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October 30, 2019 at 6:25 PM EDT
Fundamental Change Company Notice

ALDER BIOPHARMACEUTICALS, INC.

FUNDAMENTAL CHANGE COMPANY NOTICE AND OFFER TO REPURCHASE

TO THE HOLDERS OF
ALDER BIOPHARMACEUTICALS, INC.

2.50% Convertible Senior Notes due 2025 (CUSIP NO. 014339AA3)

THE OFFER TO REPURCHASE WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON December 11, 2019, UNLESS EXTENDED (SUCH TIME AND DATE, AS THE SAME MAY BE EXTENDED, THE “EXPIRATION DATE”). TENDERS OF NOTES (as defined herein) MAY BE VALIDLY WITHDRAWN (IN WHOLE OR IN PART) AT ANY TIME PRIOR TO THE EXPIRATION DATE.

 

Alder BioPharmaceuticals, Inc., a Delaware corporation (the “Company”), in accordance with Section 12.01(c) of the Indenture, dated as of February 1, 2018 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of February 1, 2018, between the Company and the Trustee (the “First Supplemental Indenture”), and the Second Supplemental Indenture, dated as of October 22, 2019, among the Company, Lundbeck LLC, a Delaware limited liability company (the “Payor”), and the Trustee (the “Second Supplemental Indenture,” and together with the Base Indenture and the First Supplemental Indenture, the “Indenture”), hereby provides this Fundamental Change Company Notice and Offer to Purchase (as such notice and offer may be amended or supplemented, this “Notice”) to the holders (each, a “Holder”) of the Company’s 2.50% Convertible Senior Notes due 2025 (the “Notes”) and offers to repurchase for cash all of the outstanding Notes, subject to the terms and conditions of this Notice, the Indenture and the Notes (the “Fundamental Change Repurchase Right”).

This Notice is being provided in connection with the consummation on October 22, 2019 (the “Effective Date”) of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of September 16, 2019 (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”), by and among H. Lundbeck A/S, a Danish aktieselskab (the “Parent”), the Payor, an indirect subsidiary of the Parent, Violet Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Payor (the “Purchaser”), and the Company.  On September 23, 2019, pursuant to the Merger Agreement, the Purchaser commenced a tender offer (the “Tender Offer”) for all outstanding shares of the Company’s Common Stock at a price of (i) $18.00 in cash per share (the “Closing Amount”), without interest and less any applicable withholding taxes, plus (y) one non-transferable contractual contingent value right per share of Common Stock (each, a “CVR”), which represents the right to receive a contingent payment of $2.00 in cash, without interest and less any applicable withholding taxes, with such payment conditioned upon the achievement, on or prior to December 31, 2024 (the “CVR Expiration Date”), of the first legally valid approval by the European Commission of a marketing authorization application for any medicinal product for human use containing Eptinezumab antibody (a “CVR Product”) in the European Union, through the European Medicines Agency’s centralized procedure, which grants the right to place on the market, sell, market and promote the applicable product in the European Union in accordance with applicable legal requirements, excluding pricing and reimbursement approval (any such approval generally, a “Marketing Authorization Approval”), for the prevention, prophylaxis and/or palliation of migraine, which approval relies on the efficacy data and endpoints from the two concluded pivotal studies, PROMISE 1 and PROMISE 2 (the first such Marketing Authorization Approval, the “Milestone”).

Immediately following consummation of the Tender Offer, the Purchaser was merged with and into the Company (the “Merger” and together with the Tender Offer, the “Transactions”), with the Company continuing as the surviving corporation in the Merger and thereby becoming a direct wholly 

owned subsidiary of the Payor. In the Merger, each share of Common Stock outstanding immediately prior to the effective time of the Merger (subject to certain exceptions) were automatically cancelled and converted into the right to receive (i) the Closing Amount plus (ii) one CVR (such potential cash payment, together with the Closing Amount, are referred to collectively herein as the “Per Share Merger Consideration”), in each case, without interest and less any applicable withholding taxes.

The consummation of the Merger on October 22, 2019 and filing on October 22, 2019 in connection with the Tender Offer of a Schedule TO under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), disclosing that the Purchaser has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the common equity of the Company each constituted both a “Fundamental Change” and a “Make-Whole Fundamental Change” (each as defined in the First Supplemental Indenture) relating to the Notes and, accordingly, each Holder has, subject to certain conditions, the right to:

  • exercise your Fundamental Change Repurchase Right to require the Company to repurchase for cash all of your Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, on December 12, 2019 (as such date may be extended, the “Fundamental Change Repurchase Date”), which is the Business Day (as defined in the First Supplemental Indenture) following the Expiration Date, at a repurchase price in cash equal to 100% of the principal amount of the Notes being repurchased, plus any accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), as more fully described herein; OR
  • Elect to convert your Notes, as more fully described herein; OR
  • Retain all of your Notes, or any portion thereof not surrendered in connection with the Fundamental Change Repurchase Right or otherwise converted as more fully described herein.

The effective date of each Fundamental Change and Make-Whole Fundamental Change resulting from the consummation of the Transactions is the Effective Date. 

The Trustee has informed the Company that, as of the date of this Notice, all custodians and beneficial holders of the Notes hold the Notes through accounts with The Depositary Trust Company (“DTC”). Accordingly, all Notes tendered for purchase or surrendered for conversion must be delivered through the transmittal procedures of DTC’s Automated Tender Offer Program (“ATOP”), subject to the terms and conditions of that system.

To exercise your Fundamental Change Repurchase Right to have the Company repurchase your Notes and to receive payment of the Fundamental Change Repurchase Price, you must validly deliver your Notes through DTC’s transmittal procedures, in each case, prior to 5:00 p.m., New York City time, on the Expiration Date. Notes tendered for repurchase may be withdrawn by the Holders of such Notes at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The right of Holders to tender Notes for repurchase pursuant to the Fundamental Change Repurchase Right expires at 5:00 p.m., New York City time, on the Expiration Date.

Alternative to the Fundamental Change Repurchase Right

You May Elect to Convert the Notes

If you do not exercise your Fundamental Change Repurchase Right in accordance with the terms of this Notice, you will retain the conversion rights associated with your Notes under the Indenture.

Pursuant to the Indenture, the Conversion Rate (as defined in the First Supplemental Indenture) for the Notes is 49.3827 shares of Common Stock per $1,000 principal amount of the Notes.  As previously disclosed in the Notice delivered by the Company to Holders on October 22, 2019, Holders electing to convert their Notes in connection with the Make-Whole Fundamental Changes are entitled to 

owned subsidiary of the Payor. In the Merger, each share of Common Stock outstanding immediately prior to the effective time of the Merger (subject to certain exceptions) were automatically cancelled and converted into the right to receive (i) the Closing Amount plus (ii) one CVR (such potential cash payment, together with the Closing Amount, are referred to collectively herein as the “Per Share Merger Consideration”), in each case, without interest and less any applicable withholding taxes.

The consummation of the Merger on October 22, 2019 and filing on October 22, 2019 in connection with the Tender Offer of a Schedule TO under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), disclosing that the Purchaser has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the common equity of the Company each constituted both a “Fundamental Change” and a “Make-Whole Fundamental Change” (each as defined in the First Supplemental Indenture) relating to the Notes and, accordingly, each Holder has, subject to certain conditions, the right to:

  • exercise your Fundamental Change Repurchase Right to require the Company to repurchase for cash all of your Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, on December 12, 2019 (as such date may be extended, the “Fundamental Change Repurchase Date”), which is the Business Day (as defined in the First Supplemental Indenture) following the Expiration Date, at a repurchase price in cash equal to 100% of the principal amount of the Notes being repurchased, plus any accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), as more fully described herein; OR
  • Elect to convert your Notes, as more fully described herein; OR
  • Retain all of your Notes, or any portion thereof not surrendered in connection with the Fundamental Change Repurchase Right or otherwise converted as more fully described herein.

The effective date of each Fundamental Change and Make-Whole Fundamental Change resulting from the consummation of the Transactions is the Effective Date. 

The Trustee has informed the Company that, as of the date of this Notice, all custodians and beneficial holders of the Notes hold the Notes through accounts with The Depositary Trust Company (“DTC”). Accordingly, all Notes tendered for purchase or surrendered for conversion must be delivered through the transmittal procedures of DTC’s Automated Tender Offer Program (“ATOP”), subject to the terms and conditions of that system.

To exercise your Fundamental Change Repurchase Right to have the Company repurchase your Notes and to receive payment of the Fundamental Change Repurchase Price, you must validly deliver your Notes through DTC’s transmittal procedures, in each case, prior to 5:00 p.m., New York City time, on the Expiration Date. Notes tendered for repurchase may be withdrawn by the Holders of such Notes at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The right of Holders to tender Notes for repurchase pursuant to the Fundamental Change Repurchase Right expires at 5:00 p.m., New York City time, on the Expiration Date.

Alternative to the Fundamental Change Repurchase Right

You May Elect to Convert the Notes

If you do not exercise your Fundamental Change Repurchase Right in accordance with the terms of this Notice, you will retain the conversion rights associated with your Notes under the Indenture.

