Full Press Release Details
Form of Base Capped Call Confirmation
111 Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: [____________]
Email: [____________]
Telephone No.: [____________]
Re: Base Call Option Transaction
The purpose of this letter agreement (this Confirmation ) is to confirm the terms and conditions of the call option
transaction entered into between [___________] ( Dealer ) and Brookdale Senior Living Inc. ( Counterparty ) as of the Trade Date specified below (the Transaction ). This letter
agreement constitutes a Confirmation as referred to in the ISDA Master Agreement specified below. Each party further agrees that this Confirmation together with the Agreement evidence a complete binding agreement between Counterparty and
Dealer as to the subject matter and terms of the Transaction to which this Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect thereto.
The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the Equity Definitions ), as
published by the International Swaps and Derivatives Association, Inc. ( ISDA ) are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall
govern. Certain defined terms used herein are based on terms that are defined in the Offering Memorandum, dated September 28, 2021 (the Offering Memorandum ), relating to the 2.00% Convertible Senior Notes due 2026 (as
originally issued by Counterparty, the Convertible Notes and each USD 1,000 principal amount of Convertible Notes, a Convertible Note ) issued by Counterparty in an aggregate initial principal amount of USD
200,000,000 (as increased by up to an aggregate principal amount of USD 30,000,000 if and to the extent that the Initial Purchasers (as defined herein) exercise their option to purchase additional Convertible Notes pursuant to the Purchase Agreement
(as defined herein)), pursuant to an Indenture to be dated October 1, 2021 between Counterparty and American Stock Transfer & Trust Company, LLC, as trustee (the Indenture ). In the event of any inconsistency between
the terms defined in the Offering Memorandum, the Indenture and this Confirmation, this Confirmation shall govern. The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set
forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Offering Memorandum. If any such definitions in
the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Offering Memorandum, the descriptions thereof in the Offering Memorandum will govern for purposes of this Confirmation. The parties further acknowledge
that the Indenture section numbers used herein are based on the draft of the Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Indenture as executed, the parties will amend this
Confirmation in good faith to preserve the intent of the parties. Subject to the foregoing, references to the Indenture herein are references to the Indenture as in effect on the date of its execution, and if the Indenture is amended or supplemented
following such date (other than any amendment or supplement (x) pursuant to Section 10.01(j) of the Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Offering
Memorandum or (y) pursuant to Section 14.07 of the Indenture, subject, in the case of this clause (y), to the second paragraph under Method of Adjustment in Section 3), any such amendment or supplement will be disregarded
for purposes of this Confirmation unless the parties agree otherwise in writing. For the purposes of the Equity Definitions, the Transaction shall be deemed to be a Share Option Transaction.
Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in,
substantial financial transactions and has taken other material actions in reliance upon the parties entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.
In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of
the Transaction to which this Confirmation relates. The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement. If there exists any ISDA Master Agreement between
Dealer and Counterparty or any confirmation or other agreement between Dealer and Counterparty pursuant to which an ISDA Master Agreement is deemed to exist between Dealer and Counterparty, then notwithstanding anything to the contrary in such ISDA
Master Agreement, such confirmation or agreement or any other agreement to which Dealer and Counterparty are parties, the Transaction shall not be considered a Transaction under, or otherwise governed by, such existing or deemed ISDA Master
| General Terms . | ||
| Trade Date: | [________], 2021 | |
| Effective Date: | The Trade Date | |
| Option Style: | Modified American , as described under Procedures for Exercise below | |
| Option Type: | Call | |
| Buyer: | Counterparty | |
| Seller: | Dealer | |
| Shares: | The common stock of Counterparty, par value USD 0.01 per share (Exchange symbol BKD ). | |
| Number of Options: | 200,000. For the avoidance of doubt, the Number of Options shall be reduced by any Options exercised by Counterparty. In no event will the Number of Options be less than zero. | |
| Applicable Percentage: | [__]% | |
| Option Entitlement: | A number equal to the product of the Applicable Percentage and 123.4568. |
| Strike Price: | USD 8.1000 | |
| Cap Price: | USD 9.9000 | |
| Premium: | USD [______] | |
| Premium Payment Date: | October 1, 2021 | |
| Exchange: | The New York Stock Exchange | |
| Related Exchange(s): | All Exchanges | |
