EXCHANGE AND PURCHASE AGREEMENT (Restricted Convertible Notes)
(Restricted
Convertible Notes)
_________________________
(including any other persons or entities exchanging Existing Notes (as defined
below) or purchasing New Notes (as defined below) hereunder for whom the
undersigned Holder holds contractual and investment authority, the “Holder”) enters into this
Exchange and Purchase Agreement (the “Agreement”) with PDL
BioPharma, Inc., a Delaware corporation (the “Company”), on _____, 2010
whereby the Holder will (a) exchange (the “Exchange”) the Company’s 2.00%
Convertible Senior Notes due 2012 (the “Existing Notes”) for a portion
of the Company’s new ______% Convertible Senior Notes due 2015 (the “New Notes”) that will be
issued pursuant to the provisions of an Indenture dated as of ____________, 2010
(the “Indenture”)
between the Company and The Bank of New York Mellon Trust Company, N.A., as
Trustee (the “Trustee”),
and (b) purchase for cash (the “Purchase”) an additional
portion of the New Notes.
On and
subject to the terms hereof, the parties hereto agree as follows:
Article
I: Exchange of Existing Notes and Purchase of New
Notes
Section
1.1 Exchange.
At the Closing (as defined herein), the Holder hereby agrees to exchange
and deliver to the Company the following Existing Notes, and in exchange
therefor the Company hereby agrees to issue to the Holder the principal amount
of New Notes described below and to pay in cash the following accrued but unpaid
interest on such Existing Notes:
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Principal
Amount of Existing Notes to be Exchanged:
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$
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| (the “Exchanged Existing Notes”). | ||
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Principal
Amount of New Notes to be Issued in the Exchange:
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$
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| (the “Exchanged New Notes”). | ||
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Cash
Payment of Accrued but Unpaid Interest on Exchanged Existing
Notes:
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$
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| (the “Cash Payment”). | ||
Section
1.2 Purchase.
At the Closing (as defined herein), the Holder hereby agrees to purchase
from the Company, and the Company hereby agrees to issue and sell to the Holder,
the following principal amount of the Notes for the cash purchase price
specified below:
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Principal
Amount of Notes to be Purchased:
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$
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(the
“Purchased New
Notes”)
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Purchase
Price for Purchased New Notes:
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______%
of the principal amount of the Purchased New
Notes
($
) (the “Purchase
Price”).
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Section
1.3 Closing.
The closing (the “Closing”) of the Exchange and
Purchase (collectively, the “Transactions”) shall occur on
a date (the “Closing
Date”) no later than three business days after the date of this
Agreement. At the Closing, (a) the Holder shall deliver or cause to
be delivered to the Company all right, title and interest in and to the
Exchanged Existing Notes free and clear of any mortgage, lien, pledge, charge,
security interest, encumbrance, title retention agreement, option, equity or
other adverse claim thereto (collectively, “Liens”), together with any
documents of conveyance or transfer that the Company may deem necessary or
desirable to transfer to and confirm in the Company all right, title and
interest in and to the Exchanged Existing Notes free and clear of any Liens and
the Purchase Price, and (b) the Company shall
issue to the Holder the Exchanged New Notes
and the Purchased New Notes (collectively,
the “Holder’s New
Notes”) and shall deliver to the Holder the
Cash Payment; provided, however, that the parties acknowledge that the issuance
of the Holder’s New Notes to the Holder may be delayed due to procedures and
mechanics within the system of the Depository Trust Company and that such delay
will not be a default under this Agreement so long as (i) the Company is
using its best efforts to effect the issuance of one or more global
notes representing the New Notes, (ii) such delay is no longer than
three business days, and (iii) interest shall accrue on such New Notes from
the Closing Date. Simultaneously with or after the Closing, the Company
may issue New Notes to one or more other holders of outstanding Existing Notes
or to other investors.
Article
II: Covenants, Representations and Warranties of the
Holder
The
Holder hereby covenants as follows, and makes the following representations and
warranties, each of which is and shall be true and correct on the date hereof
and on the Closing Date, to the Company, Lazard Frères & Co. LLC and Lazard
Capital Markets LLC, and all such covenants, representations and warranties
shall survive the Closing.