Pursuant to the Indenture, the Conversion Rate (as defined in the First Supplemental Indenture) for the Notes is 49.3827 shares of Common Stock per $1,000 principal amount of the Notes.  As previously disclosed in the Notice delivered by the Company to Holders on October 22, 2019, Holders electing to convert their Notes in connection with the Make-Whole Fundamental Changes are entitled to an increase in the Conversion Rate by an additional 9.7577 shares of Common Stock (the “Additional Shares”) pursuant to Section 11.03 the First Supplemental Indenture.  Pursuant to the terms of the Indenture, in connection with the consummation of the Merger, the Company, the Payor and the Trustee entered into the Second Supplemental Indenture to provide that, from and after the Effective Date, the consideration due upon conversion of each $1,000 principal amount of Notes shall be a number of units of Reference Property equal to the Conversion Rate in effect on the applicable Conversion Date (as may be increased pursuant to Section 11.03 of the First Supplemental Indenture), less any applicable withholding taxes.  Prior to the earlier of the occurrence of the Milestone and the CVR Expiration Date, a “unit of Reference Property” is comprised of the Per Share Merger Consideration.  Accordingly, for conversion of Notes in connection with the Make-Whole Fundamental Changes resulting from the Transactions, each $1,000 principal amount of the Notes is convertible into (i) $1,064.5272 in cash and (ii) 59.1404 CVRs, based on the Conversion Rate of 49.3827 as increased by the Additional Shares (9.7577) as provided in the Indenture.  Cash will be paid in lieu of any fractional interest in a CVR included in the consideration received by converting Holders in an amount equal to the fractional interest in such CVR multiplied by $2.00.  For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.
Holders of Notes currently have the right to convert their Notes at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date. Conversion of Notes will be deemed to be “in connection with” the Make-Whole Fundamental Changes only if the appropriate instruction form is delivered pursuant to DTC’s book-entry conversion program to U.S. Bank National Association, as conversion agent (the “Conversion Agent”), from, and including, the Effective Date up to, and including (but prior to 5:00 p.m., New York City time, on), the Business Day immediately prior to the Fundamental Change Repurchase Date. If the appropriate instruction form is not delivered pursuant to DTC’s book-entry conversion program to the Conversion Agent by the Business Day immediately prior to the Fundamental Change Repurchase Date, Holders will not be eligible to receive conversion consideration in respect to the Additional Shares. 
Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with the terms of the Indenture.
The amount in cash that you will receive if you validly exercise the Fundamental Change Repurchase Right is substantially less than the amount in cash and the contingent value of the CVRs that you will receive if you convert your Notes in connection with the Make-Whole Fundamental Changes.
You May Elect to Retain Your Notes
If a Holder decides to retain any Notes, then such Notes will remain outstanding subject to their existing terms, including with respect to a Holder’s right to receive interest payments on the Notes and exercise any future conversion rights that may arise under Section 11.01 of the First Supplemental Indenture. The Notes will mature on February 1, 2025 and will pay cash equal to $1,000 per $1,000 principal amount of the Notes on that date.  

The Trustee is:

By Mail:

U.S. Bank National Association

Global Corporate Trust Services

111 Fillmore Avenue E

Saint Paul, MN 55107

For Information:

Telephone: (800) 934-6802

The paying agent (the “Paying Agent”) and Conversion Agent is:

By Mail:

U.S. Bank National Association

Global Corporate Trust Services

111 Fillmore Avenue E

Saint Paul, MN 55107

For Information:

Telephone: (800) 934-6802

The date of this Notice is October 30, 2019

No person has been authorized to give any information or to make any representations other than those contained in this Notice and, if given or made, such information or representations must not be relied upon as having been authorized. This Notice does not constitute an offer to buy or the solicitation of an offer to sell the Notes in any circumstances or jurisdiction in which such offer or solicitation is unlawful. The delivery of this Notice shall not under any circumstances create any implication that the information contained in this Notice is current as of any time subsequent to the date of such information. Neither the Company nor the Parent or any of their respective affiliates, or any of its or their respective boards of directors, employees, advisors or representatives, or U.S. Bank National Association, in its role as Trustee, Paying Agent and Conversion Agent, is making any representation or recommendation to any Holder as to whether or not to surrender or convert (if at all) such Holder’s Notes. You should consult your own financial and tax advisors and must make your own decision as to whether or not to surrender your Notes for repurchase or to exercise your conversion rights and, if you choose to exercise either of these rights, the amount of the Notes to surrender or convert.

TABLE OF CONTENTS

SUMMARY TERM SHEET. 1

Safe Harbor/Forward-Looking Statements. 6

IMPORTANT INFORMATION CONCERNING THE FUNDAMENTAL CHANGE REPURCHASE RIGHT AND CONVERSION RIGHTS. 8

INFORMATION CONCERNING THE COMPANY.. 8

The Company. 8

The Transactions 8

INFORMATION CONCERNING THE NOTES  9

The Company’s Obligation to Repurchase the Notes 9

Fundamental Change Repurchase Price. 9

Conversion Rights of the Notes. 10

Market for the Notes. 11

Ranking. 12

PROCEDURES TO BE FOLLOWED BY HOLDERS ELECTING TO  TENDER NOTES FOR REPURCHASE  12

Method of Delivery. 12

Agreement to be Bound by the Terms of the Fundamental Change Repurchase Right 12

DELIVERY OF NOTES BY HOLDERS ELECTING  TO TENDER NOTES FOR REPURCHASE. 14

RIGHT OF WITHDRAWAL. 15

PAYMENT FOR TENDERED NOTES; SOURCE AND AMOUNT OF FUNDS. 15

NOTES ACQUIRED.. 16

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS. 16

Tax Consequences to Tendering U.S. Holders 17

Tax Consequences to Tendering Non-U.S. Holders. 18

Treatment of Non-Tendering and Non-Converting Holders. 19

ADDITIONAL INFORMATION.. 20

NO SOLICITATION.. 21

DEFINITIONS. 21

CONFLICTS

 

SUMMARY TERM SHEET

The following are answers to some of the questions that you may have about your right to (i) require the Company to repurchase your Notes, (ii) elect to convert your Notes and/or (iii) retain your Notes, in each case pursuant to the terms and conditions of the Indenture, the Notes and this Notice. The Company urges you to read carefully the remainder of this Notice because the information in this summary is not complete. Section references are included to direct you to a more detailed description of the topics in this summary. Unless stated to the contrary, or unless the context otherwise requires, references to the “Company,” “we,” “our” or “us” in this Notice refer to Alder BioPharmaceuticals, Inc.

Who is obligated to repurchase my Notes?

The Company is offering to repurchase the Notes subject to the terms and conditions of this Notice, the Indenture and the Notes.

Why is the Company offering to repurchase my Notes?

As a result of the Transactions, two Fundamental Changes occurred on October 22, 2019. The Company is offering to repurchase the Notes to satisfy its contractual obligation under Section 12.01 of the First Supplemental Indenture, which requires the Company to offer to repurchase any outstanding Notes for cash following a Fundamental Change at a repurchase price in cash equal to 100% of the principal amount of the Notes being repurchased, plus any accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date.

What Notes are the Company obligated to repurchase?

We are obligated to repurchase all of the Notes, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, validly tendered pursuant to the Fundamental Change Repurchase Right, at the option of the Holder, and not validly withdrawn. As of the date of this Notice, there was $218,634,000 aggregate principal amount of Notes outstanding, which does not include Notes that have been surrendered for conversion and are pending settlement. (See “Information Concerning the Notes”)

How much will the Company pay for my Notes and what is the form of payment?

Pursuant to the terms of the Indenture and the Notes, the Company will pay, in cash, the Fundamental Change Repurchase Price, with respect to any and all Notes validly surrendered through a Fundamental Change Repurchase Notice in accordance with DTC’s applicable procedures and delivered to the Paying Agent, and not validly withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, and which Notes are delivered to the Paying Agent by book-entry transfer on or after delivery of this Notice. The amount of accrued and unpaid interest per $1,000 principal amount of Notes will be calculated based on the number of days that have elapsed since August 1, 2019 (the last interest payment date for the Notes) to, but excluding, the Fundamental Change Repurchase Date, computed on the basis of a 360-day year comprised of twelve 30-day months, and for partial months on the basis of actual days elapsed over a 30-day month. The Company estimates that the accrued and unpaid interest payable on the Notes that are surrendered for repurchase will be approximately $9.10 per $1,000 principal amount of Notes surrendered. (See “Information Concerning the Notes—Fundamental Change Repurchase Price”)

The value that you will receive if you validly exercise the Fundamental Change Repurchase Right is substantially less than the cash and the contingent value of the CVRs that you will receive if you convert your Notes in connection with the Make-Whole Fundamental Changes. (See “—What consideration will I receive if I convert my Notes?”)

How can I determine the market value of the Notes?

There currently is a limited or no established reporting system or trading market for the Notes. To the extent that the Notes are traded, prices of the Notes may fluctuate widely depending on such factors as trading volume, the balance between buy and sell orders, prevailing interest rates, the Parent’s operating results (including the Company’s operating results) and the market for similar securities. (See “Information Concerning the Notes—Market for the Notes”)

Are my Notes currently convertible?

Yes. As previously disclosed in the Notice delivered by the Company to Holders on October 22, 2019, Holders of Notes currently have the right to convert their Notes at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date (the “Conversion Period”); however, in order to receive conversion consideration in respect of the Additional Shares, Holders must deliver the appropriate instruction form pursuant to DTC’s book-entry conversion program to the Conversion Agent before 5:00 p.m., New York City time, on the Business Day immediately prior to the Fundamental Change Repurchase Date. If you do not exercise your Fundamental Change Repurchase Right in accordance with the terms of this Notice, you will retain the conversion rights associated with your Notes under the Indenture. If you deliver a Fundamental Change Repurchase Notice to the Paying Agent, you may not surrender such Notes for conversion unless you have validly withdrawn such Fundamental Change Repurchase Notice. If you surrender your Notes for conversion at any time, you will no longer be able to exercise the Fundamental Change Repurchase Right. For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion. (See “Information Concerning the Notes—Conversion Rights of the Notes”)

What consideration will I receive if I convert my Notes?

