of the shareholder's equity
(howsoever described) of Party A as shown on the most recent annual audited
financial statements of Party A.
(c) "Payments on Early Termination". For the purpose of Section 6(e) of
this Agreement:
(i) Loss will apply.
(ii) The Second Method will apply.
4. Settlement on Extraordinary Event:
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a. If payment is required of Party B pursuant to Section 9.3 or 9.7 of the
Equity Definitions, Party B shall have the right, in its sole discretion, to
elect (the "Extraordinary Transaction Election") to satisfy any such payment
obligation by Net Share Settlement of this Transaction. Party B shall make any
election to Net Share Settle the Transaction within two Exchange Business Days
of the Announcement Date but in any event not less than twenty Exchange Business
Days prior to the effective date of such Merger or Nationalization .
b. For purposes of any such Net Share Settlement : (i) the "Shares" to be
registered and delivered to Party A shall be the Shares, (ii) the Cash
Settlement Amount shall be the amount determined in accordance with Section 9.7
of the Equity Definitions, provided that, for the purposes of this Confirmation
the second and third lines of Section 9.7(b) of the Equity Definitions are
deleted and replaced with, "promptly by the parties after the Extraordinary
Transaction Election, failing which it will be determined by the Calculation
Agent and based on", (iii) the Settlement Date shall be the tenth Clearance
System Business Day following the Announcement Date, but in any event not later
than eight Exchange Business Days before the Merger Date or the date the
Nationalization occurs (as
6
applicable), and (iv) the entity surviving, resulting from, or acquiring Party B
in connection with the Merger Event shall comply with all of the Conditions on
Net Share Settlement set forth in this confirmation.
5. Calculations and Payment on Early Termination:
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a. The obligations of Party B to make payments pursuant to Section 6(d)
and (e) of the ISDA Form are modified as follows: Party B shall have the right
to make any payment required pursuant to Section 6(e) of the ISDA Form following
the occurrence of an Early Termination Date in respect of this Transaction and
any other Transaction between the parties referenced to the Shares and to which
this modification of the ISDA Form is expressly made applicable and to which
Party B is required to make a payment pursuant to Section 6(d) or (e) of the
ISDA Form ("Share Eligible Transactions") by electing to Net Share Settle the
Share Eligible Transactions in accordance with the terms and conditions for Net
Share Settlement herein and in any other Share Eligible Transaction. Party B
shall elect to Net Share Settle the Share Eligible Transactions by giving notice
to Party A of such election (i) if Party B is the Defaulting or Affected Party,
within one Exchange Business Day after the notice fixing an Early Termination
Date is received by Party B or (ii) if Party A is the Defaulting or Affected
Party, in the notice fixing an Early Termination Date. If Party B elects Net
Share Settlement:
(i) The relevant parties shall determine pursuant to Section 6(e)
of the ISDA Form the Loss applicable to Share Eligible
Transactions and to Transactions that are not Share Eligible
Transactions ("Other Transactions") (for the avoidance of
doubt, Other Transactions includes Transactions referenced to
the Shares in respect of which Party A has a payment
obligation to Party B under Section 6(d) or (e) of the ISDA
Form) and the Cash Settlement Amount for purposes of Net Share
Settlement of Share Eligible Transactions shall be the amount,
if any, payable by Party B to Party A as the Loss in respect
of Share Eligible Transactions. In consideration of the
parties continuing obligations under this Transaction, Party A
and Party B amend the ISDA Form as of the Trade Date as
follows:
(A) Party A's obligation to make any payment pursuant to
Section 6(e) of the ISDA Form (the "Section 6(e) Payment")
is subject to the precondition that all amounts payable
and securities deliverable by Party B to Party A in
connection with all Share Eligible Transactions have been
received by Party A in full (the "Receipt"); and
(B) The time provided in the ISDA Form within which Party A
must make the Section 6(e) Payment shall be extended until
such Receipt.
The last sentence of the first paragraph of Section 6(e) of
the ISDA Form shall not apply with respect to Share Eligible
Transactions. Nothing in the immediately preceding sentence
shall affect the obligations of the parties to pay the amount
determined in accordance with Section 6(e) in respect of Other
Transactions in cash in accordance with Section 6 of the ISDA
Form.
(ii) The Settlement Date for Net Share Settlement shall be the
later of:
(A) the payment date determined pursuant to Section 6(d)(ii)
of the ISDA Form; and
(B) the earlier of (x) the second Exchange Business Day
following the date the Registration Statement is declared
effective by the Securities and Exchange Commission
("SEC"); and (y) the date determined pursuant to subclause
(vi)(A)(4).