| Excluded Provisions: | Section 14.04(h) and Section 14.03 of the Indenture. | |
| Procedures for Exercise . | ||
| Conversion Date: | With respect to any conversion of a Convertible Note (other than any conversion of Convertible Notes with a Conversion Date occurring prior to the Free Convertibility Date (any such conversion, an Early Conversion ), to which the provisions of Sections 10(i)(i) and 10(x) of this Confirmation shall apply), the date on which the Holder (as such term is defined in the Indenture) of such Convertible Note satisfies all of the requirements for conversion thereof as set forth in Section 14.02(b) of the Indenture. | |
| Free Convertibility Date: | July 15, 2026 | |
| Expiration Time: | The Valuation Time | |
| Expiration Date: | October 15, 2026, subject to earlier exercise. | |
| Multiple Exercise: | Applicable, as described under Exercise on Conversion Dates and Automatic Exercise below. | |
| Exercise on Conversion Dates: | Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date occurring on or after the Free Convertibility Date in respect of which a Notice of Conversion that is effective as to Counterparty has been delivered by the relevant converting Holder, a number of Options equal to the number of Convertible Notes in denominations of USD 1,000 as to which such Conversion Date has occurred shall be deemed to be automatically exercised. If Counterparty has provided a Notice of Exercise to Dealer in accordance with Notice of Exercise below with respect to such Options, any such Options outstanding as of 5:00 p.m. (New York City Time) on the Expiration Date shall be deemed to be automatically exercised as described under Notice of Exercise below. If Counterparty has not provided such Notice of Exercise to Dealer in accordance with Notice of Exercise below, such Options shall be deemed to be automatically exercised as described under Automatic Exercise below. |
| Notwithstanding the foregoing, in no event shall the number of Options that are exercised or deemed exercised hereunder exceed the Number of Options. | ||
| Automatic Exercise: | Notwithstanding Section 3.4 of the Equity Definitions or anything to the contrary in this Confirmation, unless Counterparty notifies Dealer in writing prior to 5:00 p.m. (New York City time) on the Expiration Date that it does not wish Automatic Exercise to occur, all Options then outstanding as of 5:00 p.m. (New York City time) on the Expiration Date (other than any Options for which Dealer has received a Notice of Exercise in accordance with Notice of Exercise below) will be deemed to be automatically exercised with Cash Settlement applicable to such deemed exercise. | |
| Notice of Exercise: | Notwithstanding anything to the contrary in the Equity Definitions, Counterparty may exercise any Options relating to Convertible Notes with a Conversion Date occurring on or after the Free Convertibility Date by notifying Dealer in writing (which, for the avoidance of doubt, may be by email) before 5:00 p.m. (New York City time) on the Scheduled Valid Day immediately preceding the Expiration Date specifying the number of such Options; provided that, if the Relevant Settlement Method for such Options is (x) Net Share Settlement and the Specified Cash Amount (as defined below) is not USD 1,000, (y) Cash Settlement or (z) Combination Settlement, Counterparty shall provide Dealer a separate notice (the Notice of Final Settlement Method ) (which, for the avoidance of doubt, may be by email) in respect of all such Convertible Notes before 5:00 p.m. (New York City time) on the Free Convertibility Date specifying (1) the Relevant Settlement Method for such Options, and (2) if the settlement method for the related Convertible Notes is not Settlement in Shares or Settlement in Cash (each as defined below), the fixed amount of cash per Convertible Note that Counterparty has elected to deliver to Holders of the related Convertible Notes (the Specified Cash Amount ) and if Counterparty fails to timely provide such Notice of Final Settlement Method, it shall be deemed to have provided a Notice of Final Settlement Method indicating that the Relevant Settlement Method is Net Share Settlement and that the settlement method for the related Convertible Notes is a combination of cash and shares with a Specified Cash Amount of USD 1,000. Counterparty acknowledges its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act (as defined below) and the rules and regulations thereunder, in respect of any election of a settlement method with respect to the Convertible Notes that is not Net Share Settlement with a Specified Cash Amount of USD 1,000. | |
| Valuation Time: | At the close of trading of the regular trading session on the Exchange; provided that if the principal trading session is extended, the Calculation Agent shall determine the Valuation Time in its commercially reasonable discretion. |
| Market Disruption Event: | Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following: | |
| Market Disruption Event means, in respect of a Share, (i) a failure by the primary United States national or regional securities exchange or market on which the Shares are listed or admitted for trading to open for trading during its regular trading session or (ii) the occurrence or existence prior to 1:00 p.m. (New York City time) on any Scheduled Valid Day for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Shares or in any options contracts or futures contracts relating to the Shares. | ||