Pursuant to the terms of the Indenture, in connection with the Common Stock Change Event that resulted from consummation of the Merger, the Company, the Payor and the Trustee entered into the Second Supplemental Indenture to provide that, from and after the Effective Date, the consideration due upon conversion of each $1,000 principal amount of Notes shall be a number of units of Reference Property equal to the Conversion Rate in effect on the applicable Conversion Date (as may be increased pursuant to Section 11.03 of the First Supplemental Indenture), less any applicable withholding taxes. Prior to the earlier of the occurrence of the Milestone and the CVR Expiration Date, a unit of Reference Property is the Per Share Merger Consideration.  As a result, if you decide to convert your Notes in connection with the Make-Whole Fundamental Changes, you will be entitled to receive (i) $1,064.5272 in cash and (ii) 59.1404 CVRs, which is equal to the Conversion Rate (49.3827) plus the Additional Shares (9.7577), multiplied by the Per Share Merger Consideration.  With respect to all conversions, cash will be paid in lieu of any fractional interest in a CVR included in the consideration received by converting Holders in an amount equal to the fractional interest in such CVR multiplied by $2.00.  For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.

Conversion of Notes will be deemed to be “in connection with” the Make-Whole Fundamental Changes only if the appropriate instruction form is delivered pursuant to DTC’s book-entry conversion program to the Conversion Agent from, and including, the Effective Date up to, and including (but prior to 5:00 p.m., New York City time, on), the Business Day immediately prior to the Fundamental Change Repurchase Date. The value that you will receive if you validly exercise the Fundamental Change Repurchase Right is substantially less than the cash and the contingent value of the CVRs that you will receive if you convert your Notes in connection with the Make-Whole Fundamental Changes.

What is the relationship between the offer to repurchase and the convertibility of the Notes?

The right to exercise the Fundamental Change Repurchase Right is a separate right from the right to convert the Notes. If you exercise your Fundamental Change Repurchase Right by delivering a Fundamental Change Repurchase Notice with respect to your Notes, you will not be able to convert such Notes unless you validly withdraw your Fundamental Change Repurchase Notice. If you do not exercise your Fundamental Change Repurchase Right, your conversion rights will not be affected. If you have exercised your conversion right and converted your Notes, you may not surrender such Notes under the Fundamental Change Repurchase Right. (See “Information Concerning the Notes—Conversion Rights of the Notes”).

Is the Company making any recommendation about the offer to repurchase?

Neither the Company nor Parent or any of their respective affiliates, or any of its or their respective boards of directors, employees, advisors or representatives, or the Trustee, the Paying Agent or the Conversion Agent makes any representation or recommendation as to whether Holders should tender or refrain from tendering Notes for repurchase pursuant to the offer. Each Holder should consult its legal, financial and tax advisors and make its own decision as to whether to tender Notes for repurchase and, if so, the principal amount of Notes to tender.

When does the Fundamental Change Repurchase Right expire?

The Fundamental Change Repurchase Right expires at 5:00 p.m., New York City time, on December 11, 2019, which is the Business Day immediately preceding the Fundamental Change Repurchase Date. We do not have an obligation to extend the period that Holders have to exercise the Fundamental Change Repurchase Right unless required by applicable law. (See “Information Concerning the Notes—The Company’s Obligation to Repurchase the Notes”)

What are the conditions to the repurchase by the Company of the Notes?

The repurchase by the Company of Notes that are validly surrendered pursuant to Section 12.01(b) of the First Supplemental Indenture and not validly withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date is not subject to any condition other than such repurchase being lawful and the satisfaction of the procedural requirements described in this Notice. (See “Information Concerning the Notes—The Company’s Obligation to Repurchase the Notes”)

How do I tender my Notes for repurchase?

To tender your Notes for purchase pursuant to the Fundamental Change Repurchase Right, you must tender the Notes through the applicable procedures of DTC on or before the Expiration Date. If your Notes are held by a broker, dealer, commercial bank, trust company or other nominee, you must contact that nominee if you decide to tender your Notes and instruct that nominee to timely tender the Notes on your behalf through the transmittal procedures of DTC on or before the Expiration Date. If you are a DTC participant, you should tender your Notes electronically through ATOP, subject to the terms and procedures of that system on or before the Expiration Date.

You bear the risk of untimely tender of your Notes. You must allow sufficient time for completion of the necessary DTC procedures before 5:00 p.m., New York City time, on the Expiration Date. By tendering your Notes through the transmittal procedures of DTC, you agree to be bound by the terms of the Fundamental Change Repurchase Right set forth in this Notice. (See “Procedures to be Followed by Holders Electing to Tender Notes for Repurchase”)

If I tender my Notes for repurchase, when will I receive payment for them?

Promptly upon expiration of the Fundamental Change Repurchase Right, we will accept for payment all Notes validly tendered for purchase and not validly withdrawn by the Expiration Date. The Company expects to deposit with the Paying Agent, on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date, an amount of cash in immediately available funds required to pay the Fundamental Change Repurchase Price for all Notes that are to be repurchased as of the Fundamental Change Repurchase Date. The Paying Agent will, on the later of (i) the Fundamental Change Repurchase Date and (ii) the time of book-entry transfer of such Notes to the Paying Agent by the Holder thereof in the manner described in this Notice, promptly make payment of the Fundamental Change Repurchase Price by wire transfer of immediately available funds to DTC, the sole record holder. DTC will thereafter distribute the cash to its participants in accordance with its procedures. (See “Payment for Tendered Notes; Source and Amount of Funds”)

Can I withdraw previously tendered Notes?

Yes. To withdraw Notes previously tendered for purchase, you (or your broker, dealer, commercial bank, trust company or other nominee) must comply with the applicable withdrawal procedures of DTC in sufficient time to allow DTC to withdraw your Notes prior to 5:00 p.m., New York City time, on the Expiration Date.

You bear the risk of untimely withdrawal of previously tendered Notes. You must allow sufficient time for completion of the DTC procedures prior to 5:00 p.m., New York City time, on the Expiration Date. (See “Right of Withdrawal”)

Do I need to do anything if I do not wish to exercise the Fundamental Change Repurchase Right?

No. If you do not tender your Notes before the Expiration Date, the Company will not purchase your Notes and your Notes will remain outstanding subject to their existing terms. If you do not tender your Notes for repurchase your conversion rights will not be affected.

If I choose to tender any of my Notes for repurchase, do I have to tender all of my Notes?

No. You may tender all of your Notes, a portion of your Notes or none of your Notes. If you wish to tender a portion of your Notes, however, you must tender Notes in principal amount of $1,000 or an integral multiple of $1,000 in excess thereof. (See “Procedures to be Followed by Holders Electing to Tender Notes for Repurchase”)

If I do not tender my Notes for repurchase, will I continue to be able to exercise my conversion rights?

Yes. If you do not tender your Notes for repurchase your conversion rights will not be affected. If you want to convert your Notes during the Conversion Period, you must deliver the appropriate instruction form pursuant to DTC’s book-entry conversion program and transfer such Notes to the Conversion Agent, through the transmittal procedures of DTC prior to the end of the Conversion Period. (See “Information Concerning the Notes—Conversion Rights of the Notes”)

What happens if I fail to exercise my right to convert prior to 5:00 p.m., New York City time, on the Business Day immediately prior to the Fundamental Change Repurchase Date?

If you do not provide the appropriate instruction form pursuant to DTC’s book-entry conversion program to the Conversion Agent by prior to 5:00 p.m., New York City time, on the Business Day immediately prior to the Fundamental Change Repurchase Date, you will not be eligible to receive conversion consideration in respect to the Additional Shares. For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.

If I elect to convert my Notes during the Conversion Period, when will I receive payment?

Upon conversion of a Note, with a Conversion Date on or after October 22, 2019, we will pay and deliver the consideration due in respect of the conversion no later than the second Business Day immediately following the date that the Notes were transferred to the Conversion Agent for conversion in accordance with the procedures of DTC. (See “Information Concerning the Notes—Conversion Rights of the Notes”)

If I have already elected to exercise my Fundamental Change Repurchase Right, can I still convert my Notes?

If you have already exercised your Fundamental Change Repurchase Right by delivering a Fundamental Change Repurchase Notice with respect to your Notes, you will not be able to convert such Notes unless you validly withdraw your Fundamental Change Repurchase Notice. You bear the risk for untimely withdrawal of a Fundamental Change Repurchase Notice. Notes properly surrendered for conversion may not be withdrawn. (See “Information Concerning the Notes—Conversion Rights of the Notes”)

What are the material U.S. federal income tax consequences if I tender my Notes for repurchase or exercise my conversion rights?

A Holder’s receipt of cash (and, in the case of conversion, CVRs) in exchange for Notes pursuant to the exercise of either the Fundamental Change Repurchase Right or conversion rights generally will be a taxable transaction for U.S. federal income tax purposes. For a discussion of certain material U.S. federal income tax consequences applicable to holders of Notes upon the exercise of either the Fundamental Change Repurchase Right or conversion rights, see “Certain U.S. Federal Income Tax Considerations.” A holder of Notes should consult its tax advisor with regard to the application of the U.S. federal income tax laws to its particular situation as well as any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or any other U.S. federal tax laws.