Section
2.1 Power and
Authorization. The Holder is duly organized, validly existing and
in good standing, and has the power, authority and capacity to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the Transactions contemplated hereby. If the Holder that is signatory
hereto is executing this Agreement to effect the exchange of Exchanged Existing
Notes beneficially owned by one or more other persons or entities or to effect
the purchase of the Purchased New Notes by one or more other persons or entities
(all of whom are thus included in the definition of “Holder” hereunder),
(a) such signatory Holder has all requisite discretionary authority to
enter into this Agreement on behalf of, and bind, each such other person or
entity that is a beneficial owner of Exchanged Existing Notes or that is
purchasing Purchased New Notes; (b) Exhibit A hereto
is a true, correct and complete list of (i) the name of each party
delivering (as beneficial owner) Exchanged Existing Notes hereunder,
(ii) the principal amount of such Holder’s Exchanged Existing Notes,
(iii) the principal amount of Exchanged New Notes to be issued to such
Holder in respect of its Exchanged Existing Notes, and (iv) the amount of
the cash payment to be made to such Holder in respect of the accrued interest on
its Exchanged Existing Notes; and (c) Exhibit B hereto
is a true, correct and complete list of (i) the name of each party
acquiring (as beneficial owner) Purchased New Notes hereunder, and (ii) the
principal amount of Purchased New Notes being acquired by such
Holder.
Section
2.2 Valid and
Enforceable Agreement; No Violations. This Agreement has been duly
executed and delivered by the Holder and constitutes a legal, valid and binding
obligation of the Holder, enforceable against the Holder in accordance with its
terms, except that such enforcement may be subject to (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors’ rights generally, and
(b) general principles of equity, whether such enforceability is considered
in a proceeding at law or in equity (the “Enforceability
Exceptions”). This Agreement and consummation of the Transactions
will not violate, conflict with or result in a breach of or default under
(i) the Holder’s organizational documents, (ii) any agreement or
instrument to which the Holder is a party or by which the Holder or any of its
assets are bound, or (iii) any laws, regulations or governmental or
judicial decrees, injunctions or orders applicable to the Holder.
Section
2.3 Title to
the Exchanged Existing Notes. The Holder is the sole legal and
beneficial owner of the Exchanged Existing Notes, and the Holder has good, valid
and marketable title to the Exchanged Existing Notes, free and clear of any
Liens (other than pledges or security interests that the Holder may have created
in favor of a prime broker under and in accordance with its prime brokerage
agreement with such broker). The Holder has not, in whole or in part,
except as described in the preceding sentence, (a) assigned, transferred,
hypothecated, pledged, exchanged or otherwise disposed of any of the Exchanged
Existing Notes or its rights in the Exchanged Existing Notes, or (b) given
any person or entity any transfer order, power of attorney or other authority of
any nature whatsoever with respect to the Exchanged Existing Notes. Upon
the Holder’s delivery of the Exchanged Existing Notes to the Company pursuant to
the Exchange, the Exchanged Existing Notes shall be free and clear of all Liens
created by the Holder.
Section
2.4 Qualified
Institutional Buyer. The Holder is a “qualified institutional
buyer” within the meaning of Rule 144A promulgated under the Securities Act of
1933, as amended (the “Securities
Act”).
Section
2.5 No
Affiliate Status. The Holder is not, and has not been during the
consecutive three month period preceding the date hereof, a director, officer or
“affiliate” within the meaning of Rule 144 promulgated under the Securities Act
(an “Affiliate”) of the
Company.
Section
2.6 Restricted
Stock. The Holder (a) acknowledges that the issuance of all
the Holder’s New Notes pursuant to the Transactions (whether in the Exchange or
the Purchase), and the issuance of any of the shares of the Company’s common
stock, par value $0.01 per share (the “Common Stock”), upon
conversion of the Holder’s New Notes (the “Conversion Shares”), have not
been and will not be registered under the Securities Act or any state securities
laws, and the Holder’s New Notes and Conversion Shares are being offered and
sold in reliance upon exemptions provided in the Securities Act and state
securities laws for transactions not involving any public offering and,
therefore, cannot be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of unless they are subsequently registered and qualified
under the Securities Act and applicable state laws or unless an exemption from
such registration and qualification is available, and that evidence of the
Holder’s New Notes and Conversion Shares will bear a legend to such effect, and
(b) is acquiring the Holder’s New Notes and Conversion Shares for
investment purposes only, for the account of the Holder and not with any view
toward a distribution thereof or with any intention of selling, distributing or
otherwise disposing of the Holder’s New Notes or Conversion Shares in a manner
that would violate the registration requirements of the Securities Act.