| Settlement Terms . | ||
| Settlement Method: | For any Option, Net Share Settlement; provided that if the Relevant Settlement Method set forth below for such Option is not Net Share Settlement, then the Settlement Method for such Option shall be such Relevant Settlement Method, but only if Counterparty shall have notified Dealer of the Relevant Settlement Method in the Notice of Final Settlement Method for such Option. | |
| Relevant Settlement Method: | In respect of any Option: | |
| (i) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note (A) entirely in Shares pursuant to Section 14.02(a)(iv)(A) of the Indenture (together with cash in lieu of fractional Shares) (such settlement method, Settlement in Shares ), (B) in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount less than USD 1,000 or (C) in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount equal to USD 1,000, then, in each case, the Relevant Settlement Method for such Option shall be Net Share Settlement; | ||
| (ii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note in a combination of cash and Shares pursuant to Section 14.02(a)(iv)(C) of the Indenture with a Specified Cash Amount greater than USD 1,000, then the Relevant Settlement Method for such Option shall be Combination Settlement; and | ||
| (iii) if Counterparty has elected to settle its conversion obligations in respect of the related Convertible Note entirely in cash pursuant to Section 14.02(a)(iv)(B) of the Indenture (such settlement method, Settlement in Cash ), then the Relevant Settlement Method for such Option shall be Cash Settlement. |
| Net Share Settlement: | If Net Share Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on the relevant Settlement Date for each such Option, a number of Shares (the Net Share Settlement Amount ) equal to the sum, for each Valid Day during the Settlement Averaging Period for each such Option, of (i) (a) the Daily Option Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period. | |
| Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Net Share Settlement Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period. | ||
| Combination Settlement: | If Combination Settlement is applicable to any Option exercised or deemed exercised hereunder, Dealer will pay or deliver, as the case may be, to Counterparty, on the relevant Settlement Date for each such Option: | |
| (i) cash (the Combination Settlement Cash Amount ) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (A) an amount (the Daily Combination Settlement Cash Amount ) equal to the lesser of (1) the product of (x) the Applicable Percentage and (y) the Specified Cash Amount minus USD 1,000 and (2) the Daily Option Value, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in clause (A) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall be deemed to be zero; and | ||
| (ii) Shares (the Combination Settlement Share Amount ) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of a number of Shares for such Valid Day (the Daily Combination Settlement Share Amount ) equal to (A) (1) the Daily Option Value on such Valid Day minus the Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the Relevant Price on such Valid Day, divided by (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in sub-clause (A)(1) above results in zero or a negative number for any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day shall be deemed to be zero. |
| Dealer will pay cash in lieu of delivering any fractional Shares to be delivered with respect to any Combination Settlement Share Amount valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period. | ||
| Cash Settlement: | If Cash Settlement is applicable to any Option exercised or deemed exercised hereunder, in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty, on the relevant Settlement Date for each such Option, an amount of cash (the Cash Settlement Amount ) equal to the sum, for each Valid Day during the Settlement Averaging Period for such Option, of (i) the Daily Option Value for such Valid Day, divided by (ii) the number of Valid Days in the Settlement Averaging Period. | |
| Daily Option Value: | For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid Day, multiplied by (ii) (A) the lesser of the Relevant Price on such Valid Day and the Cap Price, less (B) the Strike Price on such Valid Day; provided that if the calculation contained in clause (ii) above results in a negative number, the Daily Option Value for such Valid Day shall be deemed to be zero. In no event will the Daily Option Value be less than zero. | |
| Valid Day: | A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other United States national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a United States national or regional securities exchange, on the principal other market on which the Shares are then listed or admitted for trading. If the Shares are not so listed or admitted for trading, Valid Day means a Business Day. | |
| Scheduled Valid Day: | A day that is scheduled to be a Valid Day on the principal United States national or regional securities exchange or market on which the Shares are listed or admitted for trading. If the Shares are not so listed or admitted for trading, Scheduled Valid Day means a Business Day. | |