Who is the Paying Agent and the Conversion Agent?

U.S. Bank National Association, the Trustee under the Indenture, is serving as Paying Agent and Conversion Agent in connection with the Fundamental Change Repurchase Right and conversion rights. Its address and phone number are set forth on the cover of this Notice.

Whom can I contact if I have questions about the Fundamental Change Repurchase Right or the conversion rights?

Questions and requests for assistance in connection with the mechanics of tender of Notes for repurchase under the Fundamental Change Repurchase Right or the conversion of the Notes may be directed to U.S. Bank National Association, at the address and telephone number set forth in this Notice. You should direct any other questions you may have to your own financial and tax advisors.

Safe Harbor/Forward-Looking Statements

This Notice and the documents incorporated herein by reference contain forward-looking information related to the Parent, the Company and the acquisition of the Company by the Parent that involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements included, or incorporated by reference, in this Notice include, among other things, statements about the potential benefits of the acquisition, the anticipated contingent value right payment, anticipated royalties, earnings dilution and accretion, and growth, the Parent’s and the Company’s plans, objectives, expectations and intentions, the financial condition, results of operations and business of the Parent and the Company, the Company’s product pipeline and portfolio assets, and the Company’s ability to achieve the Milestone that triggers the contingent value right payment. Risks and uncertainties include, among other things, risks related to the ability to realize the anticipated benefits of the acquisition, including the possibility that the expected benefits and accretion from the acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; disruption from the transaction making it more difficult to maintain business and operational relationships; negative effects of the consummation of the acquisition on the market price of the Parent’s common stock, the Parent’s credit ratings and/or the Parent’s operating results; significant transaction costs; unknown liabilities; other business effects, including the effects of industry, market, economic, political or regulatory conditions; future exchange and interest rates; changes in tax and other laws, regulations, rates and policies, including government-mandated price decreases for the Parent’s products; future business combinations or disposals; the uncertainties inherent in research and development, including the ability to meet anticipated clinical endpoints, commencement and/or completion dates for clinical trials, regulatory submission dates, regulatory approval dates and/or launch dates, as well as the possibility of unfavorable new clinical data and further analyses of existing clinical data; the uncertainty that the Milestone for the CVR payment may not be achieved in the prescribed timeframe or at all; the risk that clinical trial data are subject to differing interpretations and assessments by regulatory authorities; whether regulatory authorities will be satisfied with the design of, and results from, the Parent’s and the Company’s clinical studies; whether and when drug applications may be filed in any jurisdictions for any potential indication for any of the Parent’s or the Company’s pipeline assets; whether and when any such applications may be approved by regulatory authorities, which will depend on a myriad of factors, including making a determination as to whether the product’s benefits outweigh its known risks and a determination of the product’s efficacy and, if approved, whether any such products will be commercially successful; decisions by regulatory authorities impacting labeling, manufacturing processes, safety and/or other matters that could affect the availability or commercial potential of any such products; and competitive developments. The Company undertakes no obligation to update these forward-looking statements (whether as a result of new information, future events or otherwise) except to the extent otherwise required by law.

A further description of risks and uncertainties relating to the Company can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and https://www.alderbio.com/.

These forward-looking statements are based on numerous assumptions and assessments made by the Parent and the Company in light of their respective experiences and perceptions of historical trends, current conditions, business strategies, operating environment, future developments and other factors they believe are appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements included, or incorporated by reference, in this Notice could cause the Parent’s plans with respect to the Company, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in the forward-looking statements included, or incorporated by reference, in this Notice are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this Notice are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as at the date of this Notice.

Certain assumptions made by the Parent are required by Danish Securities Law for full disclosure of material corporate information. Some assumptions, including assumptions relating to sales associated with product that is prescribed for unapproved uses, are made considering past performances of other similar drugs for similar disease states or past performance of the same drug in other regions where the product is currently marketed. It is important to note that although physicians may, as part of their freedom to practice medicine in the U.S., prescribe approved drugs for any use they deem appropriate, including unapproved uses, at the Parent, promotion of unapproved uses is strictly prohibited.

IMPORTANT INFORMATION CONCERNING THE FUNDAMENTAL CHANGE REPURCHASE RIGHT AND CONVERSION RIGHTS

INFORMATION CONCERNING THE COMPANY

The Company

The Company is a clinical-stage biopharmaceutical company that discovers, develops and seeks to commercialize therapeutic antibodies with the potential to meaningfully transform the treatment paradigm in migraine. All of the Company’s product candidates were discovered and developed by the Company’s scientists using its proprietary antibody technology platform coupled with a deliberate approach to design and select candidates with properties that the Company believes optimize the therapeutic potential for patients and commercial competitiveness.

The Company is focusing its resources and development efforts principally on eptinezumab (ALD403), the Company’s solely-owned lead investigational product candidate, in order to maximize its therapeutic and commercial potential. On February 21, 2019, the Company submitted a Biologics License Application to the U.S. Food and Drug Administration for eptinezumab for the prevention of migraine.  The submission follows the successful completion of the Company’s pivotal trial program for eptinezumab, consisting of Prevention of Migraine via Intravenous ALD403 Safety and Efficacy 1 (PROMISE 1), a Phase 3 clinical trial evaluating eptinezumab for the prevention of frequent episodic migraine, and Prevention Of Migraine via Intravenous ALD403 Safety and Efficacy 2 (PROMISE 2), a Phase 3 clinical trial evaluating eptinezumab for the prevention of chronic migraine.

The Company was incorporated in Delaware in May 2002 as Alder BioPharmaceuticals, Inc. The Company’s headquarters are located at 11804 North Creek Parkway South, Bothell, Washington 98011, and the telephone number is (425) 205-2900.

The Transactions

On September 23, 2019, pursuant to the Merger Agreement, the Purchaser commenced the Tender Offer for all outstanding shares of Common Stock of the Company at a price of (i) $18.00 in cash per share (which refer to herein as the Closing Amount), without interest and less any applicable withholding taxes, plus (ii) one CVR.  Immediately following consummation of the Tender Offer, the Purchaser was merged with and into the Company, with the Company continuing as the surviving corporation in the Merger and thereby becoming a direct wholly-owned subsidiary of the Payor and an indirect wholly-owned subsidiary of the Parent. In the Merger, each share of Common Stock outstanding immediately prior to the Effective Time (subject to certain exceptions) were automatically cancelled and converted into the right to receive (i) the Closing Amount, without interest and less any applicable withholding taxes, plus (ii) one CVR.  For more information about the terms and conditions of the CVRs you should examine the Schedule TO-T (File No. 005-88142) filed by the Parent on September 23, 2019 (as amended), including the Offer to Purchase attached to the Schedule TO-T as Exhibit (a)(1)(a) (as amended) and the Form of Contingent Value Rights Agreement incorporated by reference to the Schedule TO-T as Exhibit (d)(5).

Following consummation of the Transactions, the Company ceased to be a publicly traded company and became an indirect wholly-owned subsidiary of the Parent. As a result of the Transactions, two Fundamental Changes occurred on October 22, 2019, and accordingly, each Holder has the Fundamental Change Repurchase Right described herein. Each Fundamental Change also constituted a Make-Whole Fundamental Change and the Merger constituted a Common Stock Change Event (as defined in the First Supplemental Indenture) and accordingly, each Holder has the right to convert their Notes as described below under “Information Concerning the Notes—Conversion Rights of the Notes.” For the avoidance of doubt, Holders who choose to convert their Notes will receive the amount of cash and CVRs that a Holder of a number of shares of Common Stock equal to the applicable Conversion Rate immediately prior to the Merger would have owned or been entitled to receive upon the Merger.

INFORMATION CONCERNING THE NOTES

On February 1, 2018, the Company issued $250,000,000 aggregate principal amount of Notes in a registered underwritten public offering. In addition, on February 13, 2018, the Company issued an additional $37,500,000 principal amount of Notes pursuant to the exercise of an over-allotment option granted to the underwriters in the offering.  Cash interest accrues on the Notes at a rate of 2.50% per annum on the principal amount and is payable semi-annually, in arrears, on February 1 and August 1 to the person in whose name a Note is registered at the close of business on the preceding January 15 or July 15. The Notes mature on February 1, 2025. As of the date of this Notice, there was $218,634,000 aggregate principal amount of the Notes outstanding (which does not include Notes that have been surrendered for conversion and are pending settlement), which would result in an aggregate repurchase price of $218,634,000, plus any accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date, if all of the Notes are tendered pursuant to the Fundamental Change Repurchase Right.

