Exchange Agreement by and between Verastem, Inc. and Highbridge Tactical Credit Master Fund, L.P., dated November 6, 2020
November 6, 2020
117 Kendrick Street
Needham, MA 02494
Verastem, Inc.’s Exchange of 5.00% Convertible Senior Notes due 2048
Ladies and Gentlemen:
The undersigned investor (the “Investor”) hereby agrees to exchange (the “Exchange”), with Verastem, Inc., a Delaware corporation (the “Company”), the aggregate principal amount of the Company’s 5.00% Convertible Senior Notes due 2048, CUSIP 92337C AA2 (the “Old Notes”) set forth in Exhibit A hereto that it beneficially owns for the Company’s new 5.00% Series 2 Convertible Senior Notes due 2048 (the “New Notes”) having an aggregate principal amount equal to the principal amount of such Old Notes to be exchanged.
The Old Notes were issued pursuant to that certain Indenture (the “2018 Indenture”) and First Supplemental Indenture (collectively, the “Existing Indenture”), each dated as of October 17, 2018, between the Company, as issuer, and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). The New Notes will be issued pursuant to the 2018 Indenture and a Second Supplemental Indenture dated as of the Closing Date (as defined below) (collectively, the “Indenture”) between the Company, as issuer, and the Trustee, substantially in the forms set forth as Exhibit D hereto.
The Investor understands that the Exchange is being made without registration under the Securities Act of 1933, as amended (the “Securities Act”), or any securities laws of any state of the United States or of any other jurisdiction, and that the New Notes are only being offered to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act), and the Company hereby confirms that the offer and sale of the New Notes are exempt from registration under the Securities Act.
The Exchange will occur in accordance with the procedures set forth in Section 3 hereof.
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At or prior to 9:30 a.m., New York City time, on the Closing Date, the Investor agrees to direct the eligible participant of The Depository Trust Company (“DTC”) through which it holds a beneficial interest in the Old Notes to submit a withdrawal instruction through DTC’s Deposits and Withdrawal at Custodian (“DWAC”) program to the Trustee), for the aggregate principal amount of the Old Notes to be exchanged pursuant to this Exchange Agreement (the “DWAC Withdrawal”).
DTC will act as securities depositary for the New Notes. At or prior to 9:30 a.m. New York City time on the Closing Date, the Investor agrees to direct an eligible DTC participant to submit a deposit instruction (the “New Notes DWAC Deposit”) through DTC’s DWAC program to the Trustee, for the aggregate principal amount of New Notes that it is entitled to receive pursuant to this Exchange Agreement, or comply with such other settlement procedures mutually agreed in writing by the Investor and the Company. The New Notes will not be delivered until a valid DWAC Withdrawal of the Old Notes has been received and accepted by the Trustee. If the Closing does not occur, any Old Notes submitted for DWAC Withdrawal will be returned to the DTC participant that submitted the withdrawal instruction in accordance with the procedures of DTC. The Investor acknowledges that each of the DWAC Withdrawal and the New Notes DWAC Deposit must be posted on the Closing Date and that if it is posted before the Closing Date, then it will expire unaccepted and must be resubmitted on the Closing Date.
For the convenience of the Investor, attached hereto as Exhibit B is a summary of the delivery instructions that must be followed to settle the Exchange through DTC.
On the Closing Date, subject to satisfaction of the conditions precedent specified in this Exchange Agreement, and the prior receipt of a valid DWAC Withdrawal conforming with the aggregate principal amount of the Old Notes to be exchanged by the Investor and a valid New Notes DWAC Deposit conforming with the aggregate principal amount of the New Notes to be issued to the Investor in the Exchange, the Company hereby agrees to execute such New Notes, and direct the Trustee to authenticate and, by acceptance of the New Notes DWAC Deposit, deliver, such New Notes (or comply with such other settlement procedures mutually agreed in writing by the Company and the Trustee), in each case to the DTC account specified on Exhibit A to this Exchange Agreement.
If (x) the Trustee is unable to locate the DWAC Withdrawal or (y) the Trustee is unable to locate the New Notes DWAC Deposit or (z) such DWAC Withdrawal does not conform to the Old Notes to be exchanged in the Exchange or such New Notes DWAC Deposit does not conform to the New Notes to be issued in the Exchange, then the Company will promptly notify the Investor. If, because of the occurrence of an event described in clause (x), (y) or (z) of the preceding
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sentence, the New Notes are not delivered on the Closing Date, then such New Notes will be paid or delivered, as applicable, on the first business day following the Closing Date (or as soon as reasonably practicable thereafter) on which all applicable conditions set forth in clauses (x), (y) or (z) of the first sentence of this paragraph have been cured.