| Business Day: | Any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or be closed. | |
| Relevant Price: | On any Valid Day, the per Share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page BKD <equity> AQR (or its equivalent successor if such page is not available) in respect of the period from the scheduled opening time of the Exchange to the Scheduled Closing Time of the Exchange on such Valid Day (or if such volume-weighted average price is unavailable at such time, the market value of one Share on such Valid Day, as determined by the Calculation Agent in good faith and in a commercially reasonable manner using, if practicable, a volume-weighted average method). The Relevant Price will be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours. |
| Settlement Averaging Period: | For any Option, the 50 consecutive Valid Days commencing on, and including, the 51st Scheduled Valid Day immediately prior to the Expiration Date. | |
| Settlement Date: | For any Option, the second Business Day immediately following the final Valid Day of the Settlement Averaging Period for such Option. | |
| Settlement Currency: | USD | |
| Other Applicable Provisions: | The provisions of Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be applicable, except that all references in such provisions to Physically-settled shall be read as references to Share Settled . Share Settled in relation to any Option means that Net Share Settlement or Combination Settlement is applicable to that Option. | |
| Representation and Agreement: | Notwithstanding anything to the contrary in the Equity Definitions (including, but not limited to, Section 9.11 thereof), the parties acknowledge that (i) any Shares delivered to Counterparty shall be, upon delivery, subject to restrictions and limitations arising from Counterparty s status as issuer of the Shares under applicable securities laws, (ii) Dealer may deliver any Shares required to be delivered hereunder in certificated form in lieu of delivery through the Clearance System and (iii) any Shares delivered to Counterparty may be restricted securities (as defined in Rule 144 under the Securities Act of 1933, as amended (the Securities Act )). | |
| 3. Additional Terms applicable to the Transaction . | ||
| Adjustments applicable to the Transaction: | ||
| Potential Adjustment Events: | Notwithstanding Section 11.2(e) of the Equity Definitions (which Section shall not apply for purposes of the Transaction, except as provided in Section 10(z) below), a Potential Adjustment Event means an occurrence of any event or condition, as set forth in any Dilution Adjustment Provision, that would result in an adjustment under the Indenture to the Conversion Rate or the composition of a unit of Reference Property or to any Last Reported Sale Price , Daily VWAP, Daily Conversion Value or Daily Settlement Amount (each as defined in the Indenture). For the avoidance of doubt, Dealer shall not have any delivery or payment obligation hereunder, and no adjustment shall be made to the terms of the Transaction, on account of (x) any distribution of cash, property or securities by Counterparty to Holders of the Convertible Notes (upon conversion or otherwise) or (y) any other transaction in which Holders of the Convertible Notes are entitled to participate, in each case, in lieu of an adjustment under the Indenture of the type referred to in the immediately preceding sentence (including, without limitation, pursuant to the fourth sentence of Section 14.04(c) of the Indenture or the fourth sentence of Section 14.04(d) of the Indenture). |
| Method of Adjustment: | Calculation Agent Adjustment, which means that, notwithstanding Section 11.2(c) of the Equity Definitions (which Section shall not apply for purposes of the Transaction), upon any Potential Adjustment Event, the Calculation Agent, acting in good faith and in a commercially reasonable manner, shall make an adjustment to any one or more of the Strike Price and the Option Entitlement corresponding to the adjustment required to be made pursuant to the Indenture to the Conversion Rate (as such term is defined in the Indenture). In addition, if any Potential Adjustment Event occurs during the Settlement Averaging Period but no adjustment was made to any Convertible Note under the Indenture because the relevant Holder was deemed to be a record owner of the underlying Shares on the related Conversion Date, then the Calculation Agent shall make a commercially reasonable adjustment, as determined by it, to the terms hereof in order to account for such Potential Adjustment Event. | |
| Notwithstanding the foregoing and Consequences of Merger Events / Tender Offers below: | ||
| (i) if the Calculation Agent in good faith and a commercially reasonable manner disagrees with any adjustment to the Convertible Notes that involves an exercise of discretion by Counterparty or its board of directors (including, without limitation, pursuant to Section 14.05 of the Indenture, Section 14.07 of the Indenture or any supplemental indenture entered into thereunder or in connection with any proportional adjustment or the determination of the fair value of any securities, property, rights or other assets), then in each such case, the Calculation Agent will determine in good faith and in a commercially reasonable manner the adjustment to be made to any one or more of the Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction in a commercially reasonable manner; | ||