The Holder is able to bear the economic risk of holding the Holder’s New Notes
and Conversion Shares for an indefinite period and has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Holder’s New Notes and Conversion
Shares.
Section
2.7 No
Illegal Transactions. The Holder has not, directly or indirectly,
and no person acting on behalf of or pursuant to any understanding with the
Holder has, engaged in any transactions in the securities of the Company
(including, without limitation, any Short Sales (as defined below) involving any
of the Company’s securities) since the time that such Holder was first contacted
by either the Company, Lazard Frères & Co. LLC or Lazard Capital Markets LLC
or any other person regarding an investment in the New Notes or the
Company. Such Holder covenants that neither it nor any person acting on
its behalf or pursuant to any understanding with such Holder will engage,
directly or indirectly, in any transactions in the securities of the Company
(including Short Sales) prior to the time the transactions contemplated by this
Agreement are publicly disclosed. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 of Regulation SHO
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types
of direct and indirect stock pledges, forward sale contracts, options, puts,
calls, short sales, swaps, derivatives and similar arrangements (including on a
total return basis), and sales and other transactions through non-U.S.
broker-dealers or foreign regulated brokers. Solely for purposes of this
Section 2.7, subject to the Holder's compliance with its obligations under
the U.S. federal securities laws and the Holder's internal policies, “Holder”
shall not be deemed to include any subsidiaries or affiliates of the Holder that
are effectively walled off by appropriate “Chinese Wall” information barriers
approved by the Holder's legal or compliance department (and thus have not been
privy to any information concerning the Transactions).
Section
2.8 Adequate
Information; No Reliance. The Holder acknowledges
and agrees that (a) the Holder has been furnished with all materials it
considers relevant to making an investment decision to enter into the
Transactions and to invest in the Holder’s New Notes and Conversion Shares and
has had the opportunity to review the Company’s filings with the Securities and
Exchange Commission (the “SEC”), including, without
limitation, all filings made pursuant to the Exchange Act, (b) the Holder
has had a full opportunity to ask questions of the Company concerning the
Company, its business, operations, financial performance, financial condition
and prospects, and the terms and conditions of the Transactions, (c) the
Holder has had the opportunity to consult with its accounting, tax, financial
and legal advisors to be able to evaluate the risks involved in the Transactions
and to make an informed investment decision with respect to the Transactions and
(d) the Holder is not relying, and has not relied, upon any statement,
advice (whether accounting, tax, financial, legal or other), representation or
warranty made by the Company or any of its affiliates or representatives
including, without limitation, Lazard Frères & Co. LLC and Lazard
Capital Markets LLC, except for (A) the publicly available filings made by
the Company with the SEC under the Exchange Act, and (B) the
representations and warranties made by the Company in this
Agreement.
Section
2.9 No Public
Market. The
Holder understands that no public market exists for the New Notes, and that
there is no assurance that a public market will ever develop for the New
Notes.
Article
III: Covenants, Representations and Warranties of the
Company
The
Company hereby covenants as follows, and makes the following representations and
warranties, each of which is and shall be true and correct on the date hereof
and on the Closing Date, to the Holder, Lazard Frères & Co. LLC and Lazard
Capital Markets LLC, and all such covenants, representations and warranties
shall survive the Closing.
Section
3.1 Power and
Authorization. The Company is duly incorporated, validly existing
and in good standing under the laws of its state of incorporation, and has the
power, authority and capacity to execute and deliver this Agreement and the
Indenture, to perform its obligations hereunder and thereunder, and to
consummate the Transactions contemplated hereby.