The Company’s Obligation to Repurchase the Notes

The consummation of the Transactions resulted in two Fundamental Changes pursuant to the terms of the Notes and the Indenture. As a result, each Holder of the Notes has the right, at the Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion of the principal amount thereof that is equal to $1,000, or an integral multiple of $1,000 in excess thereof, on the Fundamental Change Repurchase Date. This Fundamental Change Repurchase Right will expire on the Expiration Date. We do not have an obligation to extend the period that Holders have to exercise the Fundamental Change Repurchase Right unless required by applicable law. Holders may exercise their Fundamental Change Repurchase Right by (i) delivering notice in accordance with DTC’s applicable procedures to U.S. Bank National Association, as Paying Agent, at any time prior to 5:00 p.m., New York City time, on the Expiration Date and (ii) by delivering the Notes described in the Fundamental Change Repurchase Notice to the Paying Agent through book-entry transfer on or after the date of delivery of the Fundamental Change Repurchase Notice. See “Procedures to be Followed by Holders Electing to Tender Notes for Repurchase” for further information on how to deliver a Fundamental Change Repurchase Notice and surrender your Notes for repurchase. If we make any change to this Fundamental Change Repurchase Right that we determine constitutes a material change, we will promptly disclose the change in a supplement to this Notice that we will distribute, or direct to be distributed, to registered Holders, and we will make a public announcement of such change promptly by means of a press release. We may be required to extend the Fundamental Change Repurchase Date for a period of up to five to ten business days, depending on the significance of the change, if the Fundamental Change Repurchase Right would otherwise expire during such five to ten business day period. If we are required to extend the Fundamental Change Repurchase Date, we will make a public announcement of such extension promptly by means of a press release. The repurchase by the Company of validly surrendered Notes is not subject to any condition other than such repurchase being lawful and the procedural requirements described in this Notice.

Fundamental Change Repurchase Price

Pursuant to the terms of the Indenture and the Notes, the repurchase price to be paid by the Company for the Notes is a cash price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date. The Fundamental Change Repurchase Price for any Notes that are validly surrendered and not validly withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will be paid by the Paying Agent, on the Fundamental Change Repurchase Date. Notes validly surrendered for repurchase will be accepted only in principal amounts of $1,000 or an integral multiple of $1,000 in excess thereof.

Holders who validly surrender and do not validly withdraw their Notes in connection with the Fundamental Change Repurchase Right will be entitled to receive any accrued and unpaid interest payable on their Notes accrued up to, but excluding, the Fundamental Change Repurchase Date. The amount of accrued and unpaid interest per $1,000 principal amount of Notes will be calculated based on the number of days that have elapsed since August 1, 2019 (the last interest payment date for the Notes) up to, but excluding, the Fundamental Change Repurchase Date, computed on the basis of a 360-day year comprised of twelve 30-day months, and for partial months on the basis of actual days elapsed over a 30-day month. The Company estimates that the accrued and unpaid interest payable on the Notes that are validly surrendered for repurchase will be approximately $9.10 per $1,000 principal amount of Notes surrendered.

The Fundamental Change Repurchase Price is based solely on the requirements of the Indenture and the Notes and bears no relationship to the market price of the Notes or the shares of Common Stock. Thus, the Fundamental Change Repurchase Price may be significantly higher or lower than the market price of the Notes on the Fundamental Change Repurchase Date. The value that you will receive if you validly exercise the Fundamental Change Repurchase Right is substantially less than the cash and the contingent value of the CVRs that you will receive if you convert your Notes in connection with the Make-Whole Fundamental Changes.

You should review this Notice carefully and consult with your own financial and tax advisors. You must make your own decision as to whether or not to surrender your Notes for repurchase or to exercise your conversion rights and, if you choose to exercise either of these rights, the amount of Notes to surrender or convert. Neither the Company nor Parent or any of their respective affiliates, or any of its or their respective boards of directors, employees, advisors or representatives, or U.S. Bank National Association, in its role as the Trustee, the Paying Agent and the Conversion Agent, is making any representation or recommendation to any Holder as to whether or not to surrender or convert that Holder’s Notes.

Conversion Rights of the Notes

The Notes are convertible, at the option of the Holder, at any time prior to 5:00 p.m., New York City time, on the Fundamental Change Repurchase Date. Pursuant to the terms of the Indenture, in connection with the consummation of the Merger, the Company, the Payor and the Trustee entered into the Second Supplemental Indenture to provide that, from and after the Effective Date, the consideration due upon conversion of each $1,000 principal amount of Notes shall be a number of units of Reference Property equal to the Conversion Rate in effect on the applicable Conversion Date (as may be increased pursuant to Section 11.03 of the First Supplemental Indenture), less any applicable withholding taxes.  Prior to the earlier of the occurrence of the Milestone and the CVR Expiration Date, a unit of Reference Property is comprised of the Per Share Merger Consideration.  As a result, if you decide to convert your Notes in connection with the Make-Whole Fundamental Changes, you will be entitled to receive (i) $1,064.5272 in cash and (ii) 59.1404 CVRs, which is equal to the Conversion Rate (49.3827) plus the Additional Shares (9.7577), multiplied by the Per Share Merger Consideration.  With respect to all conversions, cash will be paid in lieu of any fractional interest in a CVR included in the consideration received by converting Holders in an amount equal to the fractional interest in such CVR multiplied by $2.00.  For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.

Conversion of Notes will be deemed to be “in connection with” the Make-Whole Fundamental Changes only if the appropriate instruction form is delivered pursuant to DTC’s book-entry conversion program to the Conversion Agent from, and including, the Effective Date up to, and including (but prior to 5:00 p.m., New York City time, on), the Business Day immediately prior to the Fundamental Change Repurchase Date.  If the exercise of your conversion right is not made in connection with the Make-Whole Fundamental Changes, you will not receive conversion consideration in respect of the Additional Shares.

Upon the conversion of any Notes, a Holder will not receive any separate cash payment for accrued and unpaid interest, and the Company’s settlement of the conversion obligations described above will be deemed to satisfy in full its obligation to pay the principal amount of the Notes and any accrued and unpaid interest thereon to, but excluding, the relevant Conversion Date. As a result, any accrued and unpaid interest up to, but excluding, the Conversion Date will be deemed to be paid in full rather than cancelled, extinguished or forfeited upon conversion of any Notes.

If you want to convert your Notes, you must provide the appropriate instruction form to U.S. Bank National Association, as the Conversion Agent, through the transmittal procedures of DTC, from, and including, the Effective Date up to, and including (but prior to 5:00 p.m., New York City time, on), the Business Day immediately prior to the Fundamental Change Repurchase Date, in order to convert your Notes and receive conversion consideration in respect of the Additional Shares. For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.

Holders whose Notes are held by a broker, dealer, commercial bank, trust company or other nominee must contact such nominee if such Holder desires to exercise its conversion right and instruct such nominee to deliver the appropriate instruction form to the Conversion Agent through the transmittal procedures of DTC, from, and including, the Effective Date up to, and including (but prior to 5:00 p.m., New York City time, on), the Business Day immediately prior to the Fundamental Change Repurchase Date, in order to convert their Notes and receive conversion consideration in respect of the Additional Shares. For the avoidance of doubt, Holders who choose to convert their Notes will receive only cash and CVRs and will not receive any shares of Common Stock upon conversion.

Timely delivery of the appropriate instruction form and the Notes in compliance with the transmittal procedures of DTC is the responsibility of the surrendering Holder.

The Conversion Date with respect to each Holder electing to convert their Notes will be the date on which such Holder has satisfied all of the foregoing requirements. For Holders whose Conversion Date is on or after October 22, 2019, the Company will pay the consideration due in respect of the conversion no later than the second Business Day immediately following the relevant Conversion Date.

If you exercise your Fundamental Change Repurchase Right by delivering a Fundamental Change Repurchase Notice with respect to your Notes, you will not be able to convert such Notes unless you validly withdraw your Fundamental Change Repurchase Notice. Holders bear the risk for untimely withdrawal of a Fundamental Change Repurchase Notice.

Any Notes that are properly surrendered for conversion may not be withdrawn. Holders that do not tender their Notes for repurchase pursuant to the Fundamental Change Repurchase Right may surrender their Notes for conversion into cash at any time prior to the end of the Conversion Period as described herein or as otherwise provided in the Indenture.

Please refer to the Indenture for a more complete description of the conversion rights of the Notes and the impact to the Conversion Rate due to a Make-Whole Fundamental Change.

The right of Holders to convert their Notes is separate from the Fundamental Change Repurchase Right. If you exercise your Fundamental Change Repurchase Right by delivering a Fundamental Change Repurchase Notice with respect to your Notes, you will not be able to convert such Notes unless you validly withdraw your Fundamental Change Repurchase Notice. The value that you will receive if you validly exercise the Fundamental Change Repurchase Right is substantially less than the cash and the contingent value of the CVRs that you will receive if you convert your Notes in connection with the Make-Whole Fundamental Changes.

You should review this Notice carefully and consult with your own financial and tax advisors. You must make your own decision as to whether or not to surrender your Notes for repurchase or to exercise your conversion rights and, if you choose to exercise either of these rights, the amount of Notes to surrender or convert. Neither the Company nor Parent or any of their respective affiliates, or any of its or their respective boards of directors, employees, advisors or representatives, or U.S. Bank National Association, in its role as the Trustee, the Paying Agent and the Conversion Agent, is making any representation or recommendation to any Holder as to whether or not to surrender or convert that Holder’s Notes.

Market for the Notes

There currently is a limited or no established reporting system or trading market for the Notes. To the extent that the Notes are traded, prices of the Notes may fluctuate widely depending on such factors as trading volume, the balance between buy and sell orders, prevailing interest rates, the Parent’s operating results (including the Company’s operating results) and the market for similar securities. A debt security with a smaller outstanding principal amount available for trading (a smaller “float”) may command a lower price and trade with greater volatility than would a comparable debt security with a larger float. Consequently, our purchase of the Notes, if any, pursuant to the Fundamental Change Repurchase Right and any conversions of the Notes will reduce the float and may negatively affect the liquidity, market value and price volatility of the Notes that remain outstanding following the offer to repurchase and end of the Conversion Period. The Company cannot assure you that a market will exist for the Notes following the Transactions.

We urge you to obtain current market information for the Notes, to the extent available, before making any decision whether to exercise or refrain from exercising the Fundamental Change Repurchase Right.

Ranking

The Notes are the Company’s general, senior unsecured obligations and rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not subordinated; effectively subordinated in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

PROCEDURES TO BE FOLLOWED BY HOLDERS ELECTING TO
TENDER NOTES FOR REPURCHASE

You will not be entitled to receive the Fundamental Change Repurchase Price for your Notes unless you validly tender (and do not withdraw) your Notes on or before the Expiration Date. Only registered Holders are authorized to tender their Notes for repurchase. You may tender some or all of your Notes; provided that Notes will be accepted for purchase only in principal amounts equal to $1,000 or an integral multiple of $1,000 in excess thereof.

If you do not validly tender your Notes on or before 5:00 p.m., New York City time, on the Expiration Date or if you withdraw validly tendered Notes before 5:00 p.m., New York City time, on the Expiration Date, your Notes will not be purchased and will remain outstanding subject to the existing terms of the Notes and the Indenture.

If you exercise your Fundamental Change Repurchase Right by delivering a Fundamental Change Repurchase Notice with respect to your Notes, you will not be able to convert such Notes unless you validly withdraw your Fundamental Change Repurchase Notice.

Method of Delivery

The Trustee has informed us that, as of the date of this Notice, all custodians and beneficial holders of the Notes hold the Notes through accounts with DTC and that there are no certificated Notes in non-global form.  Accordingly, all Notes tendered for repurchase hereunder must be delivered through ATOP, subject to the terms and conditions of that system. This Notice constitutes the Fundamental Change Company Notice described in Section 12.01(c) of the Indenture and delivery of the Notes through ATOP will satisfy the Holders’ requirement to exercise the Fundamental Change Repurchase Right. Delivery of the Notes, including delivery and acceptance through ATOP, is at the election and risk of the Holder tendering such Notes.

Agreement to be Bound by the Terms of the Fundamental Change Repurchase Right

By tendering, or instructing your broker, dealer, commercial bank, trust company or other nominee to tender Notes through the transmittal procedures of DTC, a Holder acknowledges and agrees as follows:

  • such Notes shall be repurchased by the Company as of the Fundamental Change Repurchase Date pursuant to the terms and conditions set forth in the Notes, the Indenture and this Notice;
  • such Holder agrees to all of the terms of this Notice;
  • such Holder received this Notice and acknowledges that this Notice provides the notice required pursuant to the Indenture;
  • upon the terms and subject to the conditions set forth in this Notice, the Indenture and the Notes, and effective upon the Fundamental Change Repurchase Date, such Holder (i) irrevocably sells, assigns, and transfers to the Company, all right, title, and interest in and to all the Notes tendered, (ii) waives any and all rights with respect to the Notes (including, without limitation, any existing or past defaults and their consequences), (iii) releases and discharges the Company and U.S. Bank National Association, in its role as the Trustee, the Paying Agent and the Conversion Agent, and their respective directors, officers, employees, affiliates and subsidiaries from any and all claims such Holder may have now, or may have in the future arising out of, or related to, such Notes, including, without limitation, any claims that such Holder is entitled to receive additional principal or interest payments with respect to the Notes or to participate in any conversion, purchase or defeasance of the Notes and (iv) irrevocably constitutes and appoints the Paying Agent as the true and lawful agent and attorney-in-fact of such Holder with respect to any such Notes (with full knowledge that the Paying Agent also acts as agent of the Company), with full power of substitution and resubstitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) transfer ownership of such Notes, on the account books maintained by DTC, together, in any such case, with all accompanying evidences of transfer and authenticity, to the Company, (b) present such Notes for transfer on the relevant security register and (c) receive all benefits or otherwise exercise all rights of beneficial ownership of such Notes (except that the Paying Agent will have no rights to, or control over, funds from the Company, except as agent for the Company, for the Fundamental Change Repurchase Price of any tendered Notes that are repurchased by the Company), all in accordance with the terms set forth in the Indenture, the Notes and this Notice;
  • such Holder represents and warrants that such Holder (i) owns the Notes tendered and is entitled to surrender such Notes and (ii) has full power and authority to surrender, sell, assign and transfer the Notes tendered hereby, and that when such Notes are accepted for repurchase and payment by the Company, the Company will acquired good title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right;
  • such Holder agrees to indemnify and hold harmless U.S. Bank National Association, its successors and assigns, from and against all costs, expenses and liabilities of any nature in the event the undersigned is not the beneficial owner of the Notes surrendered, as represented above;
  • such Holder agrees, upon request from the Company, to execute and deliver any additional documents deemed by the Paying Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer of the Notes tendered;
  • such Holder understands that the Company’s acceptance of the Notes for payment pursuant to the procedures described in this Notice will constitute a binding agreement under the law of the State of New York between such Holder and the Company enforceable in accordance with the terms and subject to the conditions of the Fundamental Change Repurchase Right;
  • such Holder understands that all Notes validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date will be repurchased at the Fundamental Change Repurchase Price, in cash, pursuant to the terms and conditions of the Indenture, the Notes, this Notice and any related notice materials, as amended and supplemented from time to time;
  • payment for Notes repurchased pursuant to this Notice will be made by deposit of the Fundamental Change Repurchase Price for such Notes with the Paying Agent, which will act as agent for surrendering Holders for the purpose of receiving payments from the Company and transmitting such payments to such Holders;
  • any tenders of Notes may only by withdrawn through DTC in accordance with the withdrawal procedures of DTC in sufficient time to allow DTC to withdraw such tendered Notes prior to 5:00 p.m., New York City time, on the Expiration Date;
  • all authority conferred or agreed to be conferred pursuant to the terms of the Fundamental Change Repurchase Right hereby shall survive the death or incapacity of the Holder and every obligation of the Holder shall be binding upon the Holder’s heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives;
  • the delivery and tender of the Notes is not effective, and the risk of loss of the Notes does not pass to the Paying Agent, until receipt by the Paying Agent of any and all evidences of authority and any other required documents in form satisfactory to the Company; and
  • all questions as to the validity, form, eligibility (including time of receipt) and delivery or acceptance of any Fundamental Change Repurchase Notice or the surrender of Notes for repurchase and the form and validity or any related documents (including time of receipt of notices of withdrawal) will be determined by the Company, whose determination shall be final and binding absent manifest error and subject to applicable law.

DELIVERY OF NOTES BY HOLDERS ELECTING
TO TENDER NOTES FOR REPURCHASE

Notes held Through a Custodian. If your Notes are held by a broker, dealer, commercial bank, trust company or other nominee, you must contact such nominee if you desire to tender your Notes for purchase on your behalf through the transmittal procedures of DTC as set forth below in “—Notes in Global Form” prior to 5:00 p.m., New York City time, on the Expiration Date.

Notes in Global Form. If you are a DTC participant, you may elect to tender your beneficial interest in the Notes to the Company by:

    • delivering to the Paying Agent’s account at DTC through DTC’s book-entry system your beneficial interest in the Notes prior to 5:00 p.m., New York City time, on the Expiration Date; and
    • electronically transmitting your acceptance through ATOP, subject to the terms and conditions of that system, prior to 5:00 p.m., New York City time, on the Expiration Date. Upon receipt of your acceptance through ATOP, DTC will edit and verify the acceptance and send an agent’s message to the Paying Agent for its acceptance. The term “agent’s message” means a message transmitted by DTC to, and received by, the Paying Agent, which states that DTC has received an express acknowledgment from the DTC participant described in that agent’s message, stating the principal amount of Notes that have been tendered by such participant pursuant to the offer to repurchase and that such participant has received and agrees to be bound by the terms of the offer to repurchase, including those set forth under “Procedures to be Followed by Holders Electing to Tender Notes for Repurchase—Agreement to be Bound by the Terms of the Fundamental Change Repurchase Right.”

In tendering through ATOP, the electronic instructions sent to DTC by you (or by your broker, dealer, commercial bank, trust company or other nominee), and transmitted by DTC to the Paying Agent, will acknowledge, on behalf of DTC and you, receipt by you of, and agreement to be bound by, the terms of the Fundamental Change Repurchase Right, including those set forth under “Procedures to be Followed by Holders Electing to Tender Notes for Repurchase—Agreement to be Bound by the Terms of the Fundamental Change Repurchase Right.”

You bear the risk of untimely tender of your Notes. You must allow sufficient time for completion of the necessary DTC procedures prior to 5:00 p.m., New York City time, on the Expiration Date.

If the Paying Agent holds, in accordance with the terms of the Indenture, on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date, cash in immediately available funds sufficient to pay the Fundamental Change Repurchase Price for each validly tendered Note or portion of a Note that is to be repurchased on as of the Fundamental Change Repurchase Date, then as of the Fundamental Change Repurchase Date, such Notes shall cease to be outstanding and interest on such Notes shall cease to accrue.

RIGHT OF WITHDRAWAL

Notes tendered for purchase may be withdrawn at any time in sufficient time to allow DTC to withdraw those Notes prior to 5:00 p.m., New York City time, on the Expiration Date. In order to withdraw Notes, you (or your broker, dealer, commercial bank, trust company, or other nominee) must comply with the withdrawal procedures of DTC. This means you must deliver, or cause to be delivered, a valid withdrawal request through ATOP from the tendering DTC participant in sufficient time to allow DTC to withdraw those Notes before 5:00 p.m., New York City time, on the Expiration Date. The withdrawal notice must:

  • specify the DTC voluntary offer instruction number, the name of the participant for whose account such Notes were tendered and such participant’s account number at DTC to be credited with the withdrawn Notes;
  • contain a description of the Notes to be withdrawn (including the principal amount to be withdrawn); and
  • be submitted through ATOP by such participant under the same name as the participant’s name is listed in the original tender, or be accompanied by evidence satisfactory to the Company that the person withdrawing the tender has succeeded to the beneficial ownership of the Notes.

The Company will determine all questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal.

You bear the risk of untimely withdrawal of your Notes. You must allow sufficient time for completion of the necessary DTC procedures prior to 5:00 p.m., New York City time, on the Expiration Date.

PAYMENT FOR TENDERED NOTES; SOURCE AND AMOUNT OF FUNDS

The Company will, on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date, deposit with the Paying Agent an amount of cash in immediately available funds sufficient to pay the Fundamental Change Repurchase Price for each validly tendered Note or portion of a Note that is to be repurchased as of the Fundamental Change Repurchase Date. The Paying Agent will, on the later of (i) the Fundamental Change Repurchase Date and (ii) the time of book-entry transfer of such Notes to the Paying Agent by the Holder thereof in the manner described in this Notice, make payment of the Fundamental Change Repurchase Price by wire transfer of immediately available funds to DTC. DTC will thereafter distribute the cash to its participants in accordance with its procedures.

The total amount of funds required by us to repurchase all of the Notes pursuant to the Fundamental Change Repurchase Right (assuming all outstanding Notes not already surrendered for conversion as of the date of this Notice are validly tendered for repurchase and accepted for payment) is approximately $220.6 million (including accrued but unpaid interest). If any Notes are validly tendered and accepted for payment, the Company expects to fund the repurchase with available cash on hand and/or funds received from affiliates.

NOTES ACQUIRED

Any Notes repurchased by us pursuant to the offer to repurchase will be cancelled by the Trustee, pursuant to the terms of the Indenture.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

This discussion of certain U.S. federal income tax consequences of the Fundamental Change Repurchase Right and conversion rights is limited to the U.S. federal income tax issues addressed herein. Additional issues may exist that are not addressed in this discussion and that could affect the U.S. federal income tax treatment of the matters addressed herein. Holders are urged to seek advice based on their particular circumstances from a tax advisor.

The following discussion describes certain U.S. federal income tax consequences of the Fundamental Change Repurchase Right to certain Holders of the Notes and their conversion rights. This discussion applies only to the Notes held as capital assets and does not describe all of the tax consequences that may be relevant to Holders in light of their particular circumstances, including alternative minimum tax consequences, the potential application of the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), known as the Medicare contribution tax, and tax consequences applicable to Holders subject to special rules, such as:

  • certain financial institutions, including banks;
  • tax-exempt organizations (including private foundations) and governmental organizations;
  • insurance companies;
  • dealers in securities or foreign currencies;
  • dealers or traders using a mark-to-market method of tax accounting for the Notes;
  • persons holding the Notes as part of a hedge or other integrated investment, constructive sale, conversion transaction or straddle;
  • individual retirement and other tax-deferred accounts;
  • regulated investment companies;
  • real estate investment trusts;
  • persons who actually or constructively own more than 10% of our stock by vote or value;
  • persons subject to the base erosion and anti-abuse tax;
  • Holders who are members of an “expanded group” or “modified expanded group” with the Company within the meaning of U.S. Treasury regulations under Code Section 385;
  • U.S. expatriates or entities covered by the anti-inversion rules under the Code;
  • “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;
  • U.S. Holders (as defined herein) whose functional currency is not the U.S. dollar; or
  • S Corporations, partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes (and investors therein).

On December 22, 2017, Public Law Number 115-97, known as the Tax Cuts and Jobs Act (the “TCJA”), was enacted. The TCJA significantly amends the Code and includes, among other things, a provision that will require certain accrual basis taxpayers to report income with respect to the Notes no later than when such income is reported on an “applicable financial statement.” The discussion below does not address this requirement, and Holders that may be affected are urged to consult their own tax advisors concerning the particular U.S. federal income tax consequences to them.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds the Notes, the U.S. federal income tax treatment of a partner will generally depend upon the status of the partner and the activities of the partner and the partnership. Partners of partnerships holding the Notes are urged to consult their tax advisors as to their particular U.S. federal income tax consequences of holding and disposing of the Notes.

No ruling has been or will be sought from the Internal Revenue Service (the “IRS”) regarding any tax consequences relating to the matters discussed herein. Consequently, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to any of those summarized below.

This summary is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, changes to any of which subsequent to the date of this Notice may affect the tax consequences described herein, possibly on a retroactive basis. Holders should consult their own tax advisors with regard to the application of the U.S. federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or any other U.S. federal tax laws, such as estate and gift tax laws or the Medicare contribution tax on certain investment income.

Tax Consequences to Tendering U.S. Holders

As used in this section, the term “U.S. Holder” means a beneficial owner of a Note that is:

  • an individual who is a citizen or resident of the United States as determined for U.S. federal income tax purposes;
  • a corporation (or an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
  • an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
  • a trust, if it (i) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

Sale of Notes Pursuant to Exercise of the Fundamental Change Repurchase Right or Exercise of Conversion Rights

Upon the Company’s repurchase of a Note pursuant to a U.S. Holder’s exercise of its Fundamental Change Repurchase Right or exercise of its conversion rights, a U.S. Holder will recognize taxable gain or loss equal to the difference between the amount realized on the sale (other than any portion attributable to accrued and unpaid interest to the extent that such interest has not been previously included in income) and the U.S. Holder’s adjusted tax basis in the Note.  A U.S. Holder’s adjusted tax basis generally will be the original cost of the Note to the U.S. Holder, increased by any market discount previously included in the U.S. Holder’s gross income and decreased (but not below zero) by any amortizable bond premium which the U.S. Holder has previously amortized. Amortizable bond premium generally is the excess of a U.S. Holder’s adjusted tax basis in the Note immediately after its acquisition over the principal amount of the Note.

Subject to the application of the market discount rules discussed below, any gain or loss upon the Company’s repurchase of a Note pursuant to a U.S. Holder’s exercise of its Fundamental Change Repurchase Right or exercise of its conversion rights will be capital gain or loss and will be long-term capital gain or loss if the U.S. Holder held the Note for more than one year at the time of the repurchase. Long-term capital gains of non-corporate U.S. Holders are generally eligible for reduced rates of taxation. The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations. The cash received attributable to accrued interest will be treated as a payment of interest. Accordingly, to the extent that such accrued interest has not yet been included in a U.S. Holder’s income, the cash received will be taxable as ordinary income.

If a U.S. Holder acquired a Note at a “market discount” (i.e., at a price that is below the stated principal amount of the Note by more than a de minimis amount), any gain recognized by the U.S. Holder upon the repurchase of the Note pursuant to the U.S. Holder’s exercise of its Fundamental Change Repurchase Right or exercise of its conversion rights would be treated as ordinary income to the extent of any accrued market discount that the U.S. Holder had not previously included in income as ordinary income. Market discount will be considered to accrue ratably during the period from the date of the U.S. Holder’s acquisition of the Note to the maturity date of the Note, unless the U.S. Holder makes an election to accrue market discount on a constant yield basis. If a U.S. Holder has elected to include accrued market discount in income as it accrued (and has so included such accrued market discount), no additional market discount needs to be taken into account with respect to the sale of a Note pursuant to the exercise of the Fundamental Change Repurchase Right or exercise of conversion rights. U.S. Holders are urged to consult their own tax advisors as to the portion of their gain, if any, that would be taxable as ordinary income under the market discount rules.

Backup Withholding and Information Reporting

Information returns will be filed with the IRS in connection with payments made with respect to a U.S. Holder’s exercise of its Fundamental Change Repurchase Right or exercise of its conversion rights (including any amounts attributable to accrued but unpaid interest). A U.S. Holder will be subject to U.S. backup withholding, and potential penalties, on such payments if the U.S. Holder fails to timely provide its correct taxpayer identification number and comply with certain certification procedures or otherwise establish an exemption from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide a properly completed IRS Form W-9. The amount of any backup withholding deducted from a payment to a U.S. Holder may be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Tax Consequences to Tendering Non-U.S. Holders

As used in this section, the term “Non-U.S. Holder” means a beneficial owner of a Note that is not a U.S. Holder or a partnership or other entity treated as a partnership or pass-through entity for U.S. federal income tax purposes.

Special rules may apply to certain Non-U.S. Holders such as controlled foreign corporations, passive foreign investment companies, corporations that accumulate earnings to avoid U.S. federal income tax, expatriated entities subject to Section 7874 of the Code, and, in certain circumstances, individuals who are U.S. expatriates.

Consequently, Non-U.S. Holders should consult their own tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances. This discussion does not describe the U.S. federal income tax consequences to Non-U.S. Holders who are individuals present in the United States for 183 days or more in the taxable year of disposition of the Notes, who will generally be subject to special rules and are urged to consult their tax advisors regarding the U.S. federal income tax consequences applicable to their particular situation.

