Exhibit 10.2

 

EXECUTION VERSION

 

 

 

NEKTAR THERAPEUTICS

 

7.75% SENIOR SECURED NOTES DUE 2020

 

 

 

INDENTURE

 

Dated as of October 5, 2015

 

 

 

Wilmington Trust, National Association,

 

as Trustee

 

TC Lending, LLC,

 

as Collateral Agent

 

 

 

 

CROSS-REFERENCE TABLE*

 

Trust Indenture
Act Section Indenture Section 310 (a)(1) 7.10   (a)(2) 7.10   (a)(3) N.A.  
(a)(4) N.A.   (a)(5) 7.10   (b) 7.10   (c) N.A. 311 (a) 7.11   (b) 7.11   (c)
N.A. 312 (a) 2.05   (b) 12.03   (c) 12.03 313 (a) 7.06   (b)(1) 10.03   (b)(2)
7.06; 7.07   (c) 7.06; 10.03;12.02   (d) 7.06 314 (a) 4.03;12.02; 12.05   (b)
N.A.   (c)(1) 12.04   (c)(2) 12.04   (c)(3) N.A.   (d) N.A.   (e) 12.05   (f)
N.A. 315 (a) 7.01   (b) 7.05; 12.02   (c) 7.01   (d) 7.01   (e) 6.11 316 (a)
(last sentence) 2.09   (a)(1)(A) 6.05   (a)(1)(B) 6.04   (a)(2) N.A.   (b) 6.07
  (c) 2.12 317 (a)(1) 6.08   (a)(2) 6.09   (b) 2.04 318 (a) 12.01   (b) N.A.  
(c) 12.01

 

N.A. means not applicable.

* This Cross Reference Table is not part of this Indenture.

 

 

 

 

TABLE OF CONTENTS

 

      Page         ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE    
Section 1.01 Definitions 1   Section 1.02 Other Definitions 23   Section 1.03
Incorporation by Reference of Trust Indenture Act 23   Section 1.04 Rules of
Construction 24         ARTICLE 2 THE NOTES     Section 2.01 Form and Dating 24
  Section 2.02 Execution and Authentication 25   Section 2.03 Registrar and
Paying Agent 25   Section 2.04 Paying Agent to Hold Money in Trust 25   Section
2.05 Holder Lists 26   Section 2.06 Transfer and Exchange 26   Section 2.07
Replacement Notes 37   Section 2.08 Outstanding Notes 37   Section 2.09 Treasury
Notes 38   Section 2.10 Temporary Notes 38   Section 2.11 Cancellation 38  
Section 2.12 Defaulted Interest 38   Section 2.13 Global Notes 39        
ARTICLE 3 REDEMPTION AND PREPAYMENT     Section 3.01 Notices to Trustee 39  
Section 3.02 Selection of Notes to Be Redeemed or Purchased 39   Section 3.03
Notice of Redemption 39   Section 3.04 Effect of Notice of Redemption 40  
Section 3.05 Deposit of Redemption or Purchase Price 40   Section 3.06 Notes
Redeemed or Purchased in Part 41   Section 3.07 Optional Redemption 41   Section
3.08 Mandatory Redemption 42   Section 3.09 [Reserved] 42   Section 3.10 Offer
to Purchase by Application of Excess Proceeds 42         ARTICLE 4 COVENANTS    
Section 4.01 Payment of Notes 44   Section 4.02 Maintenance of Office or Agency
44   Section 4.03 Reports 45   Section 4.04 Compliance Certificate 47   Section
4.05 Taxes 47   Section 4.06 Stay, Extension and Usury Laws 47

 

 

 

 