(iii) If Party B is the Defaulting Party or the sole Affected Party,
the Closing Value of the Shares shall be 75% of the amount
determined under Closing Value.
(iv) Party B shall comply with all of the Conditions on Net Share
Settlement applicable to Share Eligible Transactions, except
that the Registration Statement must be declared effective by
the Securities and Exchange Commission ("SEC") not later than
the close of business on the second Exchange Business Day
following the notice fixing an Early Termination Date.
(v) Interest from (and including) the relevant Early Termination
Date to (but excluding) the Settlement Date shall accrue on,
and be added to, the Cash Settlement Amount, in the
Termination Currency, at the rate determined by the
Calculation Agent in its absolute discretion. Such interest
will be calculated on the basis of daily compounding and the
actual number of days elapsed.
(vi) If the Registration Statement is not declared effective by the
SEC within the time set out in paragraph 5(a)(iv) (or, where
Party A has previously made the election set out in paragraph
5(a)(vi)(B), within the time designated pursuant to paragraph
5(a)(vi)(B)), Party A, in its absolute discretion, may elect
to:
(A) receive the relevant number of Shares from Party B in
which case:
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(1) the day on which Party A makes such an
election to receive such Shares from Party B
is the "Party A Election Date", and
(2) Party B shall withdraw any Registration
Statement filed with the SEC in connection
with the Shares, and
(3) Party B will enter into a Private Placement
Purchase Agreement with Party A in form and
substance acceptable to Party A no later
than the next Exchange Business Day
following the Party A Election Date, and
(4) Party B shall deliver to Party A such Shares
on the Settlement Date which, for the
purposes of this paragraph 5(a)(vi)(A)(4),
shall be the third Exchange Business Day
following the Party A Election Date, and
(5) in addition to any Make-whole Amount payable
by Party B pursuant to the Make-Whole
Provision herein, Party B shall deliver to
Party A such additional Shares until Party A
has realized actual net proceeds upon resale
of such Shares equal to Party A's Loss. At
its election, Party A may by a written
notice to Party B retain a number of Shares
delivered by Party B pursuant to this
subclause (vi). If Party A so elects, Party
A shall be deemed to have sold each such
retained Share for an amount equal to the
price per Share obtained by Party A in the
last Share sold by Party A prior to sending
written notice of its intention to retain
Shares to Party B. In no event will Party A
be obligated to exercise its right to retain
Shares; or
(B) extend the period within which the Registration Statement
is to be declared effective by the SEC for a further
period specified in writing by Party A at the time of such
extension.
Party B intends that this Transaction shall be accounted for as "permanent
equity" within the meaning of and for the purposes of EITF 00-7. This section
entitled Calculations and Payment on Early Termination shall be applicable only
to the extent and only for as long as necessary for Party B to account for this
Transaction as "permanent equity" within the meaning and for the purposes of
EITF 00-7 or any successor financial statement guidance. In the event there is a
change in interpretation of EITF 00-7 that would cause this Transaction not to
be accounted for as "permanent equity" thereunder, the parties agree to use
reasonable efforts to agree upon amendments to the Transaction acceptable to
both parties to permit the Transaction to continue to be accounted for as
"permanent equity."
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Account Details
Party A: Cash Payments for Physical Settlement
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Cash Settlement Payments or USD Premium Payments
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Delivery of Shares for Physical Settlement and Net Share Settlement
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Party B: (please advise)
6. Relationship Between Parties
Each party will be deemed to represent to the other party on the date on which
it enters into a Transaction that (absent a written agreement between the
parties that expressly imposes affirmative obligations to the contrary for that
Transaction):
(a) Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter into that Transaction and as to whether that
Transaction is appropriate or proper for it based upon its own judgement and
upon advice from such advisers as it has deemed necessary. It is not relying on
any communication (written or oral) of the other party as investment advice or
as a recommendation to enter into that Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to
enter into that Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or guarantee as to the
expected results of that Transaction.
(b) Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice),
and understands and accepts the terms, conditions and risks of that Transaction.
It is also capable of assuming, and assumes, the risks of that Transaction.
(c) Status of Parties. The other party is not acting as a fiduciary for or an
adviser to it in respect of that Transaction.
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 at your earliest convenience.
Yours sincerely,
By: ______________________ By: _____________________
Name: Name:
Title: Title:
Confirmed as of the ___ day
of ____________, ____
TRIMERIS INC..
By: ______________________
Name:
Title: