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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 2023
PROS Holdings, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware |
(State or Other Jurisdiction of Incorporation) |
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001-33554 | | | | 76-0168604 |
(Commission File Number) | | | | (IRS Employer Identification No.) |
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3200 Kirby Drive, Suite 600 | Houston | TX | | | | | 77098 | |
(Address of Principal Executive Offices) | | | | | (Zip Code) | |
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Registrant’s telephone number, including area code | (713) | 335-5151 | |
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(Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading symbol(s) | | Name of each exchange on which registered |
| Common stock $0.001 par value per share | | PRO | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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| Item 1.01 | Entry into a Material Definitive Agreement |
Exchange Agreements
On August 23, 2023, PROS Holdings, Inc. (the “Company”) entered into privately-negotiated agreements (the “Exchange Agreements”) with a limited number of existing holders of the Company’s 1.00% Convertible Senior Notes due 2024 (the “2024 Notes”) who are institutional “accredited investors” (within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) and “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) (such existing holders, the “Exchange Participants”) to exchange approximately $122 million aggregate principal amount of the Exchange Participants’ existing 2024 Notes for an amount of the Company’s previously-issued 2.250% Convertible Senior Notes due 2027 (the “2027 Notes”) at an exchange ratio to be determined based on the volume-weighted average trading price of the Company’s common stock over a thirty-day period beginning August 24, 2023 (such exchange transactions, the “Exchange”). The 2027 Notes issued in the Exchange will constitute a further issuance of, and form a single series with, and be fungible with the existing 2027 Notes.
The 2027 Notes are unsecured, unsubordinated obligations of the Company and will pay interest semiannually at an annual rate of 2.250% and will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate at such time. The 2027 Notes have an initial conversion rate of 23.9137 shares of the Company’s common stock per $1,000 principal amount of 2027 Notes (which is equivalent to an initial conversion price of approximately $41.82 per share of the Company’s common stock). The conversion rate is subject to adjustment in certain circumstances, including in connection with specified fundamental changes. Holders of the 2027 Notes will have the right to require the Company to repurchase all or a portion of their notes upon the occurrence of a fundamental change (as defined in the indenture governing the 2027 Notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest. The 2027 Notes will mature on September 15, 2027, unless converted, redeemed or repurchased in accordance with their terms prior to such date. Prior to June 15, 2027, the 2027 Notes will be convertible only upon the satisfaction of certain conditions and during certain periods, and thereafter, at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date regardless of these conditions.
The description of the Exchange Agreements is qualified in its entirety by reference to the full and complete terms of the form of Exchange Agreement, which is attached hereto as Exhibit 10.1, and incorporated herein by reference.
Capped Call Transactions
In connection with the Exchange, on August 23, 2023, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions”) with certain option counterparties (the “Option Counterparties”). The Company will pay a premium to the Option Counterparties for the Additional Capped Call Transactions in an amount to be determined based on the volume-weighted average trading price of the Company’s common stock over a reference period beginning August 24, 2023. Initial funding of the Additional Capped Call Transactions is anticipated to occur on August 25, 2023, and final funding of the Additional Capped Call Transactions is anticipated to occur concurrently with the settlement of the Exchange, whereby the Company will either make cash payments to, or receive cash payments, from the Option Counterparties depending on the final premium for the Additional Capped Call Transactions. The Additional Capped Call Transactions will cover, subject to customary anti-dilution adjustments, a number of shares of the Company’s common stock approximately corresponding with the number of shares of the Company’s common stock underlying the additional 2027 Notes issued in the Exchange, at a strike price that corresponds to the conversion price of the 2027 Notes, also subject to adjustment in accordance with the terms of the Additional Capped Call Confirmations. The capped call transactions entered into by the Company in connection with the issuances of the 2027 Notes are intended to reduce potential dilution to the Company’s common stock and/or offset any cash payments the Company will be required to make in excess of the principal amount upon any conversion of the 2027 Notes, with such reduction or offset subject to a cap. The strike price of the Additional Capped Call Transactions is initially $41.817 and the cap price of the Additional Capped Call Transactions is initially $78.90, in each case, subject to adjustment in accordance with the terms of the Additional Capped Call Confirmations.
The Company will not be required to make any cash payments to the Option Counterparties upon the exercise of the options that are evidenced by any of the capped call transactions entered into in connection with the issuances of the 2027 Notes, including the Additional Capped Call Transactions.
The Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Company’s common stock or purchasing or selling the Company’s common stock in secondary market transactions following their entry into the Additional Capped Call Transactions and prior to the maturity of the 2027 Notes (and are likely to do so during the relevant valuation period under the Additional Capped Call Transactions or following any repurchase of the 2027 Notes by the Company on any fundamental change repurchase date, any
redemption date or otherwise, in each case if the Company exercises its option to terminate the relevant portion of the Additional Capped Call Transactions). This activity could also cause or avoid an increase or decrease in the market price of the Company’s common stock or the 2027 Notes, which could affect the holders’ ability to convert the 2027 Notes and, to the extent the activity occurs during any observation period related to a conversion of the 2027 Notes, it could affect the amount and value of the consideration that the holder will receive on conversion of such 2027 Notes.
The description of the Additional Capped Call Transactions contained herein is qualified in its entirety by reference to the form of Additional Capped Call Confirmations, which is attached as Exhibit 10.2 to this Current Report on Form 8-K.
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| Item 2.03 | Creating of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth in Item 1.01 is incorporated herein by reference into this Item 2.03.
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| Item 3.02 | Unregistered Sales of Equity Securities |
The 2027 Notes are expected to be issued to the Exchange Participants in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The Company is relying on this exemption from registration based in part on representations made by the Exchange Participants in the Exchange Agreements. The information set forth in Item 1.01 above is incorporated by reference into this Item 3.02.
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| Item 9.01 | Financial Statements and Exhibits. |
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| Exhibit No. | | Exhibit Description |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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| PROS HOLDINGS, INC. |
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| August 23, 2023 | | /s/ Damian W. Olthoff |
| | Damian W. Olthoff |
| | General Counsel and Secretary |
PROS Holdings, Inc.
Exchange Agreement
August 23, 2023
Table of Contents
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| (a) | Generally | |
| (b) | The Closing | |
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| (a) | Due Formation, Valid Existence and Good Standing: Power to Perform Obligations | |
| (b) | Deliver Free of Liens | |
| (c) | Listing of Common Stock | |
| (d) | Securities Act Matters | |
| (e) | Enforceability of New Notes | |
| (f) | Enforceability of 2027 Notes Indenture | |
| (g) | Common Stock Issuable Upon Conversion of 2027 Notes | |
| (h) | Trust Indenture Act | |
| (i) | Non-Contravention | |
| (j) | No Consents | |
| (k) | Authorization, Execution and Delivery of This Exchange Agreement | |
| (l) | Investment Company Act | |
| (m) | Accuracy of Covered SEC Filings | |
| (n) | The Closing | |
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| (a) | Power to Perform Obligations and Bind Accounts; Survival of Authority | |
| (b) | Ownership of Existing Notes | |
| (c) | Rule 144 Matters | |
| (d) | Passage of Good Title: No Liens | |
| (e) | Non-Contravention | |
| (f) | Jurisdiction of Residence | |
| (g) | Compliance with Certain Laws; No Consents | |
| (h) | Acknowledgement of Risks; Investment Sophistication | |
| (i) | No View to Distribution; No Registration | |
| (j) | Information Provided | |
| (k) | No Investment, Tax or Other Advice | |
| (l) | Investment Decision Matters | |
| (m) | Due Diligence | |
| (n) | No Regulatory Agency Recommendation or Approval | |
| (o) | Qualified Institution Buyer Status | |
| (p) | Mutual Negotiation | |
| (q) | Financial Adviser Fee | |
| (r) | Additional Documentation | |
| (s) | Bring-Down of Representations and Warranties | |
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| (t) | New York Stock Exchange Matters | |
| (u) | Settlement Instructions | |
| (v) | Wall-Cross Matters | |
| (w) | No Reliance on Matthews South | |
| (x) | Concurrent Private Placement | |
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| (a) | Conditions to the Company's Obligations | |
| (b) | Conditions to the Investor's Obligations | |
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| (a) | Waiver; Amendments | |
| (b) | Assignability | |
| (c) | Further Instruments and Acts | |
| (d) | Waiver of Jury Trial | |
| (e) | Governing Law | |
| (f) | Section and Other Headings | |
| (g) | Counterparts | |
| (h) | Notices | |
| (i) | Binding Effect | |
| (j) | Notification of Changes | |
| (k) | Severability | |
| (l) | Entire Agreement | |
| (m) | Reliance by Matthews South | |
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| EXHIBITS | | |
| Exhibit A: | Exchanging Investor Information | A-1 |
| Exhibit B: | Exchange Procedures | B-1 |
| Exhibit C: | Tax Matters | C-1 |
Exchange Agreement
EXCHANGE AGREEMENT, dated as of August 23, 2023, between PROS Holdings, Inc., a Delaware corporation (the “Company”), and the undersigned investor (the “Investor”), on its own behalf and on behalf of each of the beneficial owners listed on Exhibit A hereto (each, an “Account”) for whom the Investor holds contractual and investment authority (each Account, including the Investor if it is exchanging Existing Notes in the Exchange (each, as defined below) on its own behalf, an “Exchanging Investor”). If there is only one Account or Exchanging Investor, then each reference thereto in this Exchange Agreement will be deemed to refer to such Account or Exchanging Investor, as applicable, in the singular, mutatis mutandis.
WHEREAS, the Company and each Exchanging Investor desire to engage in the Exchange on the terms set forth in this Exchange Agreement.
WHEREAS, the Company intends to partially unwind those certain base and additional capped call transactions, dated May 1, 2019 and May 3, 2019, respectively, entered into in connection with the issuance of the Existing Notes, by entering into one or more partial termination agreements with the counterparties thereto.
WHEREAS, the Company intends to enter into one or more capped call transactions with certain financial institutions in connection with the Exchange.
THEREFORE, the Company, the Investor and each Exchanging Investor agree as follows.
Section 1. Definitions
“2027 Notes Indenture” means that certain Indenture, dated as of September 15, 2020 between the Company and the 2027 Notes Trustee.
“2027 Notes Trustee” means Wilmington Trust, National Association, in its capacity as trustee under the 2027 Notes Indenture.
“2027 Notes” means the Old 2027 Notes and the New 2027 Notes, collectively.
“Account” has the meaning set forth in the first paragraph of this Exchange Agreement.
“Closing” has the meaning set forth in Section 3(b)(i).
“Closing Date” has the meaning set forth in Section 3(b)(i).
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means the common stock, $0.001 par value per share, of the Company.
“Company” has the meaning set forth in the first paragraph of this Exchange Agreement.
“Conversion Shares” has the meaning set forth in Section 4(g).
“Covered SEC Filings” means each of the following documents, in the form they were filed with the SEC and including any amendments thereto filed with the SEC: (a) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022; (b) the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2023 and June 30, 2023; (c) those portions of the Company’s 2023 Proxy Statement on Schedule 14A that are incorporated by reference into the Annual Report referred to in clause (a) above; and (d) the Company’s Current Reports on Form 8-K (excluding any Current Reports or portions thereof that are furnished, and not filed, pursuant to Item 2.02 or Item 7.01 of Form 8-K, and any related exhibits) filed with the SEC after December 31, 2022.
“Daily 10b-18 VWAP” means for each Trading Day in the Reference Period, the composite volume weighted average price per share of Common Stock of Rule 10b-18 eligible trades for the regular trading session (including any extensions thereof) of the Exchange on the Trading Day (without regard to pre-open or after hours trading outside of such regular trading session for such Trading Day) as published by Bloomberg at 4:15 P.M. New York City time (or 15 minutes following the end of any extension of the regular trading session) on such Trading Day, on Bloomberg page “PRO <Equity> AQR SEC” (or any successor thereto), or if such price is not so reported on such Trading Day for any reason or the Company determines that such price is clearly erroneous, such Daily 10b-18 VWAP Price shall be as determined by the Company.
“Daily Exchange Ratio” means a percentage determined based on the Daily 10b-18 VWAP by reference to the grid set forth in Schedule A. If the Daily Exchange Ratio is not specified on such grid, the Exchange Consideration shall be determined by the Company based on a straight-line interpolation between the Daily Exchange Ratios or extrapolation from the Daily Exchange Ratios (as the case may be) specified on such grid.
“DTC” means The Depository Trust Company.
“DWAC” means DTC’s Deposits and Withdrawal at Custodian program.
“DWAC Withdrawal” has the meaning set forth in Section 3(b)(iii)(1).
“Exchange” has the meaning set forth in Section 3(a).
“Exchange Consideration” means, with respect to the Existing Notes of any Exchanging Investor to be exchanged in the Exchange, (i) New 2027 Notes having an aggregate principal amount equal to the Exchange Ratio multiplied by the principal amount of such Existing Notes, rounded to up to the nearest $1,000 principal amount and (ii) an amount of cash equal to the Interest Amount.
“Exchange Ratio” means the sum of the Daily Exchange Ratios for each Trading Day in the Reference Period.
“Exchanging Investor” has the meaning set forth in the first paragraph of this Exchange Agreement.
“Existing Indenture” means that certain Indenture, dated as of May 7, 2019 between the Company and the Existing Notes Trustee.
“Existing Notes” means the Company’s 1.00% Convertible Senior Notes due 2024 issued pursuant to the Existing Indenture.
“Existing Notes Trustee” means Wilmington Trust, National Association, in its capacity as trustee under the Existing Indenture.
"Interest Amount" means an amount to be determined by the Company equal to the greater of (a) zero and (b)(i) the accrued interest on the Existing Notes from, and including, May 15, 2023 to, but excluding, the Closing Date, calculated in accordance with the Existing Indenture, minus (ii) the accrued interest on the 2027 Notes from, and including, September 15, 2023 to, but excluding the Closing Date, calculated in accordance with the 2027 Notes Indenture.
“Investor” has the meaning set forth in the first paragraph of this Exchange Agreement.
“IRS” means the Internal Revenue Service.
“Liens” means any mortgages, liens, pledges, charges, security interests, encumbrances, title retention agreements, options, preemptive rights, equity or other adverse claims.
“Matthews South” means Matthews South LLC.
“New 2027 Notes” means the Company’s 2.250% Convertible Senior Notes due 2027 being issued in the Exchange.
“New Notes DWAC Deposit” has the meaning set forth in Section 3(b)(iii)(2).
“Old 2027 Notes” means the Company’s outstanding 2.250% Convertible Senior Notes due 2027, CUSIP No. 74346Y AG8, previously issued under the 2027 Notes Indenture on September 15, 2020.
“Reference Period” means the period of 30 consecutive Trading Days commencing on the first Trading Day following the date hereof.
“Release Time” hast the meaning set forth in Section 7.
“Resale Restriction Termination Date” has the meaning set forth in Section 2.05(c) of the 2027 Notes Indenture.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Trading Day” has the meaning set forth for purposes of determining amounts due upon conversion in Section 1.01 of the 2027 Notes Indenture.
Section 2. Rules of Construction. For purposes of this Agreement:
(a) “or” is not exclusive;
(b) “including” means “including without limitation”;
(c) “will” expresses a command;
(d) words in the singular include the plural and in the plural include the singular, unless the context requires otherwise;
(e) “herein,” “hereof” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision of this Agreement, unless the context requires otherwise;
(f) references to currency mean the lawful currency of the United States of America, unless the context requires otherwise; and
(g) the exhibits, schedules and other attachments to this Agreement are deemed to form part of this Agreement.
Section 3. The Exchange.
(a) Generally. Subject to the other terms of this Exchange Agreement, each of the Investor and each other Exchanging Investor, if any, agrees to exchange (the “Exchange”), with the Company the aggregate principal amount of Existing Notes, CUSIP No. 74346Y AH6, set forth in Exhibit A hereto that it beneficially owns for Exchange Consideration in kind and amount corresponding to such principal amount of Existing Notes.
(b) The Closing.
(i) Closing Date and Location. The closing of the Exchange (the “Closing”) will take place at the offices of DLA Piper LLP (US), 303 Colorado Street, Suite 3000, Austin, TX 78701, at 10:00 a.m., New York City time, on the later of (1) the second business day following the last day of the Reference Period; (2) such date as the conditions to Closing set forth in Section 6 are satisfied or waived; and (3) such other time and place as the Company and the Investor may agree (such later date, the “Closing Date”).
(ii) Conveyance of Title; Release of Claims. Subject to the other terms and conditions of this Exchange Agreement, the Investor hereby, for itself and on behalf of each Exchanging Investor, sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in such portion of the Existing Notes as indicated on Exhibit A hereto, waives any and all other rights with respect to such Existing Notes and the Existing Indenture and releases and discharges the Company from any and all claims the Investor and any other Exchanging Investor may now have, or may have in the future, arising out of, or related to, such Existing Notes, including any claims arising from any existing or past defaults under the Existing Indenture, or any claims that the Investor or any Exchanging Investor is entitled to receive additional, special or default interest with respect to the Existing Notes.
(iii) Delivery of Existing Notes and Exchange Consideration.
(1) DWAC Withdrawal. Subject to satisfaction of the applicable conditions precedent specified in this Exchange Agreement, at or prior to 9:30 a.m., New York City time, on the Closing Date, the Investor agrees to direct the eligible DTC participant through which each Exchanging Investor holds a beneficial interest in the Existing Notes to submit a DWAC withdrawal instruction (the “DWAC Withdrawal”) to the Existing Notes Trustee for the aggregate principal amount of the Existing Notes to be exchanged by such Exchanging Investor pursuant to this Exchange Agreement.
(2) New Notes DWAC Deposit. DTC will act as securities depositary for the New 2027 Notes. Subject to satisfaction of the applicable conditions precedent specified in this Exchange Agreement, at or prior to 9:30 a.m. New York City time on the Closing Date, the Investor agrees to direct an eligible DTC participant to submit, separately for each Exchanging Investor, a DWAC deposit instruction (the “New Notes DWAC Deposit”) to the 2027 Notes Trustee, for the aggregate principal amount of New 2027 Notes that such Exchanging Investor is entitled to receive pursuant to this Exchange Agreement, or comply with such other settlement procedures mutually agreed in writing by the Investor and the Company.
(3) Delivery of Exchange Consideration. The Exchange Consideration will not be delivered until a valid DWAC Withdrawal of the Existing Notes has been received and accepted by the Existing Notes Trustee. If the Closing does not occur, then any Existing Notes submitted for DWAC Withdrawal will be returned to the DTC participant that submitted the DWAC Withdrawal instruction in accordance with the procedures of DTC. On the Closing Date, subject to satisfaction of the conditions precedent specified in this Exchange Agreement, and the prior receipt of a valid DWAC Withdrawal conforming with the aggregate principal amount of the Existing Notes to be exchanged by each Exchanging Investor a valid New Notes DWAC Deposit conforming with the aggregate principal amount of the New 2027 Notes to be issued to such Exchanging Investor in the Exchange, the Company will (A) pay the Interest Amount to such Exchanging Investor by wire transfer to the account in the United States of such Exchanging Investor set forth in Exhibit A to this Exchange Agreement and (B) execute such New 2027 Notes, and direct the 2027 Notes Trustee to authenticate and, by acceptance of the New Notes DWAC Deposit, deliver, such New 2027 Notes (or comply with such other settlement procedures mutually agreed in writing by the Company and the 2027 Notes Trustee), in each case to the DTC account specified on Exhibit A to this Exchange Agreement.
(4) Acknowledgment of DWAC Posting Expiration; Delivery Instructions. Each of the Investor and each other Exchanging Investor, if any, acknowledges that each of the DWAC Withdrawal and the New Notes DWAC Deposit must be posted on the Closing Date and that if it is posted before the Closing Date, then it will expire unaccepted and must be resubmitted on the Closing Date. For the convenience of each Exchanging Investor, attached hereto as Exhibit B is a summary of the delivery instructions that must be followed to settle the Exchange through DTC.
(5) Other Exchanges. Each of the Investor and each other Exchanging Investor, if any, acknowledges that other investors are participating in similar exchanges, each of which contemplates a DWAC Withdrawal and a New Notes DWAC Deposit. The Company intends to complete the New Notes DWAC Deposit concurrently for all investors who have submitted valid DWAC Withdrawals and New Notes DWAC Deposits by the deadline above. In the event that the Investor complies with the deadline above for the DWAC Withdrawal and other investors do not, the Company will use its commercially reasonable efforts to ensure that the New 2027 Notes are delivered to the Investor pursuant to the New Notes DWAC Deposit on the Closing Date. However, in the event that such New 2027 Notes are not delivered on the Closing Date, the Company will use its commercially reasonable efforts to ensure that the same will be delivered on the business day immediately following the Closing Date or as soon as reasonably practicable thereafter.
(6) Delay of Closing. If (A) the Existing Notes Trustee is unable to locate the DWAC Withdrawal or (B) the 2027 Notes Trustee is unable to locate the New Notes DWAC Deposit or (C) such DWAC Withdrawal does not conform to the Existing Notes to be exchanged in the Exchange or such New Notes DWAC Deposit does not conform to the New 2027 Notes to be issued in the Exchange, then the Company will promptly notify the Investor. If, because of the occurrence of an event described in clause (A), (B) or (C) of the preceding sentence, the New 2027 Notes are not delivered on the Closing Date, then such New 2027 Notes will be delivered on the first business day following the Closing Date (or as soon as reasonably practicable thereafter) on which all applicable conditions set forth in clauses (A), (B) or (C) of the first sentence of this paragraph have been cured.
(iv) Questions as to Form. All questions as to the form of all documents and the validity and acceptance of the Existing Notes will be determined by the Company, in its reasonable discretion, which determination will be final and binding.
Section 4. Representations, Warranties and Covenants of the Company. The Company represents and warrants to the Exchanging Investors and covenants that:
(a) Due Formation, Valid Existence and Good Standing; Power to Perform Obligations. The Company is duly formed, validly existing and in good standing under the laws of the State of Delaware, with full power and authority to conduct its business as it is currently being conducted and to own its assets. The Company has full power and authority to consummate the Exchange and to enter into this Exchange Agreement and perform all of its obligations hereunder.
(b) Delivery Free of Liens. Upon the Company’s delivery of the New 2027 Notes to any Exchanging Investor pursuant to the Exchange, such New 2027 Notes will be free and clear of all Liens created by the Company other than those created under the Existing Indenture.
(c) Listing of Common Stock. At or before the Closing, the Company will have submitted to the New York Stock Exchange a Supplemental Listing Application with respect to the Conversion Shares. The Company will use its commercially reasonable efforts to maintain the listing of the Conversion Shares on the New York Stock Exchange for so long as the Common Stock is then so listed.
(d) Securities Act Matters. Assuming the accuracy of the representations and warranties of the Investor, made on behalf of itself and the Exchanging Investors, (i) the issuance of the New 2027 Notes in exchange for the Existing Notes pursuant to this Exchange Agreement is exempt from the registration requirements of the Securities Act; (ii) when issued pursuant to this Exchange Agreement, the New 2027 Notes will be freely transferable without restrictions as to volume and manner of sale pursuant to Rule 144 under the Securities Act; and (iii) based on applicable laws and regulations as of the Closing Date, if and when issued in accordance with the 2027 Notes Indenture, the Conversion Shares will be freely transferable without restrictions as to volume and manner of sale pursuant to Rule 144 under the Securities Act by any Investor that is not, at such time or at any time during the immediately preceding three months, an “affiliate” (as defined in Rule 144 under the Securities Act) of the Company. The Resale Restriction Termination Date for the 2027 Notes occurred on September 29, 2021. When issued pursuant to this Exchange Agreement, (i) the New 2027 Notes will be issued with the same “unrestricted” CUSIP number as the Old 2027 Notes and will not be subject to any restriction on transfer imposed by the Company or under the Securities Act by persons who are not, and who have not been at any time during the preceding three months, an “affiliate” of the Company within the meaning of Rule 144 under the Securities Act; (ii) the New 2027 Notes will be fungible with the Old 2027 Notes for U.S. federal income tax purposes and securities law purposes; and (iii) the New 2027 Notes issued pursuant to this Exchange Agreement will be issued in compliance with Section 2.10 of the 2027 Notes Indenture with the same CUSIP number as the Old 2027 Notes.
(e) Enforceability of New 2027 Notes. Each New 2027 Note to be issued pursuant to this Exchange Agreement has been duly authorized by the Company and, when issued, authenticated and delivered in the manner provided for in the 2027 Notes Indenture and this Exchange Agreement, will be validly issued, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability, 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 will be entitled to the benefits of the 2027 Notes Indenture.
(f) Enforceability of 2027 Notes Indenture. The 2027 Notes Indenture has been duly authorized, executed and delivered in accordance with its terms by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles relating to enforceability, including principles of commercial reasonableness, good faith and fair dealing, regardless of whether enforcement is sought in a proceeding at law or in equity.
(g) Common Stock Issuable Upon Conversion of 2027 Notes. Subject to the terms of the 2027 Notes Indenture, the 2027 Notes will be convertible into shares of Common Stock, cash or a combination of shares of Common Stock and cash, at the Company’s election. The Company has duly authorized and reserved a number of shares of Common Stock for issuance upon conversion of the 2027 Notes equal to the maximum number of such shares issuable upon conversion (assuming “Physical Settlement” of the 2027 Notes upon conversion and the maximum increase to the “Conversion Rate” in connection with any “Make-Whole Fundamental Change” (each, as defined in the 2027 Notes Indenture) applies) (the “Conversion Shares”), and, when such Conversion Shares are issued upon conversion of the 2027 Notes in accordance with the terms of the 2027 Notes and the 2027 Notes Indenture, such Conversion Shares will be validly issued, fully paid and non-assessable, and the issuance of any such Conversion Shares will not be subject to any preemptive or similar rights.
(h) Trust Indenture Act. Assuming the accuracy of the representations and warranties of the Investor, made on behalf of itself and the Exchanging Investors, it is not necessary to qualify the 2027 Notes Indenture under the Trust Indenture Act of 1939, as amended, in connection with the Exchange.