      Page           Section 4.07 Restricted Payments 48   Section 4.08 Dividend
and Other Payment Restrictions Affecting Subsidiaries 50   Section 4.09
Incurrence of Indebtedness and Issuance of Preferred Stock 52   Section 4.10
Asset Sales 55   Section 4.11 Transactions with Affiliates 58   Section 4.12
Liens 59   Section 4.13 Business Activities 59   Section 4.14 Corporate
Existence 59   Section 4.15 Offer to Repurchase Upon Change of Control 59  
Section 4.16 Royalty Transactions Repurchase Offer 61   Section 4.17 Additional
Note Guarantees 64   Section 4.18 Designation of Royalty Transaction
Subsidiaries 64   Section 4.19 Maintenance of Property and Insurance 64  
Section 4.20 Real Estate Mortgages and Filings 65   Section 4.21 Minimum Cash
Balance 66   Section 4.22 Control Agreements 66   Section 4.23 Access to
Management 66   Section 4.24 Amendments 66         ARTICLE 5 SUCCESSORS    
Section 5.01 Merger, Consolidation, or Sale of Assets 67   Section 5.02
Successor Corporation Substituted 68         ARTICLE 6 DEFAULTS AND REMEDIES    
Section 6.01 Events of Default 68   Section 6.02 Acceleration 71   Section 6.03
Other Remedies 71   Section 6.04 Waiver of Past Defaults 71   Section 6.05
Control by Majority 72   Section 6.06 Limitation on Suits 72   Section 6.07
Rights of Holders of Notes to Receive Payment 72   Section 6.08 Collection Suit
by Trustee 72   Section 6.09 Trustee May File Proofs of Claim 73   Section 6.10
Priorities 73   Section 6.11 Undertaking for Costs 73         ARTICLE 7 TRUSTEE
    Section 7.01 Duties of Trustee 74   Section 7.02 Rights of Trustee 75  
Section 7.03 Individual Rights of Trustee and Collateral Agent 76   Section 7.04
Trustee’s and Collateral Agent’s Disclaimer 76   Section 7.05 Notice of Defaults
76   Section 7.06 Reports by Trustee to Holders of the Notes 77   Section 7.07
Compensation and Indemnity 77   Section 7.08 Replacement of Trustee 78   Section
7.09 Successor Trustee by Merger, etc. 79   Section 7.10 Eligibility;
Disqualification 79   Section 7.11 Preferential Collection of Claims Against
Company 79

 

ii

 

 

      Page           Section 7.12 Trustee as Paying Agent 80         ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE     Section 8.01 Option to Effect Legal
Defeasance or Covenant Defeasance 80   Section 8.02 Legal Defeasance and
Discharge 80   Section 8.03 Covenant Defeasance 81   Section 8.04 Conditions to
Legal or Covenant Defeasance 81   Section 8.05 Deposited Money and Government
Securities to be Held in Trust; Other Miscellaneous Provisions 82   Section 8.06
Repayment to Company 82   Section 8.07 Reinstatement 83         ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER     Section 9.01 Without Consent of Holders of
Notes 83   Section 9.02 With Consent of Holders of Notes 84   Section 9.03
Revocation and Effect of Consents 85   Section 9.04 Notation on or Exchange of
Notes 85   Section 9.05 Trustee to Sign Amendments, Waivers, etc. 85        
ARTICLE 10 COLLATERAL AND SECURITY     Section 10.01 Grant of Security Interest;
Collateral Documents 86   Section 10.02 Recording and Opinions 86   Section
10.03 Release of Collateral 87   Section 10.04 [Reserved] 87   Section 10.05
[Reserved] 87   Section 10.06 Authorization of Actions to Be Taken by the
Trustee Under the Collateral Documents 87   Section 10.07 Authorization of
Receipt of Funds by the Trustee Under the Collateral Documents 88   Section
10.08 Termination of Security Interest 88         ARTICLE 11 NOTE GUARANTEES    
      Section 11.01 Guarantee 88   Section 11.02 Limitation on Guarantor
Liability 89   Section 11.03 Execution and Delivery of Note Guarantee 89  
Section 11.04 Guarantors May Consolidate, etc., on Certain Terms 90   Section
11.05 Releases 90         ARTICLE 12 SATISFACTION AND DISCHARGE     Section
12.01 Satisfaction and Discharge 91   Section 12.02 Application of Trust Money
92         ARTICLE 13 MISCELLANEOUS         Section 13.01 Notice 92   Section
13.02 Communication by Holders of Notes with Other Holders of Notes 94   Section
13.03 Certificate and Opinion as to Conditions Precedent 94