| (ii) in connection with any Potential Adjustment Event as a result of an event or condition set forth in Section 14.04(b) of the Indenture or Section 14.04(c) of the Indenture where, in either case, the period for determining Y (as such term is used in Section 14.04(b) of the Indenture) or SP 0 (as such term is used in Section 14.04(c) |
| of the Indenture), as the case may be, begins before Counterparty has publicly announced the event or condition giving rise to such Potential Adjustment Event, then the Calculation Agent shall have the right to adjust any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (to account solely for hedging mismatches and market losses) and expenses incurred by Dealer in connection with commercially reasonable hedging activities, with such adjustments made assuming that Dealer maintains commercially reasonable hedge positions, as a result of such event or condition not having been publicly announced prior to the beginning of such period; and | ||
| (iii) if any Potential Adjustment Event is declared and (a) the event or condition giving rise to such Potential Adjustment Event is subsequently amended, modified, cancelled or abandoned, (b) the Conversion Rate (as defined in the Indenture) is otherwise not adjusted at the time or in the manner contemplated by the relevant Dilution Adjustment Provision based on such declaration or (c) the Conversion Rate (as defined in the Indenture) is adjusted as a result of such Potential Adjustment Event and subsequently re-adjusted (each of clauses (a), (b) and (c), a Potential Adjustment Event Change ) then, in each case, the Calculation Agent shall have the right to adjust any variable relevant to the exercise, settlement or payment for the Transaction as appropriate to reflect the costs (to account solely for hedging mismatches and market losses) and expenses incurred by Dealer in connection with commercially reasonable hedging activities, with such adjustments made assuming that Dealer maintains commercially reasonable hedge positions, as a result of such Potential Adjustment Event Change. | ||
| Dilution Adjustment Provisions: | Sections 14.04(a), (b), (c), (d) and (e) and Section 14.05 of the Indenture. | |
| Extraordinary Events applicable to the Transaction: | ||
| Merger Events: | Applicable; provided that notwithstanding Section 12.1(b) of the Equity Definitions, a Merger Event means the occurrence of any event or condition set forth in the definition of Merger Event in Section 14.07(a) of the Indenture. | |
| Tender Offers: | Applicable; provided that notwithstanding Section 12.1(d) of the Equity Definitions, a Tender Offer means the occurrence of any event or condition set forth in Section 14.04(e) of the Indenture. |
| Consequences of Merger Events /Tender Offers: | Notwithstanding Section 12.2 and Section 12.3 of the Equity Definitions (which Section shall not apply for purposes of the Transaction), upon the occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall make a corresponding adjustment in respect of any adjustment under the Indenture to any one or more of the nature of the Shares (in the case of a Merger Event), Strike Price, Number of Options, Option Entitlement and any other variable relevant to the exercise, settlement or payment for the Transaction to the extent that an analogous adjustment is required to be made pursuant to the Indenture in respect of such Merger Event or Tender Offer, subject to the second paragraph under Method of Adjustment ; provided , however , that such adjustment shall be made without regard to any adjustment to the Conversion Rate pursuant to any Excluded Provision; provided further that if, with respect to a Merger Event or a Tender Offer, (i) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares of an entity or person that is not a corporation or is not organized under the laws of the United States, any State thereof or the District of Columbia or (ii) the Counterparty to the Transaction following such Merger Event or Tender Offer will not be a corporation organized under the laws of the United States, any State thereof or the District of Columbia, then, in either case, Cancellation and Payment (Calculation Agent Determination) may apply at Dealer s reasonable election; provided further that, for the avoidance of doubt, adjustments shall be made pursuant to the provisions set forth above regardless of whether any Merger Event or Tender Offer gives rise to an Early Conversion. | |
| Consequences of Announcement Events: | Modified Calculation Agent Adjustment as set forth in Section 12.3(d) of the Equity Definitions; provided that, in respect of an Announcement Event, (x) references to Tender Offer shall be replaced by references to Announcement Event and references to Tender Offer Date shall be replaced by references to date of such Announcement Event , (y) the phrase exercise, settlement, payment or any other terms of the Transaction (including, without limitation, the spread) shall be replaced with the phrase Cap Price ( provided that in no event shall the Cap Price be less than the Strike Price) and the words whether within a commercially reasonable (as determined by the Calculation Agent) period of time prior to or after the Announcement Event shall be inserted prior to the word which in the seventh line, and (z) for the avoidance of doubt, the Calculation Agent shall determine whether the relevant Announcement Event has had a material economic effect on the Transaction (and, if so, shall adjust the Cap Price accordingly to account for such economic effect in a commercially reasonable |