(i) Non-Contravention. The Exchange and the other transactions contemplated thereby will not (i) contravene any law, rule or regulation binding on the Company or any subsidiary thereof or any judgment or order of any court or arbitrator or governmental or regulatory authority applicable to the Company or any such subsidiary; (ii) constitute a breach or violation or result in a default under any loan agreement, mortgage, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it is bound; or (iii) constitute a breach or violation or result in a default under the organizational documents of the Company or any subsidiary thereof, except, in the case of clauses (i) and (ii) above, for such contraventions, conflicts, violations or defaults that would not, individually or in the aggregate, reasonably be expected to result in a material adverse effect on the business, properties, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under this Exchange Agreement.
(j) No Consents. No consent, approval, authorization, order, license, registration or qualification of or with any court or governmental or regulatory authority is required for the execution, delivery and performance by the Company of its obligations under this Exchange Agreement, the 2027 Notes Indenture and the 2027 Notes and the consummation of the transactions contemplated by this Exchange Agreement, the 2027 Notes Indenture and the 2027 Notes, except such as have been obtained or made (or will, at the Closing, have been obtained or made) by the Company.
(k) Authorization, Execution and Delivery of This Exchange Agreement. This Exchange Agreement has been duly authorized, executed and delivered by the Company.
(l) Investment Company Act. The Company is not and, after giving effect to the transactions contemplated by this Exchange Agreement, will not be required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.
(m) Accuracy of Covered SEC Filings. The Covered SEC Filings (as defined above), taken as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), as of the date of the latest Covered SEC Filing, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Section 5. Representations, Warranties and Covenants of the Investor and the Exchanging Investors. The Investor, for itself and on behalf of each Exchanging Investor, represents and warrants to the Company and covenants that:
(a) Power to Perform Obligations and Bind Accounts; Survival of Authority. The Investor, for itself and on behalf of each Exchanging Investor, has full power and authority to exchange, sell, assign and transfer the Existing Notes to be exchanged pursuant to, and to enter into, this Exchange Agreement and perform all obligations required to be performed by the Investor or such Exchanging Investor under this Exchange Agreement. If the Investor is exchanging any Existing Notes or acquiring any of the Exchange Consideration as a fiduciary or agent for one or more Accounts (including any Accounts that are Exchanging Investors), it represents that it has (i) the requisite investment discretion with respect to each such Account necessary to effect the Exchange; (ii) full power to make the representations, warranties and covenants set forth in this Section 5 on behalf of such Account; and (iii) contractual authority with respect to each such Account. All authority conferred in this Exchange Agreement will survive the dissolution of the Investor, and any representation, warranty, undertaking and obligation of the Investor under this Exchange Agreement will be binding upon the trustees in bankruptcy, legal representatives, successors and assigns of the Investor.
(b) Ownership of Existing Notes. Each of the Exchanging Investors is and, immediately before the Closing, will be the beneficial owner of the Existing Notes set forth on Exhibit A and has held the Existing Notes since August 21, 2023.
(c) Rule 144 Matters. Neither the Investor nor any other Exchanging Investor is, as of the date of this Exchange Agreement, or, at the Closing, will be, and, at no time during the three months preceding the date of this Exchange Agreement or preceding the Closing, was or will any of them be, a “person” that is an “affiliate” of the Company (as such terms are defined in Rule 144 under the Securities Act).
(d) Passage of Good Title; No Liens. When the Existing Notes are exchanged pursuant to this Exchange Agreement, the Company will acquire good, marketable and unencumbered title to the Existing Notes, free and clear of all Liens.
(e) Non-Contravention. The Exchange will not (i) contravene any law, rule or regulation binding on the Investor or any of the Exchanging Investors or any investment guideline or restriction applicable to the Investor or any of the Exchanging Investors; or (ii) constitute a breach or violation or result in a default under the organizational documents of the Investor or any Exchanging Investor or any material loan agreement, mortgage, lease or other agreement or instrument to which the Investor or any Exchanging Investor is a party or by which it is bound.
(f) Jurisdiction of Residence. The Investor and each Exchanging Investor is a resident of the jurisdiction set forth on Exhibit A attached to the Exchange Agreement.
(g) Compliance with Certain Laws; No Consents. The Investor and each Exchanging Investor will comply with all applicable laws and regulations in effect in any jurisdiction in which the Investor or any of the Exchanging Investors acquires any New 2027 Notes pursuant to the Exchange and there are no consents, approvals or permissions required for such purchases, acquisitions or sales under the laws and regulations of any jurisdiction to which the Investor or any of the Exchanging Investors is subject or in which the Investor or any Exchanging Investor acquires any New 2027 Notes pursuant to the Exchange.
(h) Acknowledgement of Risks; Investment Sophistication. The Investor and each Exchanging Investor understands and accepts that the New 2027 Notes to be acquired in the Exchange involve risks. Each of the Investor and the Exchanging Investors has such knowledge, skill and experience in business, financial and investment matters that such person is capable of evaluating the merits and risks of the Exchange and an investment in the 2027 Notes. With the assistance of each Exchanging Investor’s own professional advisors, to the extent that the Exchanging Investor has deemed appropriate, each Exchanging Investor has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the 2027 Notes and the consequences of the Exchange and this Exchange Agreement. Each Exchanging Investor has considered the suitability of the 2027 Notes as an investment in light of its own circumstances and financial condition, and each of the Investor and the Exchanging Investor is able to bear the risks associated with an investment in the 2027 Notes.
(i) No View to Distribution; No Registration. Each Exchanging Investor is acquiring the New 2027 Notes solely for such Exchanging Investor’s own beneficial account, for investment purposes, and not with a view to, or for resale in connection with, any distribution of the 2027 Notes in violation of the Securities Act. Each of the Investor and the Exchanging Investors understands that the offer and sale of the 2027 Notes have not been registered under the Securities Act or any state securities laws by reason of specific exemptions under the provisions thereof that depend in part upon the investment intent of the Investor and the Exchanging Investors and the accuracy of the other representations made by the Investor, for itself and on behalf of each Exchanging Investor, in this Exchange Agreement. Each of the Investor and the Exchanging Investors understands that the Company and its affiliates are relying upon the representations and agreements contained in this Exchange Agreement (and any supplemental information) for the purpose of determining whether the Exchange meets the requirements for such exemptions.
(j) Information Provided. The Investor and each Exchanging Investor acknowledges that no person has been authorized to give any information or to make any representation concerning the Company or the Exchange other than as contained in this Exchange Agreement, and the Covered SEC Filings. The Company takes no responsibility for, and provides no assurance as to the reliability of, any other information that others may provide to the Investor or any Exchanging Investor.
(k) No Investment, Tax or Other Advice. The Investor confirms that it and each Exchanging Investor is not relying on any statement (written or oral), representation or warranty made by, or on behalf of, the Company, Matthews South or any of their respective affiliates as investment, tax or other advice or as a recommendation to participate in the Exchange and receive the Exchange Consideration in exchange for Existing Notes. The Investor confirms that it and each Exchanging Investor has read the 2027 Notes Indenture and has not relied on any statement (written or oral) of the Company, Matthews South or any of their respective affiliates as to the terms of the 2027 Notes. Neither the Company, Matthews South nor any of their respective affiliates is acting or has acted as an advisor to the Investor or any Exchanging Investor in deciding whether to participate in the Exchange and to exchange Existing Notes for the Exchange Consideration.
(l) Investment Decision Matters. The Investor confirms that none of the Company, Matthews South or any of their respective affiliates have (i) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the 2027 Notes; or (ii) made any representation to the Investor or any Exchanging Investor regarding the legality of an investment in the 2027 Notes under applicable investment guidelines, laws or regulations. In deciding to participate in the Exchange, each of the Investor and the Exchanging Investors is not relying on the advice or recommendations of the Company or Matthews South, or their respective affiliates, and has made its own independent decision that the terms of the Exchange and the investment in the 2027 Notes are suitable and appropriate for it.
(m) Due Diligence. Each of the Investor and the Exchanging Investors is familiar with the business and financial condition and operations of the Company and has had the opportunity to conduct its own investigation of the Company and the 2027 Notes. Each of the Investor and the Exchanging Investors has had access to and reviewed the Covered SEC Filings and such other information concerning the Company and the 2027 Notes it deems necessary to enable it to make an informed investment decision concerning the Exchange. Each of the Investor and the Exchanging Investors has been offered the opportunity to ask questions of the Company and received answers thereto, as it deems necessary to enable it to make an informed investment decision concerning the Exchange.
(n) No Regulatory Agency Recommendation or Approval. Each of the Investor and the Exchanging Investors understands that no federal or state agency has passed upon the merits or risks of an investment in the 2027 Notes or made any recommendation or endorsement, or made any finding or determination concerning the fairness or advisability, of such investment or the consequences of the Exchange and this Exchange Agreement.
(o) Qualified Institutional Buyer Status. Each Exchanging Investor and each Account for which it is acting is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act. Each of the Investor and the Exchanging Investors agrees to furnish any additional information requested by the Company or any of its affiliates to assure compliance with applicable U.S. federal and state securities laws in connection with the Exchange.
(p) Mutual Negotiation. The Investor acknowledges that the terms of the Exchange have been mutually negotiated between the Investor and the Company. The Investor was given a meaningful opportunity to negotiate the terms of the Exchange. The Investor had a sufficient amount of time to consider whether to participate in the Exchange, and neither the Company nor Matthews South, nor any of their respective affiliates or agents, has placed any pressure on the Investor to respond to the opportunity to participate in the Exchange. The Investor’s and each Exchanging Investor’s participation in the Exchange was not conditioned by the Company on the Investor or any Exchanging Investor’s exchange of a minimum principal amount of Existing Notes for the Exchange Consideration.
(q) Financial Adviser Fee. The Investor acknowledges that it and each Exchanging Investor understands that the Company intends to pay Matthews South a fee in respect of the Exchange.
(r) Additional Documentation. The Investor will, upon request, execute and deliver, for itself and on behalf of any Exchanging Investor, any additional documents that the Company, the Existing Notes Trustee or the 2027 Notes Trustee may reasonably request to complete the Exchange.
(s) Bring-Down of Representations and Warranties. The Investor understands that, unless the Investor notifies the Company in writing to the contrary at or before the Closing, each of the Investor’s representations and warranties, on behalf of itself and each Exchanging Investor, contained in this Exchange Agreement will be deemed to have been reaffirmed and confirmed as of the Closing, taking into account all information received by the Investor and each Exchanging Investor.
(t) New York Stock Exchange Matters. Neither the Investor nor any Exchanging Investor has an ownership interest equal to or greater than either 5% of the number of shares of Common Stock of the Company or 5% of the voting power outstanding of the Company, in each case, before the initial issuance of the securities issued in the Exchange.
(u) Settlement Instructions. No later than one (1) business day after the date hereof, the Investor agrees to deliver to the Company settlement instructions substantially in the form of Exhibit A attached to the Exchange Agreement for each of the Exchanging Investors.
(w) Wall-Cross Matters. The Investor acknowledges and agrees that it and each Exchanging Investor has not transacted, and will not transact, in any securities of the Company, including, but not limited to, any hedging transactions, from the time the Investor was first contacted by the Company or Matthews South with respect to the transactions contemplated by this Exchange Agreement until after the Release Time. Solely for purposes of this Section 5(v), subject to the Investor’s compliance with its obligations under U.S. federal securities laws and the Investor’s internal policies, (i) “Investor” will not include any employees or affiliates of the Investor that are effectively walled off by appropriate “Fire Wall” information barriers approved by the Investor’s legal or compliance department, and (ii) the foregoing representations and covenants of this Section 5(v) will not apply to any transaction by or on behalf of an Account that was effected without the advice or participation of, or such Account’s receipt of information regarding the transactions contemplated hereby provided by, the Investor.
(w) No Reliance on Matthews South. The Investor acknowledges and agrees that Matthews South has not acted as a financial advisor or fiduciary to the Investor or any Exchanging Investor and that Matthews South and its respective directors, officers, employees, representatives and controlling persons have no responsibility for making, and have not made, any independent investigation of the information contained herein or in the Company’s SEC filings and make no representation or warranty to the Investor or any Exchanging Investor, express or implied, with respect to the Company, the Existing Notes or the Exchange Consideration or the accuracy, completeness or adequacy of the information provided to the Investor or any Exchanging Investor or any other publicly available information, nor will any of the foregoing persons be liable for any loss or damages of any kind resulting from the use of the information contained therein or otherwise supplied to the Investor or any Exchanging Investor.
(x) Authorization, Execution and Delivery of This Exchange Agreement. This Exchange Agreement has been duly authorized, executed and delivered by the Investor.
Section 6. Conditions to Obligations of the Company, the Investor and the Exchanging Investors.
(a) Conditions to the Company’s Obligations. The obligation of the Company to deliver the Exchange Consideration is subject to the satisfaction at or prior to the Closing of each of the following conditions precedent: (i) the representations, warranties and covenants of the Investor, for itself and on behalf of the Exchanging Investors, in Section 5 hereof are true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing; (ii) and all covenants of the Investor or any Exchanging Investor in Section 5 to be performed at or before the Closing have been performed; and (iii) the conditions precedent set forth in Section 3(b)(iii)(3) and the receipt by the Company of a valid DWAC Withdrawal and New Notes DWAC Deposit conforming to the requirements set forth in this Exchange Agreement.