 

iii

 

 

      Page           Section 13.04 Statements Required in Certificate or Opinion
94   Section 13.05 Rules by Trustee and Agents 94   Section 13.06 Force Majeure
94   Section 13.07 No Personal Liability of Directors, Officers, Employees and
Stockholders 95   Section 13.08 Governing Law; Waiver of Jury Trial 95   Section
13.09 No Adverse Interpretation of Other Agreements 95   Section 13.10
Successors 95   Section 13.11 Severability 95   Section 13.12 Counterpart
Originals 95   Section 13.13 Table of Contents, Headings, etc. 96   Section
13.14 U.S.A. Patriot Act 96

 

EXHIBITS

 

Exhibit A FORM OF NOTE A-1 Exhibit B FORM OF CERTIFICATE OF TRANSFER B-1 Exhibit
C FORM OF CERTIFICATE OF EXCHANGE C-1 Exhibit D FORM OF CERTIFICATE OF ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR D-1 Exhibit E FORM OF SUPPLEMENTAL INDENTURE
E-1

 

iv

 

 

INDENTURE dated as of October 5, 2015 between Nektar Therapeutics, a Delaware
corporation, and Wilmington Trust, National Association, as trustee (together
with its successors and assigns, in such capacity, the “Trustee”) and TC
Lending, LLC, as collateral agent (together with its successors and assigns, in
such capacity, the “Collateral Agent”).

 

The Company (as hereinafter defined), the Trustee and the Collateral Agent agree
as follows for the benefit of each other and for the equal and ratable benefit
of the Holders (as defined below) of the 7.75% Senior Secured Notes due 2020
(the “Notes”):

 

ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE

 

Section 1.01         Definitions.

 

“144A Global Note” means a Global Note substantially in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.

 

“Acquired Debt” means, with respect to any specified Person:

 

(1)Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Restricted Subsidiary of, such specified Person; and

 

(2)Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person will be deemed to be control solely for purposes of
Section 4.11. For purposes of this definition, the terms “controlling,”
“controlled by” and “under common control with” have correlative meanings.

 

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying
agent.

 

“Applicable Procedures” means, with respect to any transfer or exchange of or
for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

 

“Applicable Transaction” means (1) any incurrence of Indebtedness as part of a
Collaboration Transaction or Royalty Transaction in connection with which cash
proceeds are generated and (2) the receipt of any cash payments by the Company
or any Restricted Subsidiary of the Company as part of a Collaboration
Transaction other than (x) net royalty payments, (y) payments for bona fide
services provided by the Company or any Restricted Subsidiary and (z) payments
for manufacturing and supply activities and (3) any incurrence of Permitted
Convertible Notes, in each case, arising from transactions occurring after the
date of this Indenture but excluding amendments, restatements, modifications,
renewals, supplements or replacements of agreements entered into prior to the
date of this Indenture.

 

1

 

 

“Asset Sale” means:

 

(1)the sale, lease, conveyance or other disposition of any assets or property;
provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole will be governed by Section 4.15 and/or Section 5.01 and not by
the provisions of Section 4.10; and

 

(2)the issuance of Equity Interests in any of the Company’s Restricted
Subsidiaries or the sale of Equity Interests in any of its Restricted
Subsidiaries.