Sale of Notes Pursuant to Exercise of the Fundamental Change Repurchase Right or Exercise of Conversion Rights

Payments to any Non-U.S. Holder in exchange for the Notes surrendered upon exercise of the Non-U.S. Holder’s Fundamental Change Repurchase Right or exercise of conversion rights generally will not be subject to U.S. federal income or withholding tax provided that (i) the Non-U.S. Holder certifies on IRS Form W-8BEN (or other applicable IRS Form W-8), under penalties of perjury, that it is not a U.S. person, and (ii) such payments are not effectively connected with the conduct of a trade or business in the United States, as discussed below.

Effectively Connected Income

If a Non-U.S. Holder of a Note is engaged in a trade or business in the United States, and if income or gain on the Note is effectively connected with the conduct of that trade or business, the Non-U.S. Holder will generally be taxed in the same manner as a U.S. Holder (see “—Tax Consequences to Tendering U.S. Holders” above), subject to an applicable income tax treaty providing otherwise, except that the Non-U.S. Holder will be required to provide a properly executed IRS Form W-8ECI (or appropriate substitute form) in order to receive payments attributable to accrued and unpaid interest free of withholding. These Non-U.S. Holders should consult their own tax advisors with respect to other U.S. tax consequences of the disposition of the Notes pursuant to the exercise of the Fundamental Change Repurchase Right or exercise of conversion rights including, with respect to a foreign corporation that is a Non-U.S. Holder, the possible imposition of a branch profits tax on its effectively connected earnings and profits at a rate of 30% (or lower treaty rate).

Backup Withholding and Information Reporting

Unless a Non-U.S. Holder complies with certification procedures to establish that it is not a U.S. person, the Non-U.S. Holder may be subject to U.S. backup withholding and related information reporting on any payments received in exchange for the Notes (including any amounts attributable to accrued but unpaid interest). Copies of information returns may also be made available under the provisions of a specific treaty or other agreement to tax authorities of the country in which a Non-U.S. Holder resides. Compliance with the certification procedures required to claim the exemption from withholding tax referred to above will satisfy the certification requirements necessary to avoid backup withholding as well. The amount of any backup withholding from a payment to a Non-U.S. Holder may be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability and may entitle the Non-U.S. Holder to a refund, provided that the required information is timely and properly furnished to the IRS.

FATCA

Pursuant to Sections 1471 through 1474 of the Code and the Treasury regulations, promulgated thereunder, the IRS published guidance and agreements between the United States and foreign governments commonly referred to as intergovernmental agreements and subject to further guidance (collectively, “FATCA”), U.S. federal withholding tax at the rate of 30% may apply to payments of interest on the Notes made by non-U.S. financial institutions and certain other non-U.S. nonfinancial entities unless they enter into an agreement with the IRS whereby they commit to satisfying certain due diligence and information reporting requirements. An intergovernmental agreement between the United States and the non-U.S. Holder’s jurisdiction may modify these requirements.

Treatment of Non-Tendering and Non-Converting Holders

The U.S. federal income tax treatment to a non-tendering or non-converting Holder of the Notes is not entirely clear, and depends on whether the effectiveness of the Second Supplemental Indenture constitutes a “modification” of the Notes that is “significant” for U.S. federal income tax purposes. 

A “modification” of the terms of a debt instrument, which for this purpose would include the effectiveness the Second Supplemental Indenture, may result in a deemed exchange of the original debt instrument for a new debt instrument for U.S. federal income tax purposes in which gain or loss may be recognized by U.S. Holders if the modification is “significant.” Subject to provisions applicable under certain categories of modifications, a modification is “significant" under the applicable Treasury Regulations if, based on all facts and circumstances, the legal rights or obligations that are altered and the degree to which they are altered are “economically significant.” The applicable Treasury Regulations also provide that a change in the yield of a debt instrument is a significant modification if the annual yield of the modified instrument varies from the annual yield on the unmodified instrument (determined as of the date of the modification) by more than the greater of 25 basis points or five percent of the annual yield of the unmodified instrument.

If the effectiveness of the Second Supplemental Indenture does not constitute a significant modification with respect to a Note, Holders should not realize any gain or loss from a deemed exchange of the Notes and should continue to have the same adjusted tax basis, holding period and accrued market discount (if any) with respect to the applicable Holder’s Notes as the applicable Holder had immediately prior to the effectiveness of the Second Supplemental Indenture.  If the effectiveness of the Second Supplemental Indenture does constitute a significant modification with respect to a Note, the applicable Note should be treated as exchanged for a “new” Note for U.S. federal income tax purposes, as described above. Such exchange may qualify as a “recapitalization” for U.S. federal income tax purposes if both the unmodified “old” Note and the modified “new” Note are “securities” for U.S. federal income tax purposes. Whether a deemed exchange of debt instruments qualifies as an exchange of securities depends on, among other things, all the facts and circumstances, including the term to maturity of the debt instruments. In this regard, debt instruments with a term of ten years or more generally qualify as securities, whereas debt instruments with a term of less than five years generally do not qualify as securities. Whether a debt instrument with a term of maturity between five and ten years qualifies as a security is unclear. A deemed exchange qualifying as a recapitalization generally should not result in the recognition of gain or loss to Holders who do not exercise their Fundamental Change Repurchase Right or their conversion rights.  A deemed exchange that does not qualify as a recapitalization generally should result in the realization (and potential recognition) of gain or loss.

We urge you to consult your own tax advisor regarding the risk that the effectiveness of the Second Supplemental Indenture constitutes a significant modification for U.S. federal income tax purposes and the consequences to you if it does.

THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND DOES NOT DISCUSS ALL ASPECTS OF U.S. FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO PARTICULAR HOLDERS OF NOTES IN LIGHT OF THEIR CIRCUMSTANCES. HOLDERS OF NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE EXERCISE OF THEIR FUNDAMENTAL CHANGE REPURCHASE RIGHT OR CONVERSION RIGHTS, INCLUDING THE EFFECT OF ANY FEDERAL STATE, NON-U.S. OR OTHER TAX LAWS.

ADDITIONAL INFORMATION

In accordance with its obligations under the Exchange Act, the Company has filed annual, quarterly and current reports and proxy statements and other information with the Securities and Exchange Commission (the “SEC”). You may read and copy any document that we file with the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can also request copies of the documents, upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information. Our SEC filings are also available on the SEC’s website at www.sec.gov.

After the consummation of the Merger, the Company’s shares of Common Stock ceased trading on The Nasdaq Global Market. The Company intends to file a Form 15 with the SEC on or around November 1, 2019 to terminate the registration of the Common Stock under the Exchange Act and immediately suspend its reporting obligations under Sections 13 and 15(d) of the Exchange Act.

The Company is incorporating by reference in this Notice some of the information that it files with the SEC, which means that the Company may disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this Notice. The Company incorporates by reference the documents listed below:

      • the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 25, 2019;
      • the information specifically incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 from its Definitive Proxy Statement on Schedule 14A for the Company’s 2019 Annual Meeting of Stockholders, filed with the SEC on April 30, 2019;
      • the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, filed with the SEC on May 2, 2019;
      • the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, filed with the SEC on August 6, 2019;
      • the Company’s Current Reports on Form 8-K filed with the SEC on January 4, 2019, January 17, 2019, February 8, 2019, March 1, 2019, March 5, 2019, March 28, 2019, March 28, 2019, April 12, 2019, May 2, 2019, May 24, 2019, September 16, 2019 and October 22, 2019; and
      • the Base Indenture and First Supplemental Indenture, each between the Company and the Trustee, filed as Exhibits 4.1 and 4.2, respectively, to the Company’s Current Report on Form 8-K, filed with the SEC on February 1, 2018.

For more information about the Transactions, including the terms and conditions of the CVRs, you should examine the Schedule TO-T (File No. 005-88142) filed by the Parent on September 23, 2019, and the Offer to Purchase attached to the Schedule TO-T as Exhibit (a)(1)(a), each as amended. The Merger Agreement is incorporated by reference to the Schedule TO-T as Exhibit (d)(1) and a Form of Contingent Value Rights Agreement is incorporated by reference to the Schedule TO-T as Exhibit (d)(5).

The Company also incorporates by reference into this Notice additional documents that the Company may file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, from the date of this Notice until the Fundamental Change Repurchase Date; provided, however, that the Company is not incorporating by reference any additional documents or information furnished and not filed with the SEC. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Notice to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes that statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Notice. You should not assume that the information in this document or any other of the documents referred to above is accurate as of any date other than the date of the applicable documents.

NO SOLICITATION

We have not employed or retained any persons to make solicitations or recommendations in connection with the offer to repurchase.

DEFINITIONS

All capitalized terms used but not specifically defined herein shall have the meanings given to such terms in the Indenture.

CONFLICTS

In the event of any conflict between this Notice on the one hand and the terms of the Indenture or any applicable laws on the other hand, the terms of the Indenture or applicable laws, as the case may be, will control.

Neither the Company nor the Parent or any of their respective affiliates, or any of its or their respective boards of directors, employees, advisors or representatives, or U.S. Bank National Association, in its role as Trustee, Paying Agent and Conversion Agent, is making any representation or recommendation to any Holder as to whether or not to surrender or convert (if at all) such Holder’s Notes. You should consult your own financial and tax advisors and must make your own decision as to whether or not to surrender your Notes for repurchase or to exercise your conversion rights and, if you choose to exercise either of these rights, the amount of Notes to surrender or convert.

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