(b) Conditions to the Investor’s Obligations. The obligation of the Investor, on behalf of the Exchanging Investors, to deliver (or cause to be delivered) the Existing Notes is subject to the satisfaction at or prior to the Closing of each of the following conditions precedent: (i) the representations, warranties and covenants of the Company in Section 4 are true and correct as of the Closing in all respects with the same effect as though such representations and warranties had been made as of the Closing; and (ii) all covenants of the Company in Section 4 to be performed at or before the Closing have been performed.
Section 7. The Release Time.
(a) As of the date of this Exchange Agreement, the Company is not aware of, and has not provided to the Investor, any material non-public information regarding the Company or its securities, other than any material non-public information relating to the Exchange; and
(b) the Company agrees to publicly disclose at or before 8:30 a.m., New York City time, on the first business day after the date of this Exchange Agreement (such time and date, the “Release Time”), the exchange of the Existing Notes contemplated by this Exchange Agreement and similar exchange agreements in a Current Report on Form 8-K. The Company acknowledges and agrees that, as of the Release Time, none of the information provided by or on behalf of the Company to the Investor or any Exchanging Investor in connection with the Exchange will constitute material non-public information.
Section 8. Tax Matters.
The Investor acknowledges that, if an Exchanging Investor is a United States person for U.S. federal income tax purposes, either (a) the Company must be provided with a correct taxpayer identification number (generally, a person’s social security or federal employer identification number) and certain other information on a properly completed and executed IRS Form W-9, which is provided herein on Exhibit C attached to this Exchange Agreement; or (b) another basis for exemption from backup withholding must be established. The Investor further acknowledges that, if an Exchanging Investor is not a United States person for U.S. federal income tax purposes, the Company must be provided with the appropriate properly completed and executed IRS Form W-8, attesting to that non-U.S. Exchanging Investor’s foreign status and certain other information, including information establishing an exemption from withholding under Sections 1471 through 1474 of the Code. The Investor further acknowledges that any Exchanging Investor may be subject to 30% U.S. federal withholding or 24% U.S. federal backup withholding on certain payments or deliveries made to such Exchanging Investor unless such Exchanging Investor properly establishes an exemption from, or a reduced rate of, such withholding or backup withholding.
Section 9. Miscellaneous.
(a) Waiver; Amendment. Neither this Exchange Agreement nor any provisions hereof may be modified, changed, discharged or terminated except by an instrument in writing, signed by the party against whom any waiver, change, discharge or termination is sought.
(b) Assignability. Neither this Exchange Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof will be assignable by either the Company, on the one hand, or the Investor or any Exchanging Investor, on the other hand, without the prior written consent of the other party.
(c) Further Instruments and Acts. Each of the parties to this Exchange Agreement agrees to execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to more effectively carry out the purposes of this Exchange Agreement.
(d) Waiver of Jury Trial. EACH OF THE COMPANY, THE INVESTOR AND THE EXCHANGING INVESTORS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS EXCHANGE AGREEMENT.
(e) Governing Law. This Exchange Agreement will be governed by and construed in accordance with the internal laws of the State of New York.
(f) Section and Other Headings. The section and other headings contained in this Exchange Agreement are for reference purposes only and will not affect the meaning or interpretation of this Exchange Agreement.
(g) Counterparts. This Exchange Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed to be an original and all of which together will be deemed to be one and the same agreement. Delivery of an executed signature page to this Exchange Agreement by facsimile or other electronic transmission (including pdf format) will be effective as delivery of a manually executed counterpart hereof.
(h) Notices. All notices and other communications to the Company provided for herein will be in writing and will be deemed to have been duly given if delivered personally or sent by nationally recognized overnight courier service or by registered or certified mail, return receipt requested, postage prepaid to the following addresses (or such other address as either party may have hereafter specified by notice in writing to the other): (i) if to the Company, PROS Holdings, Inc., 3200 Kirby Drive, Suite 600, Houston, TX 77098, Attention: Legal Department; and (ii) if to the Investor, the address provided on the signature page below.
(i) Binding Effect.. The provisions of this Exchange Agreement will be binding upon and accrue to the benefit of the parties hereto and the Exchanging Investors and their respective heirs, legal representatives, successors and permitted assigns.
(j) Notification of Changes. The Investor hereby covenants and agrees to notify the Company upon the occurrence of any event prior to the Closing that would cause any representation, warranty, or covenant of the Investor, made on behalf of itself and each Exchanging Investor, contained in this Exchange Agreement to be false or incorrect.
(k) Severability. If any term or provision of this Exchange Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other term or provision of this Exchange Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
(l) Entire Agreement. This Exchange Agreement, including all Exhibits hereto, constitutes the entire agreement of the parties hereto with respect to the specific subject matter covered hereby, and supersedes in their entirety all other agreements or understandings between or among the parties with respect to such specific subject matter.
(m) Reliance by Matthews South. Matthews South, acting as financial advisor to the Company, may rely on each representation and warranty of the Company and of the Investor, made on behalf of itself and each Exchanging Investor, herein or pursuant to the terms hereof with the same force and effect as if such representation or warranty were made directly to Matthews South. Matthews South will be a third-party beneficiary of this Exchange Agreement to the extent provided in this Section 9(m).
[The Remainder of This Page Intentionally Left Blank; Signature Pages Follow]
IN WITNESS WHEREOF, the parties to this Exchange Agreement have caused this Exchange Agreement to be duly executed as of the date first written above.
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| | | Investor: | |
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| | | Legal Name | |
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| Investor Address: | | | Taxpayer Identification Number: |
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| | | Telephone Number: |
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| Country (and, if applicable, State) of Residence: | | | |
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Aggregate Principal Amount of Existing Notes to be Exchanged by All Exchanging Investors (must be an integral multiple of $1,000): |
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| $ | | ,000 | | | |
[Signature Page to Exchange Agreement]
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| | | PROS HOLDINGS, INC. | |
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| | By: | | | |
| | | Name: | |
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[Signature Page to Exchange Agreement]
SCHEDULE A
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| Daily 10b-18 VWAP | Daily Exchange Ratio |
| $45.00 | 0.02700 |
| $44.00 | 0.02739 |
| $43.00 | 0.02780 |
| $42.00 | 0.02821 |
| $41.00 | 0.02864 |
| $40.00 | 0.02909 |
| $39.00 | 0.02954 |
| $38.00 | 0.03002 |
| $37.00 | 0.03050 |
| $36.00 | 0.03101 |
| $34.97 | 0.03154 |
| $34.00 | 0.03207 |
| $33.00 | 0.03262 |
| $32.00 | 0.03320 |
| $31.00 | 0.03380 |
| $30.00 | 0.03442 |
| $29.00 | 0.03506 |
| $28.00 | 0.03573 |
| $27.00 | 0.03642 |
| $26.00 | 0.03714 |
| $25.00 | 0.03789 |
If the Daily 10b-18 VWAP is above $45.00 or below $25.00, the Daily Exchange Ratio
will be determined with linear extrapolation from the top two rows of the above table, or bottom two rows of the above table, respectively.
For example, at $47.00, the Daily Exchange Ratio will be 0.02622, and at $23.00 the Daily Exchange Ratio will be 0.03939.
EXHIBIT A
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| Exchanging Investor Information | | |
| (Complete the Following Form for Each Exchanging Investor) | | |
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| Legal Name of Exchanging Holder: | | | | | |
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| Aggregate principal amount of Existing Notes to be exchanged | | | | | |
| (must be an integral multiple of $1,000): | | $ | | ,000 | |
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| Exchanging Holder's Address: | | | | | |
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| Telephone: | | | | | | |
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Country (and, if applicable, State) of Residence: | | | |
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| Taxpayer Identification Number: | | | | | |
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| Account for Existing Notes | | Account for New 2027 Notes | | Wire Instructions for Interest Amount |
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| DTC Participant Number: | | DTC Participant Number | | Bank Routing #: |
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| DTC Participant Name: | | DTC Participant Name: | | SWIFT Code: |
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| DTC Participant Phone Number: | | DTC Participant Phone Number: | | Bank address: |
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| DTC Participant Contact Email: | | DTC Participant Contact Email: | | Account Number: |
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| | | Account # at DTC Participant: | | Account Name: |
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EXHIBIT B
Exchange Procedures
NOTICE TO INVESTOR
Attached are Investor Exchange Procedures for the settlement of the exchange (the “Exchange”) of 1.00% Convertible Senior Notes due 2024, CUSIP 74346Y AH6 (the “Existing Notes”) of PROS Holdings, Inc. (the “Company”) for the Company’s 2.250% Convertible Senior Notes due 2027 (the “New 2027 Notes”) (the “Exchange Consideration”), pursuant to the Exchange Agreement, dated as of August 23, 2023 (the “Exchange Agreement”), between you and the Company, which is expected to occur on the Closing Date (as defined in the Exchange Agreement). To ensure timely settlement, please follow the instructions for the Exchange as set forth on the following page.
Your failure to comply with the attached instructions may delay your receipt of the Exchange Consideration.
If you have any questions, please contact Bryan Goldstein of Matthews South LLC at (xxx) xxx-xxxx.
Thank you.
Delivery of the Existing Notes
You must direct the eligible DTC participant through which you hold a beneficial interest in the Existing Notes to post on the Closing Date, no later than 9:30 a.m., New York City time, withdrawal instructions through DTC via DWAC for the aggregate principal amount of Existing Notes (CUSIP #74346Y AH6) set forth in Exhibit A of the Exchange Agreement to be exchanged. It is important that this instruction be submitted and the DWAC posted on Closing Date; if it is posted before the Closing Date, then it will expire unaccepted and will need to be re-posted on the Closing Date.
To Receive the New 2027 Notes
You must direct your eligible DTC participant through which you wish to hold a beneficial interest in the New 2027 Notes to post on the Closing Date, no later than 9:30 a.m., New York City time, a deposit instruction through DTC via DWAC for the aggregate principal amount of New 2027 Notes to which you are entitled pursuant to the Exchange. It is important that this instruction be submitted and the DWAC posted on the Closing Date; if it is posted before the Closing Date, then it will expire unaccepted and will need to be re-posted on the Closing Date.
Closing
On the Closing Date, after the Company receives your Existing Notes and your delivery instructions as set forth above, and subject to the satisfaction of the conditions to Closing as set forth in your Exchange Agreement, the Company will deliver the New 2027 Notes in accordance with the delivery instructions above.
EXHIBIT C
Tax Matters
Under U.S. federal income tax law, an Exchanging Investor who exchanges Existing Notes for the Exchange Consideration generally must provide such Exchanging Investor’s correct taxpayer identification number (“TIN”) on IRS Form W-9 (attached hereto) or otherwise establish a basis for exemption from backup withholding. A TIN is generally an individual holder’s social security number or an Exchanging Investor’s employer identification number. If the correct TIN is not provided, the Exchanging Investor may be subject to a $50 penalty imposed by the IRS. In addition, certain payments made to holders may be subject to U.S. backup withholding tax (currently set at 24% of the payment). If an Exchanging Investor is required to provide a TIN but does not have the TIN, the Exchanging Investor should consult its tax advisor regarding how to obtain a TIN. Certain holders are not subject to these backup withholding and reporting requirements. Non-U.S. Holders generally may establish their status as exempt recipients from backup withholding by submitting a properly completed applicable IRS Form W-8 (available from the Company or the IRS at www.irs.gov), signed, under penalties of perjury, attesting to such Exchanging Investor’s exempt foreign status. U.S. backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is timely furnished to the IRS. the Exchanging Investors are urged to consult their tax advisors regarding how to complete the appropriate forms and to determine whether they are exempt from backup withholding or other withholding taxes.
[Dealer name and address]
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| To: | PROS Holdings, Inc. 3200 Kirby Dr., Suite 600 Houston, Texas 77098 |
| From: | [Dealer] |
| Re: | Capped Call Transaction |
| Ref. No: | [__________]1 |
| Date: | [•], 2023 |
Dear Ladies and Gentlemen:
The purpose of this communication (this “Confirmation”) is to set forth the terms and conditions of the above-referenced transaction entered into on the Trade Date specified below (the “Transaction”) between [Dealer] (“Dealer”) and PROS Holdings, Inc. (“Counterparty”). The additional terms of the Transaction are as set forth in the Trade Notification in the form of Schedule D hereto (the “Trade Notification”), which shall reference this Confirmation and supplement, form a part of, and be subject to this Confirmation. This letter agreement, as supplemented by the Trade Notification, constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.
1.This Confirmation and the Trade Notification are subject to, and incorporate, the definitions and provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”, and together with the 2006 Definitions, the “Definitions”), in each case as published by the International Swaps and Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency between the 2006 Definitions and the Equity Definitions, the Equity Definitions will govern and in the event of any inconsistency between terms defined in the Equity Definitions and this Confirmation and the Trade Notification, this Confirmation and the Trade Notification shall govern.