 

Notwithstanding the preceding, none of the following items will be deemed to be
an Asset Sale:

 

(1)any single transaction or series of related transactions (other than a
Royalty Transaction) that involves assets having a Fair Market Value of less
than $1.0 million;

 

(2)a transfer of assets between or among the Company and the Guarantors;

 

(3)an issuance of Equity Interests by a Restricted Subsidiary of the Company to
the Company or to a Restricted Subsidiary of the Company;

 

(4)the sale or lease of products, services or accounts receivable in the
ordinary course of business, any sale or other disposition of damaged, worn-out
or obsolete assets in the ordinary course of business and the abandonment or
other disposition of intellectual property (other than a Royalty Transaction)
that in the Company’s good faith judgment are not useful in a Permitted Business
or otherwise of any material value;

 

(5)the sale or other disposition of cash or Cash Equivalents;

 

(6)a Restricted Payment that does not violate Section 4.07 or a Permitted
Investment;

 

(7)the licensing or sublicensing of patents, trademarks, know-how or other
intellectual property or general intangibles related thereto (in each case,
other than a Royalty Transaction) in the ordinary course of business which do
not materially interfere with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries (provided that any exclusive
license of patents that effectively constitutes a transfer of the related patent
shall be deemed to be an Asset Sale);

 

(8)the lease, assignment or sublease of any real or personal property (other
than a Royalty Transaction) in the ordinary course of business which do not
materially interfere with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries;

 

(9)the sale of any property in a Sale/Leaseback Transaction within six months of
the acquisition of such property;

 

(10)the sale or other disposition of the Equity Interests of any Royalty
Transaction Subsidiary pursuant to the foreclosure of a pledge of such Equity
Interests in connection with the related Royalty Transaction; and

 

2

 

 

(11)any Collaboration Transaction, to the extent involving any sale, lease,
conveyance or other disposition of property or assets.

 

For the avoidance of doubt, (i) any Royalty Transaction shall constitute an
Asset Sale and (ii) no Specified Drug shall be permitted to be sold, disposed or
otherwise transferred other than pursuant to a Royalty Transaction.

 

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law
for the relief of debtors.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Section 13(d)(3)
of the Exchange Act), such “person” will be deemed to have beneficial ownership
of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and
“Beneficially Owned” have a corresponding meaning.

 

“Board of Directors” means:

 

(1)with respect to a corporation, the board of directors of the corporation or
any committee thereof duly authorized to act on behalf of such board;

 

(2)with respect to a partnership, the Board of Directors of the general partner
of the partnership;

 

(3)with respect to a limited liability company, the managing member or members
or any controlling committee of managing members thereof; and

 

(4)with respect to any other Person, the board or committee of such Person
serving a similar function.

 

“Business Day” means any day other than a Legal Holiday.

 

“Capital Lease Obligation” means, at the time any determination is to be made,
the amount of the liability in respect of a capital lease that would at that
time be required to be capitalized on a balance sheet prepared in accordance
with GAAP, and the Stated Maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be prepaid by the lessee without payment of a penalty.

 

“Capital Stock” means:

 

(1)in the case of a corporation, corporate stock;

 

(2)in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock;

 

(3)in the case of a partnership or limited liability company, partnership
interests (whether general or limited) or membership interests; and

 

(4)any other interest or participation in a Person that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, but excluding from all of the foregoing any debt
securities convertible into Capital Stock, whether or not such debt securities
include any right of participation with Capital Stock.

 

3

 

 

“Cash Equivalents” means:

 

(1)United States dollars;

 

(2)securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality of the United States
government (provided that the full faith and credit of the United States is
pledged in support of those securities) having maturities of not more than one
year from the date of acquisition;

 

(3)certificates of deposit and eurodollar time deposits with maturities of two
years or less from the date of acquisition, bankers’ acceptances with maturities
not exceeding two years and overnight bank deposits, in each case, with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Thomson Bank Watch Rating of “B” or better;

 

(4)repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (2) and (3) above entered into with
any financial institution meeting the qualifications specified in clause (3)
above;

 

(5)commercial paper having one of the two highest ratings obtainable from
Moody’s or S&P and, in each case, maturing within two years after the date of
acquisition;

 

(6)readily marketable direct obligations issued by any state of the United
States of America or any political subdivision thereof having one of the two
highest rating categories obtainable from either Moody’s or S&P (or reasonably
equivalent ratings of another internationally recognized ratings agency) in each
case with maturities not exceeding two years from the date of acquisition;

 

(7)Indebtedness issued by Persons (other than the Company or any of its
Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from
Moody’s in each case with maturities not exceeding two years from the date of
acquisition; and

 

(8)investment funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (7) of this
definition.