| manner) on one or more occasions on or after the date of the Announcement Event up to, and including, the Expiration Date, any Early Termination Date and/or any other date of cancellation (and, for the avoidance of doubt, a cumulative adjustment shall be made on the earliest to occur of such dates), it being understood that any adjustment in respect of an Announcement Event shall take into account any earlier adjustment relating to the same Announcement Event and shall not be duplicative with any other adjustment or cancellation valuation made pursuant to this Confirmation, the Equity Definitions or the Agreement; provided that in no event shall the Cap Price be adjusted to be less than the Strike Price. An Announcement Event shall be an Extraordinary Event for purposes of the Equity Definitions, to which Article 12 of the Equity Definitions is applicable. | ||
| Announcement Event: | (i) The public announcement by (A) Counterparty, any subsidiary of Counterparty or any Valid Third-Party Entity of any transaction or event that the Calculation Agent determines is reasonably likely to be completed and that, if completed, would constitute a Merger Event or Tender Offer (it being understood and agreed that in determining whether such transaction or event is reasonably likely to be completed, the Calculation Agent may take into consideration the effect of the relevant announcement on the Shares and/or options relating to the Shares), (B) Counterparty or any subsidiary thereof of any potential acquisition or disposition by Counterparty and/or its subsidiaries where the aggregate consideration exceeds 35% of the market capitalization of Counterparty as of the date of such announcement (a Transformative Transaction ) or (C) Counterparty, any subsidiary of Counterparty or any Valid Third-Party Entity of the bona fide intention to enter into a Merger Event, Tender Offer or Transformative Transaction (in the case of a Valid Third-Party Entity, that the Calculation Agent determines is capable, financially and otherwise, of consummating the relevant Merger Event, Tender Offer or Transformative Transaction, it being understood and agreed that in making such determination, the Calculation Agent may take into consideration the effect of the relevant announcement on the Shares and/or options relating to the Shares), (ii) the public announcement by Counterparty of an intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, a Merger Event or Tender Offer or a Transformative Transaction or (iii) any subsequent public announcement by any entity of a change to a transaction or intention that is the subject of an announcement of the type described in clause (i) or (ii) of this sentence (including, without limitation, a new announcement, whether or not by the same party, relating to such a transaction or intention or the announcement of a withdrawal from, or the abandonment or discontinuation of, such a transaction or intention), as determined by the |
| Calculation Agent. For the avoidance of doubt, the occurrence of an Announcement Event with respect to any transaction or intention shall not preclude the occurrence of a later Announcement Event with respect to such transaction or intention. For purposes of this definition of Announcement Event, (A) Merger Event shall mean such term as defined under Section 12.1(b) of the Equity Definitions (but, for the avoidance of doubt, the remainder of the definition of Merger Event in Section 12.1(b) of the Equity Definitions following the definition of Reverse Merger therein shall be disregarded) and (B) Tender Offer shall mean such term as defined under Section 12.1(d) of the Equity Definitions; provided that Section 12.1(d) of the Equity Definitions is hereby amended by replacing 10% with 20% in the third line thereof. | ||
| Valid Third-Party Entity: | In respect of any transaction, any third party that the Calculation Agent determines has a bona fide intent to enter into or consummate such transaction (it being understood and agreed that in determining whether such third party has such a bona fide intent, the Calculation Agent may take into consideration the effect of the relevant announcement by such third party on the Shares and/or options relating to the Shares). | |
| Nationalization, Insolvency or Delisting: | Cancellation and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors), such exchange or quotation system shall thereafter be deemed to be the Exchange. | |
| Additional Disruption Events: | ||
| Change in Law: | Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended by (i) replacing the phrase the interpretation in the third line thereof with the phrase , or public announcement of, the formal or informal interpretation , (ii) replacing the word Shares where it appears in clause (X) thereof with the words Hedge Position , (iii) replacing the parenthetical beginning after the word regulation in the second line thereof the words (including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption, effectiveness or promulgation of new regulations authorized or mandated by existing statute) and (iv) adding the words provided that, in the case of clause (Y) hereof and any law, regulation or interpretation, the consequence of such law, regulation or interpretation is applied equally by Dealer to all of its similarly situated counterparties and/or similar transactions, if any; after the semi-colon in the last line thereof. |