This Confirmation and the Trade Notification evidence a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation and the Trade Notification relate. This Confirmation and the Trade Notification shall be subject to an agreement (the “Agreement”) in the form of the ISDA 2002 Master Agreement as if Dealer and Counterparty had executed an agreement in such form on the Trade Date (but without any Schedule except for (i) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine), [(ii) the election of an executed guarantee of [__________] (“Guarantor”) dated as of the Trade Date in substantially the form attached hereto as Schedule 1 as a Credit Support Document, (iii) the election of Guarantor as Credit Support Provider in relation to Dealer and (iv)]2 [and (ii)] the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Dealer, (a) [with a “Threshold Amount” of 3% of the shareholders’ equity of [Dealer] [[__] [(“Dealer Parent”)]3 on the Trade Date, (b) “Specified Indebtedness” having the meaning set forth in Section 14 of the Agreement, except that it shall not include any obligation in respect of deposits received in the ordinary course of Dealer's banking business, (c) the phrase “, or becoming capable at such time of being declared,” shall be deleted from clause (1) of such Section 5(a)(vi) of the Agreement, and (d) the following sentence shall be added to the end of Section 5(a)(vi) of the Agreement: “Notwithstanding the foregoing, such provisions shall exclude any default that results solely from wire transfer difficulties or an error or omission of an administrative or operational nature, but only if funds were available to enable the relevant party to make payment when due and the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”.
1 If applicable
2 Requested if Dealer is not the highest rated entity in group, typically from Parent.
3 Include as applicable
All provisions contained in, or incorporated by reference to, the Agreement will govern this Confirmation except as expressly modified herein. In the event of any inconsistency between provisions of the Agreement, this Confirmation, and the Trade Notification, the following will prevail for purpose of the Transaction to which this Confirmation relates in the order of precedence indicated: (i) the Trade Notification, (ii) this Confirmation and (iii) the Agreement.
The Transaction hereunder shall be the sole transaction under the Agreement. If there exists any ISDA Master Agreement between Dealer and Counterparty or any confirmation or other agreement between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty are parties, the Transaction shall not constitute a “Transaction” or “Specified Transaction” as defined in any such existing or deemed to be existing ISDA Master Agreement between Dealer and Counterparty, and the occurrence of an Event of Default, Termination Event or other event under this Transaction shall not, by itself, give rise to any right or obligation under any other ISDA Master Agreement or other agreement or deemed agreement.
2.The Transaction constitutes a Share Option Transaction for purposes of the Equity Definitions. The terms of the particular Transaction to which this Confirmation relates are as follows:
General Terms:
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| Trade Date: | [•] |
| Effective Date: | [•], or such other date as agreed by the parties in writing. |
| Components: | The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Expiration Date set forth in Schedule A to this Confirmation and the Number of Options set forth in Schedule A to this Confirmation. The exercise, valuation and settlement of the Transaction will be effected separately for each Component as if each Component were a separate Transaction under the Agreement. |
| Option Style: | “European”, as described under “Procedures for Exercise” below. |
| Option Type: | Call |
| Seller: | Dealer |
| Buyer: | Counterparty |
| Shares: | Common Stock of Counterparty, par value USD$0.001 (Ticker Symbol: “PRO”). |
| Number of Options: | For each Component, as provided in Schedule A to this Confirmation.4 |
| Option Entitlement: | One Share Per Option |
| Strike Price: | USD 41.817 |
| Cap Price: | USD 78.90; provided that in no event shall the Cap Price be reduced to an amount less than the Strike Price in connection with any adjustment by the Calculation Agent under this Confirmation. |
| Number of Shares: | As of any date, a number of Shares equal to the product of (i) the Number of Options and (ii) the Option Entitlement. |
| Initial Premium: | [ ] |
4 The total (allocated across each participating Dealer) should be equal to (i) the [estimated] number of Convertible Securities in principal amount of $1,000 issued in the exchange multiplied by (ii) the initial conversion rate.
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| Initial Premium Payment Date: | The Currency Business Day one Settlement Cycle after the Trade Date. On the Initial Premium Payment Date, Counterparty shall pay the Initial Premium to Dealer. |
| Final Premium: | An amount in USD as set forth in the Trade Notification, to be equal to the Premium minus the Initial Premium. If the Final Premium is positive, Counterparty shall pay the Final Premium to Dealer on the Final Premium Date. If the Final Premium is negative, Dealer shall pay the absolute value of the Final Premium to Counterparty on the Final Premium Payment Date. Dealer and Counterparty hereby agree that notwithstanding anything to the contrary herein or in the Agreement, following the payment of the Final Premium, no Early Termination Amount or amount determined pursuant to Sections 12.2, 12.3, 12.6, 12.7, 12.8 or 12.9 of the Equity Definitions, or otherwise under the Equity Definitions, shall be payable by Counterparty to Dealer |
| Premium: | An amount in USD as set forth in the Trade Notification, to be equal to the product of (i) the Average Per-Share Premium and (ii) the sum of the Number of Options for all Components. Notwithstanding anything to the contrary in the Equity Definitions, the obligation of Counterparty to pay the Premium to Dealer on the Premium Payment Date shall be fully satisfied by the payment of the Initial Premium and, if applicable, the Final Premium on the Initial Premium Payment Date and Final Premium Payment Date, as applicable. |
| Per-Share Premium: | For each Relevant Date during the Hedge Period, the “Per-Share Premium” set forth in the grid in Schedule B hereto corresponding to the 10b-18 VWAP Price; provided that (i) if the 10b-18 VWAP Price is between “10b-18 VWAP Prices” set forth in such grid, the “Per-Share Premium” shall be determined by linear interpolation between the “Per-Share Premium” set forth in such grid corresponding to such “10b-18 VWAP Prices” and (ii) if the 10b-18 VWAP Price is less than the lowest “10b-18 VWAP Price” or greater than the highest “10b-18 VWAP Price”, as applicable, set forth in such grid, the Per-Share Premium will be determined by the Calculation Agent in a commercially reasonable manner consistent with the methodology used in creating such grid. |
| Average Per-Share Premium: | An amount in USD as set forth in the Trade Notification, to be equal to the arithmetic average of the Per-Share Premiums for each Relevant Date during the Hedge Period. |
| Final Premium Payment Date: | The Currency Business Day immediately following the Hedge Period End Date. |
| Exchange: | The New York Stock Exchange |
| Related Exchange: | All Exchanges; provided that Section 1.26 of the Equity Definitions shall be amended to add the words “United States” before the word “exchange” in the tenth line of such Section. |
| Initial Hedging: | |
| Hedge Period: | The period from and including the Hedge Period Start Date to and including the Hedge Period End Date. Promptly following the Hedge Period End Date, Dealer shall deliver the Trade Notification to Counterparty. |
| Hedge Period Start Date: | [ ] |
| Hedge Period End Date: | [ ] |
| Relevant Scheduled Trading Day: | Each Scheduled Trading Day set forth in Schedule C, and each [___] Scheduled Trading Day thereafter. |
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| Relevant Dates: | Any date that is both an Exchange Business Day and a Relevant Scheduled Trading Day. |
| 10b-18 VWAP Price: | For any Exchange Business Day, the composite volume weighted average price per Share of Rule 10b-18 eligible trades for the regular trading session (including any extensions thereof) of the Exchange on the Exchange Business Day (without regard to pre-open or after hours trading outside of such regular trading session for such Exchange Business Day) as published by Bloomberg at 4:15 P.M. New York City time (or 15 minutes following the end of any extension of the regular trading session) on such Exchange Business Day, on Bloomberg page “PRO <Equity> AQR_SEC” (or any successor thereto), or if such price is not so reported on such Exchange Business Day for any reason or the Calculation Agent determines that such price is clearly erroneous, such 10b-18 VWAP Price shall be as determined by the Calculation Agent. |
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| Valuation Disruption: | For purposes of the Hedge Period, the definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be” and inserting the words “at any time on any Scheduled Trading Day during the Hedge Period” after the word “material,” in the third line thereof. Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof. In the event that Dealer concludes, in its reasonable discretion based on the advice of counsel, that it is appropriate with respect to any legal, regulatory or self-regulatory requirements or related policies and procedures generally applied by Dealer to transactions similar to the Transaction, for it to refrain from or decrease any Hedging Activities relating to the Transaction on any Relevant Scheduled Trading Day or Days during the Hedge Period, Dealer may by written notice to Counterparty, elect to deem that a Market Disruption Event has occurred and will be continuing on such Relevant Scheduled Trading Day or Days. If any such Disrupted Day is a Disrupted Day because of a Market Disruption Event (or a deemed Market Disruption Event as provided herein), the Calculation Agent shall determine whether (i) such Disrupted Day is a Disrupted Day in full, in which case the Per-Share Premium for such Disrupted Day shall not be included for purposes of determining the Average Per-Share Premium or (ii) such Disrupted Day is a Disrupted Day only in part, in which case the Per-Share Premium for such Disrupted Day shall be determined by the Calculation Agent based on, in lieu of the 10b-18 VWAP Price for such day, Rule 10b-18 eligible transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event, and the weighting of the Per-Share Premium for the Relevant Scheduled Trading Days during the Hedge Period shall be adjusted by the Calculation Agent for purposes of determining the Average Per-Share Premium with such adjustments based on, among other factors, the duration of any Market Disruption Event and the volume, historical trading patterns and price of the Shares. Any Exchange Business Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be an Exchange Business Day or Relevant Scheduled Trading Day; if a closure of the Exchange prior to its normal close of trading on any Relevant Scheduled Trading Day is scheduled following the date hereof, then such Relevant Scheduled Trading Day shall be deemed to be a Disrupted Day in full. In addition, notwithstanding anything to the contrary in this Confirmation, if a Disrupted Day (whether a Disrupted Day in full, a Disrupted Day in part and/or a Disrupted Day as a result of a deemed Market Disruption Event as provided herein) occurs and Dealer is unable to establish its initial commercially reasonable Hedge Position for the full number of Shares in respect of which Dealer expected to establish its initial commercially reasonable Hedge Position on the date hereof, the Calculation Agent may extent the Initial Hedge Period by one Relevant Scheduled Trading Day for each such Disrupted Day. |
| Procedures for Exercise: | |
| Expiration Time: | The Valuation Time |
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| Expiration Date: | For any Component, as provided in Schedule A to this Confirmation (or, if such date is not a Scheduled Valid Day, the next following Scheduled Valid Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Valid Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that in no event shall the Expiration Date be postponed to a date later than the Final Termination Date and, notwithstanding anything to the contrary in this Confirmation or the Equity Definitions, if the Expiration Date is a Disrupted Day that occurs on the Final Termination Date, the Relevant Price for such Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a good faith and commercially reasonable manner. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine in a good faith and commercially reasonable manner that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make commercially reasonable adjustments to the Number of Options for the relevant Component for which such day shall be the Expiration Date, shall designate the Scheduled Valid Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Options for such Component and may determine the Relevant Price based on transactions in the Shares on such Disrupted Day taking into account the nature and duration of such Market Disruption Event on such day. Any Scheduled Valid Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be a Scheduled Valid Day; if a closure of the Exchange prior to its normal close of trading on any Scheduled Valid Day is scheduled following the date hereof, then such Scheduled Valid Day shall be deemed to be a Disrupted Day in full. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date. |
| Final Termination Date: | September 23, 2027 |
| Automatic Exercise: | Applicable; and means that the Number of Options for the relevant Component will be deemed to be automatically exercised at the Expiration Time on the Expiration Date for such Component if at such time such Component is In-the-Money, unless Buyer notifies Seller (in writing) prior to the Expiration Time on such Expiration Date that it does not wish Automatic Exercise to occur with respect to such Component, in which case Automatic Exercise will not apply with respect to such Component. “In-the-Money” means, in respect of any Component, that the Relevant Price on the Expiration Date for such Component is greater than the Strike Price for such Component. |
| 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 a good faith and commercially reasonable manner. |
| Valuation Date: | For any Component, the Expiration Date therefor. |
| Market Disruption Event: | Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof. Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof. |
| Settlement Terms: | |
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| Settlement Method Election: | Applicable; provided that (a) Section 7.1 of the Equity Definitions is hereby amended by replacing the term “Physical Settlement” with the term “Net Share Settlement”, (b) Counterparty must make a single irrevocable election for all Components and (c) if Counterparty is electing Cash Settlement, such Settlement Method Election would be effective only if Counterparty represents and warrants to Dealer in writing on the date of such Settlement Method Election that (i) Counterparty is not in possession of any material non-public information regarding Counterparty or the Shares, and (ii) such election is being made in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws. Without limiting the generality of the foregoing, Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Sections 9 and 10(b) of the Exchange Act and the rules and regulations promulgated thereunder in respect of such election. |
| Electing Party: | Counterparty |
| Settlement Method Election Date: | The second Scheduled Valid Day prior to the scheduled Expiration Date for the Component with the earliest scheduled Expiration Date. |
| Default Settlement Method: | Net Share Settlement |
| Net Share Settlement: | With respect to any Component, if Net Share Settlement is applicable to the Options exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the relevant Settlement Date for such Component, a number of Shares (the “Net Share Settlement Amount”) equal to (i) the Daily Option Value on the Expiration Date of such Component divided by (ii) the Relevant Price on such Expiration Date. Dealer will deliver cash in lieu of any fractional Shares to be delivered with respect to any Net Share Settlement Amount valued at the Relevant Price for the Expiration Date of such Component. |
| Cash Settlement: | With respect to any Component, if Cash Settlement is applicable to the Options exercised or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date for each such Option, an amount of cash (the “Cash Settlement Amount”) equal to the Daily Option Value on the Expiration Date of such Component. |