Section
3.2 Valid and
Enforceable Agreements; No Violations. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforcement may be subject to the Enforceability
Exceptions. At the Closing, the Indenture, substantially in the form of
Exhibit C
hereto, will have been duly executed and delivered by the Company and will
govern the terms of the Holder’s New Notes, and will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to the
Enforceability Exceptions. This Agreement, the Indenture and consummation
of the Transactions will not violate, conflict with or result in a breach of or
default under (i) the charter, bylaws or other organizational documents of
the Company, (ii) any agreement or instrument to which the Company is a
party or by which the Company or any of its assets are bound, or (iii) any
laws, regulations or governmental or judicial decrees, injunctions or orders
applicable to the Company
Section
3.3 Validity
of the Holder’s New Notes. The Holder’s New Notes have been duly authorized
by the Company and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to the Holder pursuant to the
Transactions against delivery of the Exchanged Existing Notes and payment of the
Purchase Price in accordance with the terms of this Agreement, the Holder’s New
Notes will be valid and binding obligations of the Company, enforceable in
accordance with their terms, except that such enforcement may be subject to the
Enforceability Exceptions, and the issuance of the Holder’s New Notes will not
be subject to any preemptive, participation, rights of first refusal and other
similar rights. Assuming the accuracy of the Holder’s representations and
warranties hereunder, the Holder’s New Notes (a) will be issued in the
Transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation
D promulgated under the Securities Act, and (b) will be issued in
compliance with all applicable state and federal laws concerning the issuance of
the Holder’s New Notes.
Section
3.4 Validity
of Underlying Common Stock . The Holder’s New Notes will be
convertible into the Conversion Shares in accordance
with the terms of the Indenture. The Conversion Shares have been duly
authorized and reserved by the Company for issuance upon conversion of the
Holder’s New Notes and, when issued upon conversion of the Holder’s New Notes in
accordance with the terms of the Holder’s New Notes and the Indenture, will be
validly issued, fully paid and non-assessable, and the issuance of the
Conversion Shares will not be subject to any preemptive, participation, rights
of first refusal and other similar rights.
Section
3.5 Listing
Approval. At the Closing Date, the Conversion Shares shall be
listed on the NASDAQ Stock Market.
Section
3.6 Disclosure.
On or before the first business day following the date of this Agreement,
the Company shall issue a publicly available press release or file with the SEC
a Current Report on Form 8-K disclosing all material terms of the
Transactions and certain other matters concerning the Company (to the extent not
previously publicly disclosed).
Article
IV: Miscellaneous
Section
4.1 Entire
Agreement. This Agreement and any documents and agreements executed
in connection with the Transactions embody the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior and contemporaneous oral or written agreements,
representations, warranties, contracts, correspondence, conversations, memoranda
and understandings between or among the parties or any of their agents,
representatives or affiliates relative to such subject matter, including,
without limitation, any term sheets, emails or draft documents.
Section
4.2 Construction.
References in the singular shall include the plural, and vice versa,
unless the context otherwise requires. References in the masculine shall
include the feminine and neuter, and vice versa, unless the context otherwise
requires. Headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meanings of the provisions
hereof. Neither party, nor its respective counsel, shall be deemed the
drafter of this Agreement for purposes of construing the provisions of this
Agreement, and all language in all parts of this Agreement shall be construed in
accordance with its fair meaning, and not strictly for or against either
party.
Section
4.3 Governing
Law. This Agreement shall in all respects be construed in
accordance with and governed by the substantive laws of the State of New York,
without reference to its choice of law rules.
Section
4.4 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument. Any counterpart or other signature hereon delivered by
facsimile shall be deemed for all purposes as constituting good and valid
execution and delivery of this Agreement by such party.
[Signature
Page Follows]
IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.
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“HOLDER”:
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“COMPANY”:
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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EXHIBIT
A
Exchanging
Beneficial Owners
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Name of
Beneficial Owner
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Principal Amount
of Exchanged
Existing Notes
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Principal Amount of
Exchanged New Notes
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Cash Interest Payment
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EXHIBIT
B
Purchasing
Beneficial Owners
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Name of
Beneficial Owner
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Principal Amount of
Purchased New Notes
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EXHIBIT
C
Form
of Indenture