 

“Change of Control” means the occurrence of any of the following:

 

(1)the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than (x) by way of merger or consolidation or (y) pursuant to a Royalty
Transaction), in one or a series of related transactions, of (i) all or
substantially all of the properties or assets of the Company and its
Subsidiaries taken as a whole to any Person other than the Company or a
Guarantor; or (ii) assets of the Company or any Subsidiary of the Company to a
Person other than the Company or a Guarantor for a purchase price equal to more
than 50% of the consolidated total assets of the Company (based upon the
Company’s most recent audited balance sheet);

 

(2)the adoption of a plan relating to, or the occurrence of, the liquidation,
dissolution or winding up of the Company;

 

(3)the consummation of any transaction (including, without limitation, any
merger or consolidation), the result of which is that any “person” or “group”
(each as defined above) becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the Voting Stock of the Company, measured by voting power
rather than number of shares;

 

4

 

 

(4)the Company consolidates with, or merges with or into, any Person, or any
Person consolidates with, or merges with or into, the Company, or the Company
consummates an exchange of shares, recapitalization, reorganization, business
combination or other similar event, in any such event pursuant to a transaction
following which the holders of Voting Stock immediately preceding such
consolidation, merger, exchange, recapitalization, reorganization, business
combination or similar event either (a) no longer hold a majority of the Voting
Stock of the Company or (b) no longer have the ability elect a majority of the
board of directors of the Company; or

 

(5)the first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors.

 

“Clearstream” means Clearstream Banking, S.A.

 

“Collaboration Agreement” means any agreement entered into in connection with a
Collaboration Transaction.

 

“Collaboration Transaction” means any transaction pursuant to which the Company
or any Restricted Subsidiary (a) provides a license or sublicense of its
intellectual property, or transfers, contributes or assigns intellectual
property owned or controlled by the Company or any Restricted Subsidiary and/or
provides a right of reference regulatory filings and applications with
governmental health authorities, and/or provides rights with respect to
pre-clinical and clinical data, in each case to one or more third parties in
connection with the (b) research, clinical development, regulatory activities,
manufacturing, commercialization and/or marketing of one or more of the
Company’s or any Restricted Subsidiary’s drugs or drug candidates, or similar
agreements or arrangements.

 

“Collateral” has the meaning assigned to it in the Collateral Documents.

 

“Collateral Agent” shall have the meaning set forth in the preamble.

 

“Collateral Documents” means the Security Agreement, the other security
agreements, pledge agreements, Mortgages, collateral assignments, Control
Agreements and related agreements (including, without limitation, financing
statements under the Uniform Commercial Code of the relevant states), each as
amended, supplemented, restated, renewed, replaced or otherwise modified from
time to time, to secure any Obligations under the Indenture Documents or under
which rights or remedies with respect to any such Lien are governed.

 

“Company” means Nektar Therapeutics, and any and all successors thereto.

 

“Competitor” means an entity engaged primarily in substantially the same
business as the Company, which is the business of discovery, development,
manufacturing, selling, licensing and/or other commercialization of
pharmaceutical products. For the avoidance of doubt, “Competitor” shall not
include any financial services institution, investment fund or lender.

 

5

 

 

“Consolidated Cash Flow” means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period, adjusted as
follows (without duplication):

 

(1)plus provision for taxes based on income, profits or capital, including
state, franchise and similar taxes, of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
taken into account in computing such Consolidated Net Income;

 

(2)plus the Fixed Charges of such Person and its Restricted Subsidiaries for
such period, to the extent that such Fixed Charges were deducted in computing
such Consolidated Net Income;

 

(3)plus depreciation, amortization (including amortization of intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income;

 

(4)minus non-cash items increasing such Consolidated Net Income for such period
other than the recognition of deferred revenue from transactions for which cash
was received after the date of this Indenture, the accrual of revenue in the
ordinary course of business and any items which represent the reversal of any
accrual of, or cash reserve for, anticipated cash charges in any prior period
and any items for which cash was received in a prior period;

 

in each case, on a consolidated basis and determined in accordance with GAAP.