| Delivery Obligation: | For any Settlement Date, the Net Share Settlement Amount or the Cash Settlement Amount payable or deliverable on such Settlement Date. |
| Daily Option Value: | For any Component, an amount equal to (i) the Number of Options in such Component, multiplied by (ii) the Option Entitlement multiplied by (iii) (A) the lesser of the Relevant Price on the Expiration Date of such Component and the Cap Price, minus (B) the Strike Price on such Expiration Date; provided that if the calculation above results in a negative number, the Daily Option Value for such Component shall be deemed to be zero. In no event will the Daily Option Value be less than zero. |
| Valid Day: | A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange. If the Shares are not listed, quoted or traded on any U.S. securities exchange or any other market, “Valid Day” means a Business Day. |
| Scheduled Valid Day: | A day that is scheduled to be a Valid Day on the Exchange. If the Shares are not listed, quoted or traded on any U.S. securities exchange or any other market, “Scheduled Valid Day” means a Business Day. |
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| Business Day: | Any day other than a Saturday, a Sunday or other day on which banking institutions are authorized or required by law, regulation or executive order to close or be closed in the State of New York. |
| Relevant Price: | On any Valid Day, the per Share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “PRO <equity> AQR” (or its equivalent successor if such page is not available) (the “VWAP”) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent in a good faith and commercially reasonable manner using, if practicable, a volume-weighted average method substantially similar to the method for determining the VWAP). 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 Date: | For all Components of the Transaction, the date one Settlement Cycle immediately following the Expiration Date for the Component with the latest scheduled Expiration Date. |
| Settlement Currency: | USD |
| Other Applicable Provisions: | To the extent Dealer is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 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 Settlement.” |
| Representation and Agreement: | Notwithstanding anything to the contrary in 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”)). |
| Adjustments: | |
| Method of Adjustment: | Calculation Agent Adjustment; provided that the parties agree that (x) open market Share repurchases at prevailing market price and (y) Share repurchases through a dealer pursuant to accelerated share repurchases, forward contracts or similar transactions (including without limitation any discount to average VWAP prices) that are entered into at prevailing market prices and in accordance with customary market terms for transactions of such type to repurchase the Shares shall not be considered Potential Adjustment Events so long as, in the case of clause (y) after giving effect to such transaction, the aggregate number of Shares repurchased during the term of the Transaction pursuant to all such transactions described in clause (y) would not exceed 25% of the number of Shares outstanding as of the Trade Date, as determined by the Calculation Agent and as adjusted by the Calculation Agent in a commercially reasonable manner to account for any subdivision or combination with respect to the Shares. |
| Extraordinary Events: | |
| New Shares: | In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety and replaced with “publicly quoted, traded or listed on any of The New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors) and of an entity or person organized under the laws of the United States, any State thereof or the District of Columbia”. |
| | | | | |
| Merger Events: | Applicable |
| Consequences of Merger Events: | |
| (a) Share-for-Share: | Modified Calculation Agent Adjustment |
| (b) Share-for-Other: | Cancellation and Payment (Calculation Agent Determination) |
| (c) Share-for-Combined: | Component Adjustment; provided that the Calculation Agent may elect Cancellation and Payment for all or part of the Transaction if Component Adjustment would not produce a commercially reasonable result. |
Tender Offer: | Applicable; provided that the definition of “Tender Offer” in Section 12.1 of the Equity Definitions will be amended by replacing the phrase “greater than 10% and less than 100% of the outstanding voting shares of the Counterparty” in the third and fourth line thereof with “greater than 20% and less than 100% of the outstanding Shares of the Counterparty”. |
| Consequences of Tender Offers: | |
| (a) Share-for-Share: | Modified Calculation Agent Adjustment |
| (b) Share-for-Other: | Modified Calculation Agent Adjustment |
| (c) Share-for-Combined: | Modified Calculation Agent Adjustment |
Consequences of Announcement Events: | Upon an Announcement Event (as defined below), the Calculation Agent shall make a 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 phrase “exercise, settlement, payment or any other terms of the Transaction including, without limitation, the spread)” shall be replaced with the phrase “exercise, settlement, payment or any other terms of the Transaction; and (z) the words “whether within a commercially reasonable (as determined by the Calculation Agent) period of time prior to or after the Announcement Event” shall be inserted after the word “Transaction” in the sixth line thereof; provided further that if an adjustment to the Cap Price would produce a commercially reasonable result, then such adjustment shall be limited to the Cap Price (provided that in no event shall the Cap Price be less than the Strike Price)”. An Announcement Event shall be an “Extraordinary Event” for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable (it being understood and agreed that the Calculation Agent shall provide to Counterparty commercially reasonable documentary evidence of the inputs used to make such adjustments to the terms of the Transaction, subject to, and in accordance with, Section 3 hereof); provided that upon the Calculation Agent making an adjustment, determined in a commercially reasonable manner, to the terms of any Component upon any Announcement Event, then the Calculation Agent shall make an adjustment to the terms of such Component upon any announcement regarding the same event that gave rise to the original Announcement Event regarding the abandonment of any such event to the extent necessary to reflect the economic effect of such subsequent announcement on the Transaction. |
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Announcement Event: | (i) The public announcement (whether by Counterparty or a Valid Third Party Entity) of any Merger Event or Tender Offer, or the announcement by Counterparty of any intention to enter into a Merger Event or Tender Offer, (ii) the public announcement by Counterparty of an intention by Counterparty to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer, (iii) there occurs a public announcement (whether by Counterparty or a Valid Third Party Entity) of any potential acquisition by Counterparty and/or its subsidiaries where the consideration exceeds 35% of the market capitalization of the Counterparty as of the date of such announcement, or (iv) any subsequent public announcement (whether by Counterparty or a Valid Third Party Entity) of a change to a transaction or intention that is the subject of an announcement of the type described in clause (i), (ii) or (iii) of this sentence (including, without limitation, a new announcement 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); provided that, for the avoidance of doubt, the occurrence of an Announcement Event with respect to any transaction or intention shall not preclude the occurrence of a later Announcement Event with respect to such transaction or intention; it being understood that any adjustment in respect of an Announcement Event shall take into account any earlier adjustment relating to the same Announcement Event and shall not be duplicative with any other adjustment, cancellation or valuation made pursuant to this Confirmation, the Equity Definitions or the Agreement. |
| Valid Third Party Entity: | In respect of any transaction, any third party that has a bona fide intent to enter into or consummate such transaction (it being understood and agreed that in determining whether such third party has such a bona fide intent, the Calculation Agent may take into consideration the effect of the relevant announcement by such third party on the Shares and/or options relating to the Shares). |
| Notice of Merger Consideration and Consequences: | Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Counterparty shall reasonably promptly (but in any event prior to the relevant merger date) notify the Calculation Agent of (i) the type and amount of consideration that a holder of Shares would have been entitled to in the case of reclassifications, consolidations, mergers, sales or transfers of assets or other transactions that cause Shares to be converted into the right to receive more than a single type of consideration and (ii) the weighted average of the types and amounts of consideration to be received by the holders of Shares that affirmatively make such an election. |
| 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 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 such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange. |
| Additional Disruption Events: | |
| | | | | |
(a) 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) by adding the phrase “and/or Hedge Position” after the word “Shares” in clause (X) thereof and (iii) by immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date”. |
(b) Failure to Deliver: | Applicable |
(c) Insolvency Filing: | Applicable |
(d) Hedging Disruption: | Applicable |
(e) Increased Cost of Hedging: | Not Applicable |
| Hedging Party: | Dealer |
| Determining Party: | For all applicable Extraordinary Events, Dealer; all calculations and determinations made by the Determining Party shall be made in good faith and in a commercially reasonable manner; provided that, upon receipt of written request from Counterparty, the Determining Party shall promptly provide Counterparty with a written explanation (including relevant data in a commonly used file format for the storage and manipulation of financial data) describing in reasonable detail any calculation, adjustment or determination made by it (including any quotations, market data or information from internal or external sources used in making such calculation, adjustment or determination, as the case may be, but without disclosing Determining Party’s proprietary models or other information that may be proprietary or subject to contractual, legal or regulatory obligations to not disclose such information), and shall use commercially reasonable efforts to provide such written explanation within five (5) Exchange Business Days from the receipt of such request. |
| Non-Reliance: | Applicable |
| Agreements and Acknowledgments Regarding Hedging Activities: | Applicable |
| Hedging Adjustment: | For the avoidance of doubt, whenever the Dealer, Determining Party or Calculation Agent is required or permitted to make a calculation, adjustment, determination or election (for the avoidance of doubt, including but not limited to, any calculation or determinations with respect to any amounts, including amounts payable upon termination or early termination) pursuant to the terms of the Agreement, this Confirmation or the Equity Definitions to take into account the effect of an event or otherwise, the Calculation Agent or Determining Party or Dealer, as the case may be, shall make such calculation, determination, election or adjustment by reference to the effect of such event on Dealer assuming that Dealer maintains a commercially reasonable Hedge Position in respect of the Transaction. |
| Additional Acknowledgments: | Applicable |
3.Calculation Agent: Dealer; provided that following the occurrence of an Event of Default of the type described in Section 5(a)(vii) of the Agreement with respect to Dealer, Counterparty shall have the right to designate a nationally recognized third-party dealer in over-the-counter derivatives to act as the Calculation Agent.
All calculations and determinations made by the Calculation Agent shall be made in good faith and in a commercially reasonable manner; provided that, upon receipt of written request from Counterparty, the Calculation Agent shall promptly provide Counterparty with a written explanation describing in reasonable detail any calculation, adjustment or determination made by it (including any quotations, market data or information from internal or external sources used in making such calculation, adjustment or determination, as the case may be, but without disclosing Dealer's proprietary models or other information that may be proprietary or subject to contractual, legal or regulatory obligations to not disclose such information), and shall use commercially reasonable efforts to provide such written explanation within five (5) Exchange Business Days from the receipt of such request.
4.Account Details:
Dealer Payment Instructions:
[Bank:
SWIFT:
Bank Routing:
Acct Name:
Acct No.: ]
[Bank: [____________]
SWIFT: [____________]
Bank Routing: [____________]
Acct Name: [____________]
Acct No.: [____________]]
Counterparty Payment Instructions: To be advised.
5.Offices:
The Office of Dealer for the Transaction is: [New York].
The Office of Counterparty for the Transaction is: Houston.
6.Notices: For purposes of this Confirmation:
(a)Address for notices or communications to Counterparty:
To: PROS Holdings, Inc.
3200 Kirby Drive
Suite 600
Houston, Texas 77098
Attention: [General Counsel]
Telephone No.: [__________]
Facsimile No.: [__________]
(b)Address for notices or communications to Dealer:
[To: [Dealer]
[Address]
Attention: [__]
Telephone: [__]
Facsimile: [__]
Email: [__]
7.Representations, Warranties and Agreements:
(a) In addition to the representations and warranties in the Agreement and those contained elsewhere herein, Counterparty represents and warrants to and for the benefit of, and agrees with, Dealer as follows:
(i) On the Trade Date (A) none of Counterparty and its officers and directors is aware of any material non-public information regarding Counterparty or the Shares, and (B) all reports and other documents filed by
Counterparty with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents), do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.
(ii) On the Trade Date, (A) the Shares or securities that are convertible into, or exchangeable or exercisable for Shares, are not, and shall not be, subject to a “restricted period,” as such term is defined in Regulation M under the Exchange Act (“Regulation M”), and (B) Counterparty is not engaged in any “distribution,” as such term is defined in Regulation M, of any securities of Counterparty, other than a distribution meeting the requirements of the exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until the Scheduled Trading Day immediately following the Hedge Period End Date, engage in any such distribution.
(iii) Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that neither Dealer nor any of its affiliates is making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements).
(iv) Without limiting the generality of Section 3(a)(iii) of the Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.
(v) On or prior to the Trade Date, Counterparty shall deliver to Dealer a resolution of Counterparty’s board of directors authorizing the Transaction.
(vi) Counterparty is not entering into this Confirmation to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to manipulate the price of the Shares (or any security convertible into or exchangeable for Shares) or otherwise in violation of the Exchange Act.
(vii) Counterparty is not, and after giving effect to 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.
(viii) On each of the Trade Date and the Initial Premium Payment Date, Counterparty is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Counterparty would be able to purchase the Number of Shares in compliance with the laws of the jurisdiction of Counterparty’s incorporation.
(ix) To Counterparty’s knowledge, no U.S. state or local 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; provided that no such representation shall be made by Counterparty with respect to any rules and regulations applicable to Dealer (including FINRA) arising from Dealer’s status as a regulated entity under applicable law.
(x) 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, (C) has total assets of at least $50 million.
(b) Each of Dealer and Counterparty represents that it is an “eligible contract participant” as defined in Section 1a(18) of the U.S. Commodity Exchange Act, as amended, and is entering into the Transaction as principal (and not as agent or in any other capacity, fiduciary or otherwise) and not for the benefit of any third party.