All questions as to the form of all documents and the validity and acceptance of the Old Notes will be determined by the Company, in its reasonable discretion, which determination will be final and binding.
All authority herein conferred or agreed to be conferred in this Exchange Agreement will survive the dissolution of the Investor, and any representation, warranty, undertaking and obligation of the Investor hereunder will be binding upon the trustees in bankruptcy, legal representatives, successors and assigns of the Investor.
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[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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In Witness Whereof, the undersigned has executed this Exchange Agreement as of the date first written above.
By: Highbridge Capital Management, LLC, as Trading Manager
/s/ Jonathan Segal
Name: Jonathan Segal
Country (and, if applicable, State) of Residence:
Taxpayer Identification Number:
[Signature Page to Exchange Agreement]
/s/ Robert Gagnon
Name: Robert Gagnon
Title: Chief Business and Financial Officer
[Signature Page to Exchange Agreement]
Legal Name of Investor:Highbridge Tactical Credit Master Fund, L.P.
Aggregate principal amount of Old Notes to be exchanged (must be a multiple of $1,000):$28,000,000.00
Country (and, if applicable, State) of Residence:Cayman Islands
Taxpayer Identification Number:
Account for Old NotesAccount for New Notes
DTC Participant Number:DTC Participant Number:
DTC Participant Name:DTC Participant Name:
DTC Participant Phone Number:DTC Participant Phone Number:
DTC Participant Contact Email:DTC Participant Contact Email:
Account # at DTC Participant:
NOTICE TO INVESTOR
Attached are Investor Exchange Procedures for the settlement of the exchange (the “Exchange”) of 5.00% Convertible Senior Notes due 2048, CUSIP 92337C AA2 (the “Old Notes”) of Verastem, Inc. (the “Company”) for the Company’s 5.00% Series 2 Convertible Senior Notes due 2048 (the “New Notes”), pursuant to the Exchange Agreement, dated as of November 6, 2020, between you and the Company, which is expected to occur on November 13, 2020. To ensure timely settlement, please follow the instructions for the Exchange as set forth on the following page.
Your failure to comply with the attached instructions may delay your receipt of the New Notes.
Delivery of the Old Notes
You must direct the eligible DTC participant through which you hold a beneficial interest in the Old Notes to post on November 13, 2020, no later than 9:30 a.m., New York City time, withdrawal instructions through DTC via DWAC for the aggregate principal amount of Old Notes (CUSIP #92337C AA2) set forth in Exhibit B.1 of the Exchange Agreement to be exchanged. It is important that this instruction be submitted and the DWAC posted on November 13, 2020; if it is posted before November 13, 2020, then it will expire unaccepted and will need to be re-posted on November 13, 2020.
To receive the New Notes
You must direct your eligible DTC participant through which you wish to hold a beneficial interest in the New Notes to post on November 13, 2020, no later than 9:30 a.m., New York City time, a deposit instruction through DTC via DWAC for the aggregate principal amount of New Notes to which you are entitled pursuant to the Exchange. It is important that this instruction be submitted and the DWAC posted on November 13, 2020; if it is posted before November 13, 2020, then it will expire unaccepted and will need to be re-posted on November 13, 2020.
On November 13, 2020, after the Company receives your Old Notes and your delivery instructions as set forth above, and subject to the satisfaction of the conditions to Closing as set forth in your Exchange Agreement, the Company will deliver the New Notes in accordance with the delivery instructions above.
Under U.S. federal income tax law, a holder who exchanges Old Notes for the New Notes generally must provide such holder’s correct taxpayer identification number (“TIN”) on IRS Form W-9 (attached hereto) or otherwise establish a basis for exemption from backup withholding. A TIN is generally an individual holder’s social security number or a holder’s employer identification number. If the correct TIN is not provided, the holder may be subject to a $50 penalty imposed by the IRS. In addition, certain payments made to holders may be subject to U.S. backup withholding tax (currently set at 24% of the payment). If a holder is required to provide a TIN but does not have the TIN, the holder should consult its tax advisor regarding how to obtain a TIN. Certain holders are not subject to these backup withholding and reporting requirements. Non-U.S. Holders generally may establish their status as exempt recipients from backup withholding by submitting a properly completed applicable IRS Form W-8 (available from the Company or the IRS at www.irs.gov), signed, under penalties of perjury, attesting to such holder’s exempt foreign status. U.S. backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is timely furnished to the IRS. Holders are urged to consult their tax advisors regarding how to complete the appropriate forms and to determine whether they are exempt from backup withholding or other withholding taxes.