 

“Consolidated Net Income” means, with respect to any specified Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:

 

(1)any extraordinary, nonrecurring or unusual gains or losses or income,
expenses or charges, including, without limitation, any non-cash royalty revenue
and any associated non-cash royalty expense, any severance expenses, any fees,
expenses or charges related to any equity offering, Permitted Investment,
acquisition or Indebtedness permitted to be incurred by this Indenture (in each
case, whether or not successful), in each case, shall be excluded;

 

(2)the Net Income (but not loss) of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting will be included only to the
extent of the amount of dividends or similar distributions paid in cash (or to
the extent converted into cash) to the specified Person or a Restricted
Subsidiary of the Person;

 

(3)solely for the purpose of determining the amount available for Restricted
Payments under clause (iii)(a) of Section 4.07(a), the Net Income of any
Restricted Subsidiary (other than a Note Guarantor) will be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders unless any applicable restrictions have been legally waived;

 

(4)the cumulative effect of a change in accounting principles will be excluded;

 

6

 

 

(5)the Net Income of any Royalty Transaction Subsidiary will be included solely
to the extent distributed to the specified Person or one of its Subsidiaries;

 

(6)any increase in amortization or depreciation or any one-time non-cash charges
or reductions in Net Income, in each case resulting from purchase accounting in
connection with any acquisition that is consummated after the date of this
Indenture shall be excluded;

 

(7)any impairment charges or asset write-offs and amortization of intangibles in
each case arising pursuant to the application of GAAP shall be excluded;

 

(8)any non-cash expense realized or resulting from employee benefit plans or
post-employment benefit plans, grants of stock appreciation or similar rights,
stock options or other rights to officers, directors and employees of such
Person or any of its Restricted Subsidiaries, any severance or relocation costs
or expenses, one-time non-cash compensation charges, in each case of such Person
or any of its Restricted Subsidiaries, shall be excluded;

 

(9)any currency translation gains and losses related to currency remeasurements
of indebtedness, and any net loss or gain resulting from hedging transactions
for currency exchange risk, shall be excluded;

 

(10)non-cash charges for deferred tax asset valuation allowances shall be
excluded; and

 

(11)to the extent covered by insurance and actually reimbursed, or, so long as
such Person has made a determination that there exists reasonable evidence that
such amount will in fact be reimbursed by the insurer and only to the extent
that such amount is (a) not denied by the applicable carrier in writing within
180 days and (b) in fact reimbursed within 365 days of the date of such evidence
(with a deduction for any amount so added back to the extent not so reimbursed
within 365 days), expenses with respect to casualty events or business
interruption, net of any reimbursement to the extent already taken into account
in computing Consolidated Net Income, shall be excluded.

 

“Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Company who:

 

(1)was a member of such Board of Directors on the date of this Indenture; or

 

(2)was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election.

 

“Control Agreement” means a control agreement, in form and substance
satisfactory to Collateral Agent, executed and delivered by the Company or one
of its Subsidiaries, Collateral Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

 

“Corporate Trust Office of the Trustee” will be at the address of the Trustee
specified in Section 13.01 hereof or such other address as to which the Trustee
may give notice to the Company.

 

“Custodian” means the Trustee, as custodian with respect to the Notes in global
form, or any successor entity thereto.

 

7

 

 

“Default” means any event that is, or with the passage of time or the giving of
notice or both would be, an Event of Default.

 

“Definitive Note” means a certificated Note registered in the name of the Holder
thereof and issued in accordance with Section 2.06 hereof, substantially in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the “Schedule of Exchanges of Interests in the Global
Note” attached thereto.

 

“Deposit Account” means a demand, time, savings, passbook or like account with a
bank, savings and loan association, credit union or like organization, other
than an account evidenced by a negotiable certificate of deposit.