(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act, by virtue of Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to Dealer that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment and its investments in and liabilities in respect of the Transaction, which it understands are not readily marketable, are not disproportionate to its net worth, and it is able to bear any loss in connection with the Transaction, including the loss of its entire investment in the Transaction, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof, (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws, and (v) its financial condition is such that it has no need for liquidity with respect to its investment in the Transaction and no need to dispose of any portion thereof to satisfy any existing or contemplated undertaking or indebtedness and 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 the Transaction.
(d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial institution,” “swap participant” and “financial participant” within the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment” within the meaning of Section 546 of the Bankruptcy Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of Section 546 of the Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.
(e) As a condition to the effectiveness of the Transaction, Counterparty shall deliver an opinion of counsel, dated as of the Effective Date, in substantially the form attached hereto as Schedule E.
(f) Counterparty understands that notwithstanding any other relationship between Counterparty and Dealer and its affiliates, in connection with the Transaction and any other over-the-counter derivative transactions between Counterparty and Dealer or its affiliates, Dealer or its affiliates is acting as principal and is not a fiduciary or advisor in respect of any such transaction, including any entry, exercise, amendment, unwind or termination thereof.
(g) Each party acknowledges and agrees to be bound by the Conduct Rules of the Financial Industry Regulatory Authority, Inc. applicable to transactions in options, and further agrees not to violate the position and exercise limits set forth therein.
(h) Counterparty represents and warrants that it has received, read and understands the OTC Options Risk Disclosure Statement and a copy of the most recent disclosure pamphlet prepared by The Options Clearing Corporation entitled “Characteristics and Risks of Standardized Options”.
8.Other Provisions:
(a)Right to Extend. Dealer may divide any Component into additional Components and designate the Expiration Date and the Number of Options for each such Component if Dealer determines, in good faith and a commercially reasonable manner, that such further division is necessary to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions in the cash market, stock loan market or other relevant market or 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 compliant and consistent with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures, generally applicable to transactions of the type of the Transaction; provided that in no event shall any Expiration Date for any Component be postponed to a date later than the Final Termination Date.
(b) Repayment Events. Promptly (but in any event within ten Scheduled Trading Days) following any Repayment Event, Counterparty may notify Dealer in writing of such repurchase and cancellation and the number of Convertible Notes so repurchased and cancelled (any such notice, a “Repayment Notice”). Notwithstanding anything to the contrary in this Confirmation, the receipt by Dealer from Counterparty of (x) any Repayment Notice, within the applicable time period set forth in the preceding sentence, and (y) a written representation and warranty by Counterparty that, as of the date of such Repayment Notice, Counterparty is not in possession of any material non-public information regarding Counterparty or the Shares, an Early Termination Date shall be designated, as provided in this paragraph. Upon receipt of any such Repayment Notice and the related written representation and warranty, Dealer shall promptly designate an Exchange Business Day following receipt of such Repayment Notice as an Early Termination Date with respect to the portion of this Transaction corresponding to a number of Options (the “Repayment Options”) equal to the lesser of (A) the number of Shares specified by the Company in the Repayment Notice (which shall not exceed the Number of Options) underlying the number of Convertible Notes specified in such Repayment Notice, divided by the Option Entitlement and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repayment Options on a pro rata basis across all Components, as determined by the Calculation Agent. Any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated on the basis of an Additional Termination Event having occurred in respect of a hypothetical transaction having terms identical to this Transaction but a Number of Options equal to the number of Repayment Options, (2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction.
Counterparty acknowledges and agrees that (x) (i) Counterparty will not deliver any Repayment Notice in respect of, and (ii) no Repayment Event will be deemed to occur under, the Existing Capped Call Confirmations, until all of the Options hereunder have been (or, after giving effect to the relevant analogous Repayment Notice, as applicable, will be) exercised or terminated, (y) the principal amount of any Convertible Notes subject to a Repayment Event hereunder shall not be subject to any Repayment Event under the Existing Capped Call Confirmations and (z) in delivering any Repayment Notice hereunder, or any “Repurchase Notice” under the Existing Capped Call Confirmations, Counterparty shall deliver such notice, and specify the necessary information therein, in a manner consistent with the foregoing. The “Existing Capped Call Confirmations” shall mean, collectively, (i) those certain Base Capped Call Confirmations between Counterparty and certain financial institutions [including Dealer], dated September 10, 2020.
“Repayment Event” means (i) the redemption or repurchase and cancellation of the Counterparty’s 2.250% Convertible Senior Notes due 2027 (the “Convertible Notes”) issued pursuant to the Counterparty’s indenture (the “Indenture”) dated September 15, 2020 between the Counterparty and Wilmington Trust, National Association, as trustee, including without limitation pursuant to Article 15 of the Indenture in connection with a “Fundamental Change” (as defined in the Indenture) or Article 16 of the Indenture in connection with an “Optional Redemption” (as defined in the Indenture), or (ii) any Convertible Notes are converted in connection with any of the events described in clause (i) or in connection with a Fundamental Change, it being understood that a Convertible Note shall be deemed to have been converted in connection with a Fundamental Change if such Convertible Note is converted following announcement of an event which would constitute a Fundamental Change and prior to the related “Fundamental Change Repurchase Date” (as defined in the Indenture).
(c) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events. If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists solely of cash, (ii) a Merger Event 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) and 6(e) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below) unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, 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) as of the date of such election, Counterparty represents that it is not in possession of any material non-public information regarding Counterparty or the Shares, and that such election is being made in good faith and not as part of a plan or scheme to evade compliance with the federal securities laws, 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) and 6(e) of the Agreement, as the case may be, shall apply.
| | | | | |
| Share Termination Alternative: | If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment. |
| Share Termination Delivery Property: | A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price. |
| Share Termination Unit Price: | The value 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 a variety of factors, including the market price of the Share Termination Delivery Units and/or the purchase price paid in connection with the commercially reasonable 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, 9.11 and 9.12 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption “Representation and Agreement” in Section 2 will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”. “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction. |
(d) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, based on the advice of legal counsel, the Shares acquired by Dealer for the purpose of effecting commercially reasonable hedging of its obligations pursuant to the Transaction (the “Hedge Shares”) cannot be sold in the U.S. public market by Dealer without registration under the Securities Act, Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, use its commercially reasonable efforts to make available to Dealer an effective registration statement under the Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form and substance reasonably satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered offering for companies of a similar size in a similar industry, (B) provide accountant's “comfort” letters in customary form for registered offerings of equity securities for companies of a similar size in a similar industry, (C) provide disclosure opinions of nationally recognized outside counsel to Counterparty in customary form for registered offerings of equity securities for companies of a similar size in a similar industry, (D) provide other customary opinions, certificates and closing documents customary in form for registered offerings of equity securities for companies of a similar size in a similar industry and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with respect to Counterparty customary in scope for underwritten offerings of equity securities for companies of a similar size in a similar industry; provided, however, that if Counterparty elects clause (i) above but Dealer, in its commercially 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 Section 8(d) shall apply at the election of Counterparty; (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities of companies of a similar size in a similar industry, in form and substance commercially reasonably satisfactory to Dealer using best efforts to include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer), opinions and certificates and such other documentation as is customary for private placement agreements of equity securities of companies of a similar size in a similar industry, as is reasonably acceptable to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its good faith and commercially reasonable judgment, to compensate Dealer for any customary liquidity discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement, for the avoidance of doubt, any such adjustment shall be made solely to the extent permitted under ASC 815-40); provided that no “comfort letter” or accountants’ consent shall be required to be delivered in connection with any private placements; or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer.
(e) Repurchase Notices. Counterparty shall, at least one Scheduled Valid Day prior to any day on which Counterparty intends to effect any repurchase of Shares, give Dealer written notice of such repurchase (a “Repurchase Notice”) on such day if, following such repurchase, the Notice Percentage would reasonably be expected to be (i) greater than [__]5% and (ii) greater by 0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice, greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the denominator of which is the number of Shares outstanding on such day. In the event that Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner specified in this Section 8(e) then Counterparty agrees to indemnify and hold harmless Dealer, its affiliates and their respective directors, officers, employees, agents and controlling persons (Dealer and each such person being an “Indemnified Party”) from and against any and all losses (including losses relating to the 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 and liabilities (or actions in respect thereof), joint or several, to which such Indemnified Party may become subject under applicable securities laws, including without limitation, Section 16 of the Exchange Act or under any U.S. state or federal law, regulation or regulatory order, in each case relating to or arising out of such failure. If for any reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss, claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to Counterparty) in connection with the investigation of, preparation for or defense or settlement of any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding is initiated or brought by or on behalf of Counterparty, in each case relating to or arising out of such failure. This indemnity shall survive the completion of the Transaction contemplated by this Confirmation and any assignment and delegation of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit of any permitted assignee of Dealer. Counterparty will not be liable under this indemnity provision to the extent any loss, claim, damage, liability or expense is found in a final judgment by a court to have resulted from Dealer’s gross negligence or willful misconduct.
5 To be 0.5% higher than the number of Shares underlying the capped call (including any base and any original additional capped call) of the Dealer with the highest Applicable Percentage.
(f) Transfer or Assignment.
(i)Counterparty shall have the right to transfer or assign its rights and obligations hereunder with respect to all, but not less than all, of the Options hereunder (such Options, the “Transfer Options”); provided that such transfer or assignment shall be subject to reasonable conditions that Dealer may impose, including but not limited, to the following conditions:
(A)With respect to any Transfer Options, Counterparty shall not be released from its notice and indemnification obligations pursuant to Section 8(e) or any obligations under (x) Section 8(d) of this Confirmation or (y) in respect of any Extraordinary Event occurring prior to such transfer;
(B)Any Transfer Options shall only be transferred or assigned to a third party that is a United States person (as defined in the Internal Revenue Code of 1986, as amended);
(C)Such transfer or assignment shall be effected on terms, including any reasonable undertakings by such third party (including, but not limited to, an undertaking with respect to compliance with applicable securities laws in a manner that, in the reasonable judgment of Dealer, will not expose Dealer to material risks under applicable securities laws) and execution of any documentation and delivery of legal opinions with respect to securities laws and other matters by such third party and Counterparty, as are requested and reasonably satisfactory to Dealer;
(D)Dealer will not, as a result of such transfer and assignment, be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Dealer would have been required to pay to Counterparty in the absence of such transfer and assignment;
(E)An Event of Default, Potential Event of Default or Termination Event will not occur as a result of such transfer and assignment;
(F)Without limiting the generality of clause (B), Counterparty shall cause the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Dealer to permit Dealer to determine that results described in clauses (D) and (E) will not occur upon or after such transfer and assignment; and
(G)Counterparty shall be responsible for all reasonable costs and expenses, including reasonable counsel fees, incurred by Dealer in connection with such transfer or assignment.
(ii)Dealer may, without Counterparty’s consent, transfer or assign all, but not less than all, of its rights or obligations under the Transaction to any Affiliate of Dealer that (i) is a nationally recognized dealer in equity derivatives similar to the Transaction and (ii) 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 if the following conditions are satisfied (the “Transfer Conditions”): (1) the transferee agrees in writing with Dealer to be bound by the terms of this Confirmation with respect to the transferred obligations; (2) as of the date of such transfer, and giving effect thereto, the transferee will not be required to withhold or deduct on account of Tax from any payments under the Agreement or will be required to gross up for such Tax under Section 2(d)(i)(4) of the Agreement; (3) as of the date of such transfer, and giving effect thereto, Counterparty will not be required to gross up for such Tax under Section 2(d)(i)(4) of the Agreement; (4) no Event of Default where Dealer is the Defaulting Party or Termination Event where Dealer is the sole Affected Party has occurred and is continuing at the time of the transfer, and no Event of Default or Termination Event will occur with respect to Counterparty, Dealer or the transferee as a result of such transfer; (5) if to a transferee incorporated or organized in a jurisdiction other than the United States or United Kingdom, after giving effect to such transfer, no material adverse legal or regulatory consequence shall result to Dealer, Counterparty or the transferee as a result of such transfer; [and] (6) Dealer shall have provided prompt written notice to Counterparty of such transfer[; and (7) the Guarantor agrees to guarantee any obligations of the transferee hereunder]. Dealer may, with Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any other third party, such consent not to be unreasonably withheld or delayed. If at any time at which (A) the Section 16 Percentage exceeds 9.0%, (B) the Option Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists. In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 8(c) 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 would give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or would 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, but shall not be discharged to the extent of any failure to perform any designated or delegated obligation of Dealer under this Confirmation.
(g) Staggered Settlement. If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s commercially reasonable hedging activities hereunder, Dealer reasonably determines that it would have a legal or regulatory concern if it were 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, acting in good faith and in a commercially reasonable manner, 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 (each of which will be on or prior to the 20th Exchange Business Day after such Nominal Settlement Date) or delivery times and how it will allocate the Shares it is required to deliver under “Delivery Obligation” (above) among the Staggered Settlement Dates or delivery times; and
(ii)the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates and delivery times will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date; provided that in no event shall any Staggered Settlement Date be a date later than the Final Termination Date.
(h) Hedge Period Covenants.