| Failure to Deliver: | Applicable | |
| Hedging Disruption: | Applicable; provided that: | |
| (i) Section 12.9(a)(v) of the Equity Definitions is hereby amended by inserting the following two phrases at the end of such Section: | ||
| For the avoidance of doubt, the term equity price risk shall be deemed to include, but shall not be limited to, stock price and volatility risk. And, for the further avoidance of doubt, any such transactions or assets referred to in phrases (A) or (B) above must be available on commercially reasonable pricing terms. ; and | ||
| (ii) Section 12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the third line thereof, after the words to terminate the Transaction , the words or a portion of the Transaction affected by such Hedging Disruption . | ||
| Increased Cost of Hedging: | Not Applicable | |
| Hedging Party: | For all applicable Additional Disruption Events, Dealer; provided that when making any determination or calculation as Hedging Party (but not, for the avoidance of doubt, the making of any election it is entitled to make as Hedging Party ), Dealer shall be bound by the same obligations relating to required acts of the Calculation Agent as set forth in Section 1.40 of the Equity Definitions and this Confirmation as if the Hedging Party were the Calculation Agent. | |
| Following any determination or calculation by Hedging Party hereunder (other than, for the avoidance of doubt, the making of any election by Hedging Party that is entitled to make as Hedging Party ), upon a written request by Counterparty (which may be by email), Hedging Party will promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that in no event will Hedging Party be obligated to share with Counterparty any proprietary or confidential data or information or any proprietary or confidential models used by it in making such determination or calculation or any information that is subject to an obligation not to disclose such information. |
| Determining Party: | For all applicable Extraordinary Events, Dealer; provided that when making any determination or calculation as Determining Party, Dealer shall be bound by the same obligations relating to required acts of the Calculation Agent as set forth in Section 1.40 of the Equity Definitions and this Confirmation as if Determining Party were the Calculation Agent. | |
| Following any determination or calculation by Determining Party hereunder, upon a written request by Counterparty (which may be by email), Determining Party will promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such determination or calculation (including any assumptions used in making such determination or calculation), it being understood that in no event will Determining Party be obligated to share with Counterparty any proprietary or confidential data or information or any proprietary or confidential models used by it in making such determination or calculation or any information that is subject to an obligation not to disclose such information. | ||
| Non-Reliance: | Applicable | |
| Agreements and Acknowledgments | ||
| Regarding Hedging Activities: | Applicable | |
| Additional Acknowledgments: | Applicable | |
| 4. Calculation Agent . | Dealer; provided that, following the occurrence and during the continuance of an Event of Default of the type described in Section 5(a)(vii) of the Agreement with respect to which Dealer is the sole Defaulting Party, Counterparty shall have the right to designate a nationally recognized independent equity derivatives dealer to replace Dealer as the Calculation Agent, and the parties shall work in good faith to execute any appropriate documentation required by such replacement Calculation Agent. | |
| Following any adjustment, determination or calculation by the Calculation Agent hereunder, upon a written request by Counterparty (which may be by email), the Calculation Agent will promptly (but in any event within five Scheduled Trading Days) provide to Counterparty by email to the email address provided by Counterparty in such written request a report (in a commonly used file format for the storage and manipulation of financial data) displaying in reasonable detail the basis for such |
| adjustment, determination or calculation (including any assumptions used in making such adjustment, determination or calculation), it being understood that in no event will the Calculation Agent be obligated to share with Counterparty any proprietary or confidential data or information or any proprietary or confidential models used by it in making such adjustment, determination or calculation or any information that is subject to an obligation not to disclose such information. | ||
| All calculations and determinations by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. |
Account for delivery of Shares to Counterparty: To be provided separately by Counterparty.
Bank: [____________]
ABA#: [____________]
Acct No.: [____________]
Beneficiary: [____________]
Account for delivery of Shares from Dealer:
[Dealer s Office Address]
Brookdale Senior Living Inc.
Westwood Place, Suite 400
Brentwood, Tennessee 37027
Attention: [____________]
Email: [____________]
Telephone No.: [____________]
Each of the representations and warranties of Counterparty set forth in Section 1 of the Purchase Agreement (the Purchase
Agreement ) dated as of September 28, 2021 between Counterparty and BofA Securities, Inc., as representative of the Initial Purchasers party thereto (the Initial Purchasers ), are true and correct and are hereby
deemed to be repeated to Dealer as if set forth herein. Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:
| Share Termination Alternative: | If applicable, Dealer shall deliver to Counterparty the Share Termination Delivery Property on, or within a commercially reasonable period of time after, the date when the relevant Payment Obligation would otherwise be due pursuant to Section 12.7 or 12.9 of the Equity Definitions or Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in satisfaction of such Payment Obligation in the manner reasonably requested by Counterparty free of payment. | |
| Share Termination Delivery Property: | A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the Payment Obligation divided by the Share Termination Unit Price. The Calculation Agent shall adjust the Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price. |
| Share Termination Unit Price: | The value of property contained in one Share Termination Delivery Unit, as determined by the Calculation Agent in its discretion by commercially reasonable means and notified by the Calculation Agent to Dealer at the time of notification of the Payment Obligation; provided that to the extent the Share Termination Delivery Unit consists of one Share (subject to Consequences of Merger Events / Tender Offers above), the value of such Share will be equal to the average of the per Share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page BKD <equity> AQR (or its equivalent successor if such page is not available) over a period of time determined by the Calculation Agent to be reasonably necessary to establish or unwind a commercially reasonable hedge position. | |
| Share Termination Delivery Unit: | One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the Exchange Property ), a unit consisting of the type and amount of such Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event, as determined by the Calculation Agent. If such Naturalization, Insolvency, or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash. | |
| Failure to Deliver: | Applicable | |
| Other applicable provisions: | If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as modified above) of the Equity Definitions and the provisions set forth opposite the caption Representation and Agreement in Section 2 will be applicable, except that all references in such provisions to Physically-settled shall be read as references to Share Termination Settled and all references to Shares shall be read as references to Share Termination Delivery Units . Share Termination Settled in relation to the Transaction means that Share Termination Alternative is applicable to the Transaction. |
Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing
correctly sets forth the terms of the Transaction by signing in the space provided below and returning to Dealer the fully executed Confirmation via facsimile or e-mail.
| Very truly yours, | ||
| [Dealer] | ||
| By: | ||
| Authorized Signatory | ||
| Name: |
Accepted and confirmed as of the Trade Date:
| Brookdale Senior Living Inc. | ||
| By: | ||
| Authorized Signatory | ||
| Name: |
[Signature Page to Base Capped Call Confirmation]