(i)During the period commencing on the Trade Date and ending on the Hedge Period End Date, neither Counterparty nor any “affiliated purchaser” (as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) of Counterparty shall directly or indirectly (including, without limitation, by means of any cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, or commence any tender offer relating to, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share) or any security convertible into or exchangeable or exercisable for Shares; provided that this Section 8(h) shall not (i) limit Counterparty’s ability, pursuant to its employee incentive plans, to re-acquire Shares or equivalent interests in connection with related equity transactions; (ii) limit Counterparty’s ability to withhold shares to cover exercise price and/or tax liabilities associated with such equity transactions; or (iii) limit Counterparty’s and its affiliates’ ability to grant stock and options and similar interests to “affiliated purchasers” (as defined in Rule 10b-18) or the ability of affiliated purchasers (and, for the avoidance of doubt, the trustee under any employee stock plan of Counterparty or its affiliates) to acquire stock or options and similar interests, in connection with the Counterparty’s compensation policies or benefit plans for directors, officers and employees or any agreements with respect to the compensation of directors, officers or employees of any entities that are acquisition targets of Counterparty, and in connection with any such purchase Counterparty will be deemed to represent to Dealer that such purchase does not constitute a “Rule 10b-18 Purchase” (as defined in Rule 10b-18).
(ii)Other than the Related Transactions, Counterparty has not and will not enter into capped call agreements similar to the Transaction described herein or any accelerated share buyback, forward share repurchase, option purchase, cash or net-share settled forward sale or warrant or other agreements or transactions to directly or indirectly (including by means of a derivative instrument) purchase any Shares or are likely to result in any purchases of Shares by a counterparty, where any initial hedge period, calculation period, relevant period or settlement valuation period (each however defined) in such other transaction will overlap at any time (including as a result of extensions in such initial hedge period, calculation period, relevant period or settlement valuation period as provided in the relevant agreements) with the Hedge Period under this Confirmation without the prior written consent of Dealer.
“Related Transactions” means one or more capped call transactions entered into between Counterparty and certain other dealers entered into on the date hereof and which have substantially similar terms to the Transaction.
(iii)Counterparty will not during the period commencing on the Trade Date for any Transaction and ending on the Hedge Period End Date make or permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction (a “Merger Announcement”) unless such Merger Announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares.
(iv)Counterparty acknowledges and agrees that, during the period commencing on the Trade Date for any Transaction and ending on the Hedge Period End Date, any amendment, modification, waiver or termination of this Confirmation and any Trade Notification must be effected in accordance with the requirements of Rule 10b5-1(c). Without limiting the generality of the foregoing, to the extent required by Rule 10b5-1(c), any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, and, to the extent prohibited by Rule 10b5-1(c), no such amendment, modification or waiver shall be made at any time at which Counterparty or any officer, director, manager or similar person of Counterparty is aware of any material non-public information regarding Counterparty or the Shares.
(v)On any Scheduled Trading Day that is not a Relevant Scheduled Trading Day during the Hedge Period, Dealer shall not, and shall cause its affiliates and agents (if any) not to, make any purchases of Shares in connection with the Transaction, other than purchases made to dynamically hedge for Dealer’s own account or the account of its affiliate(s) the optionality arising under the Transaction.
(i) 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.
(j) No Netting and Set-off. The provisions of Section 2(c) of the Agreement shall not apply to the Transaction. Each party waives any and all rights it may have to set-off delivery or payment obligations it owes to the other party under the Transaction against any delivery or payment obligations owed to it by the other party, whether arising under the Agreement, under any other agreement between parties hereto, by operation of law or otherwise.
(k) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to convey to it rights with respect to the Transaction that are senior to the claims of common stockholders in the event of Counterparty's bankruptcy. For the avoidance of doubt, the parties agree that the preceding sentence shall not apply at any time other than during Counterparty's bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations under this Confirmation or the Agreement. For the avoidance of doubt, the parties acknowledge that the obligations of Counterparty under this Confirmation are not secured by any collateral that would otherwise secure the obligations of Counterparty herein under or pursuant to any other agreement.
(l) Early Unwind. In the event the exchanges of the Securities (as defined in the [Exchange Agreements], dated as of [•], between certain prospective investors in the Convertible Notes and Counterparty (the “Exchange Agreements”)), are not consummated pursuant to the Exchange Agreement for any reason by the close of business in New York on [•]6 (or such later date as agreed upon by the parties) (such date, the “Early Unwind Date”), (i) the Transaction shall automatically terminate on the Early Unwind Date and (ii) Dealer shall determine an amount payable pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated on the Early Unwind Date on the basis of an Additional Termination Event having occurred in respect of which Counterparty were the sole Affected Party and the Transaction were the sole Affected Transaction.
(m) Illegality. The parties agree that, for the avoidance of doubt, for purposes of Section 5(b)(i) of the Agreement, “any applicable law” shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and regulations promulgated thereunder and any similar law or regulation, without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and the consequences specified in the Agreement, including without limitation, the consequences specified in Section 6 of the Agreement, shall apply to any Illegality arising from any such act, rule or regulation.
(n) Amendments to Equity Definitions and the Agreement. The following amendments shall be made to the Equity Definitions:
(i)solely for purposes of applying the Equity Definitions and for purposes of this Confirmation, any reference in the Equity Definitions to a Strike Price shall be deemed to be a reference to either of the Strike Price or the Cap Price, or both, as appropriate;
6 To be the scheduled closing date for the Exchange Agreements.
(ii)for the purpose of any adjustment under Section 11.2(c) of the Equity Definitions, the first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: “(c) If ‘Calculation Agent Adjustment’ is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction, then following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has, in the commercially reasonable judgment of the Calculation Agent, a material economic effect on the theoretical value of the relevant Shares or options on the Shares (provided that such event is not based on (x) an observable market, other than the market for Counterparty’s own stock or (y) an observable index, other than an index calculated measured solely by reference to Counterparty’s own operations) and, if so, will (i) make appropriate adjustment(s), if any, determined in a commercially reasonable manner, to any one or more of:” and, the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing such latter phrase with the words “(provided that, solely in the case of Sections 11.2(e)(i), (ii)(A), (iv) and (v), no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares but, for the avoidance of doubt, solely in the case of Sections 11.2(e)(ii)(B) through (D), (iii), (vi) and (vii) adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)”;
(iii)Section 11.2(a) of the Equity Definitions is hereby amended by (1) deleting the words “in the determination of the Calculation Agent, a diluting or concentrative effect” and replacing these words with “in the commercially reasonable judgment of the Calculation Agent, a material economic effect”; and (2) adding at the end thereof “; provided that such event is not based on (i) an observable market, other than the market for Counterparty’s own stock or (ii) an observable index, other than an index calculated measured solely by reference to Counterparty’s own operations”;
(iv)Section 11.2(e)(vii) of the Equity Definitions is hereby amended and restated as follows: “any other event that in the commercially reasonable judgment of the Calculation Agent has a material economic effect on the theoretical value of the Shares or options of the Shares; provided that such event is not based on (a) an observable market, other than the market for Counterparty’s own stock or (b) an observable index, other than an index calculated measured solely by reference to Counterparty’s own operations.”;
(v)Section 12.7(b) of the Equity Definitions is hereby amended by deleting the words “(and in any event within five Exchange Business Days) by the parties after” appearing after the words “agreed promptly” and replacing with the words “by the parties on or prior to”; and
(o) Counterparty and Dealer agree and acknowledge that (A) the Transactions contemplated by this Confirmation will be entered into in reliance on the fact that this Confirmation and each Trade Notification hereto form a single agreement between Counterparty and Dealer, and Dealer would not otherwise enter into such Transactions; (B) this Confirmation, together with each Trade Notification hereto, is a “qualified financial contract,” as such term is defined in Section 5-701(b)(2) of the General Obligations Law; (C) each Trade Notification hereto, regardless of whether transmitted electronically or otherwise, constitutes a “confirmation in writing sufficient to indicate that a contract has been made between the parties” hereto, as set forth in Section 5-701(b)(3)(b) of the General Obligations Law; and (D) this Confirmation and each Trade Notification hereto constitute a prior “written contract,” as set forth in Section 5-701(b)(1)(b) of the General Obligations Law, and each party hereto intends and agrees to be bound by this Confirmation and such Trade Notification.
(p) Governing Law. THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY TRANSACTION CONTEMPLATED HEREBY.
(q) [INTENTIONALLY OMITTED]
(r) Delivery or Receipt of Cash. For the avoidance of doubt, other than payment of the Premium by Counterparty, nothing in this Confirmation shall be interpreted as requiring Counterparty to cash settle the Transaction, except in circumstances where cash settlement is within Counterparty’s control (including, without limitation, where Counterparty elects to deliver or receive cash) or in those circumstances in which holders of Shares would also receive cash.
(s) Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY TRANSACTION CONTEMPLATED HEREBY.
(t) Amendment. This Confirmation and the Agreement may not be modified, amended or supplemented, except in a written instrument signed by Counterparty and Dealer.
(u) Counterparts. This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
(v) Tax Matters. For the purpose of Sections 4(a)(i) and (ii) of the Agreement, Counterparty agrees to deliver to Dealer one duly executed and completed United States Internal Revenue Service Form W-9 (or successor thereto) and Dealer agrees to deliver to Counterparty, as applicable, a U.S. Internal Revenue Service Form W-8 or Form W-9 (or successor thereto). Such forms or documents shall be delivered upon (i) execution of this Confirmation, and (ii) reasonable request of the other party.
(w) Withholding Tax imposed on payments to non-US counterparties under the United States Foreign Account Tax Compliance Act. “Indemnifiable Tax”, as defined in Section 14 of the 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 Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.
(x) HIRE Act Protocols. The parties agree that the definitions and provisions contained in the 2015 Section 871(m) Protocol as published by the International Swaps and Derivatives Association, Inc. are incorporated into and apply to the Agreement as if set forth in full herein.
(y) US QFC Protocol. Each party hereby agrees that the terms of the ISDA 2018 U.S. Resolution Stay Protocol (the “ISDA U.S. Stay Protocol”) are incorporated into and form a part of this Agreement, and this Agreement shall be deemed a Protocol Covered Agreement for purposes thereof. For purposes of incorporating the ISDA U.S. Stay Protocol, Dealer shall be deemed to be a Regulated Entity and Counterparty shall be deemed to be an Adhering Party.
(z) Financial Assistance. Counterparty acknowledges that the Transaction constitutes a purchase of its equity securities. Counterparty further acknowledges that, pursuant to the provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), the Counterparty would be required to agree to certain time-bound restrictions on its ability to purchase its equity securities if it receives loans, loan guarantees or direct loans (as that term is defined in the CARES Act) under section 4003(b) of the CARES Act. Counterparty further acknowledges that it may be required to agree to certain time-bound restrictions on its ability to purchase its equity securities if it receives loans, loan guarantees or direct loans (as that term is defined in the CARES Act) under programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system (together with loans, loan guarantees or direct loans under section 4003(b) of the CARES Act, “Governmental Financial Assistance”). Accordingly, Counterparty represents and warrants that it has not applied for, and prior to the termination or settlement of this Transaction has no intention to apply for, Governmental Financial Assistance under any governmental program or facility that (a) is established under the CARES Act or the Federal Reserve Act, as amended, and (b) requires, as a condition of such Governmental Financial Assistance, that the Counterparty agree, attest, certify or warrant that it has not, as of the date specified in such condition, repurchased, or will not repurchase, any equity security of Counterparty.
(aa) [DEALER TO ADD ANY APPLICABLE AGENCY PROVISIONS]
Please confirm that the foregoing correctly sets forth the terms of our agreement by sending to us a letter or telex substantially similar to this facsimile, 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 faithfully, |
| | | | |
| | [DEALER] |
| | | | |
| | By: | | |
| | | Name: | |
| | | Title | |
| | | | |
| Agreed and Accepted by: | | | | |
| | | | |
| PROS HOLDINGS, INC. | | | | |
| | | | |
| | | | |
| Name: | | | | |
| Title: | | | | |
Schedule A
| | | | | | | | |
| Component | Number of Options | Expiration Date |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Schedule B
| | | | | |
| 10b-18 VWAP Price | Per-Share Premium |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
| |
Schedule C
Relevant Scheduled Trading Days
Schedule D
Trade Notification
| | | | | | | | | | | | | | |
| [Dealer Name and Address] |
| | | | [Date] |
| | | | |
| To: | PROS Holdings, Inc. | | |
| 3200 Kirby Dr., Suite 600 | | |
| Houston, Texas 77098 | | |
| | | | |
| RE: | Base Capped Call Transaction | |
| | | | |
| The purpose of this Trade Notification is to notify you of certain terms in the Transaction entered into between [ _ ] ("Dealer") and PROS Holdings, Inc. ("Counterparty"). This Trade Notification supplements, forms part of, and is subject to the Confirmation dated as of [ _ ], 2023 between Dealer and Counterparty, as amended and supplemented from time to time. |
| | | | |
| Average Per-Share Premium: | USD [__________] | | |
| Premium: | USD [__________] | | |
| Final Premium | USD [__________] | | |
| | | | |
| | | | | | | | | | | | | | |
| | Yours faithfully, |
| | | | |
| | [DEALER] |
| | | | |
| | By: | | |
| | | Authorized Signatory | |
| | | Name: | |
[Signature Page to Trade Notification]
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-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
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