 

“Depositary” means, with respect to the Notes issuable or issued in whole or in
part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

 

“Designated Preferred Stock” means Preferred Stock of the Company (other than
Disqualified Stock), that is issued for cash (other than to the Company or any
of its Subsidiaries or an employee stock ownership plan or trust established by
the Company or any of its Subsidiaries) and is so designated as Designated
Preferred Stock, pursuant to an Officer’s Certificate, on the issuance date
thereof.

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms
of any security into which it is convertible, or for which it is exchangeable,
in each case, at the option of the holder of the Capital Stock), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
of the Capital Stock, in whole or in part, on or prior to the date that is 91
days after the date on which the Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 4.07. The amount of Disqualified Stock deemed to be
outstanding at any time for purposes of this Indenture will be the maximum
amount that the Company and its Restricted Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory redemption provisions of,
such Disqualified Stock, exclusive of accrued dividends.

 

“Domestic Restricted Subsidiary” means any Restricted Subsidiary of the Company
that was formed under the laws of the United States or any state of the United
States or the District of Columbia or that guarantees or otherwise provides
direct credit support for any Indebtedness of the Company.

 

“Equity Interests” means Capital Stock and all warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).

 

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear
system.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

8

 

 

“Excluded Account” means (i) Deposit Accounts and Securities Accounts the
balance of which consists exclusively of (a) withheld income taxes and federal,
state or local employment taxes in such amounts as are required to be paid to
the Internal Revenue Service or state or local government agencies within the
following two months with respect to employees of the Company or any of its
Restricted Subsidiaries, and (b) any payroll accounts, health care reimbursement
accounts and employee benefits accounts, including any accounts containing
amounts required to be paid over to an employee benefit plan pursuant to DOL
Reg. Sec. 2510.3-102 on behalf of or for the benefit of employees of the Company
or any of its Restricted Subsidiaries, (ii) all segregated Deposit Accounts
constituting (and the balance of which consists solely of funds set aside in
connection with) tax accounts, fiduciary accounts and trust accounts and (iii)
any Deposit Accounts and Securities Accounts, amounts on deposit in which do not
exceed $50,000 individually or $250,000 in the aggregate at any one time.

 

“Existing Indebtedness” means Indebtedness of the Company and its Subsidiaries
in existence on the date of this Indenture (other than the Indebtedness under
the Existing Secured Notes), until such amounts are repaid.

 

“Existing Secured Notes” means the 12.00% Senior Secured Notes due 2017 of the
Company issued under the Existing Secured Notes Indenture.

 

“Existing Secured Notes Indenture” means the Indenture, dated as of July 11,
2012, between the Company and Wells Fargo Bank, National Association, as trustee
and collateral agent.

 

“Fair Market Value” means the value that would be paid by a willing buyer to an
unaffiliated willing seller in a transaction not involving distress or necessity
of either party, as determined in good faith by the Company (and in the case of
determinations of Fair Market Value in excess of $5.0 million, by the Board of
Directors of the Company).

 

“Fee Letter” means the letter agreement dated October 5, 2015 between the
Collateral Agent and the Company, as amended, amended and restated, supplemented
or otherwise modified from time to time.

 

“Fixed Charge Coverage Ratio” means with respect to any specified Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
specified Person or any of its Restricted Subsidiaries incurs, assumes,
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge
Coverage Ratio will be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other
discharge of Indebtedness, or such issuance, repurchase or redemption of
preferred stock, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable four-quarter reference period.

 

For purposes of making the computation referred to above, Investments,
acquisitions, dispositions, mergers, consolidations and discontinued operations
(as determined in accordance with GAAP), in each case with respect to an
operating unit of a business, during the four-quarter reference period or
subsequent to such reference period and on or prior to or simultaneously with
the Calculation Date (each, for purposes of this definition, a “pro forma
event”) shall be calculated on a pro forma basis assuming that all such
Investments, acquisitions, dispositions, mergers, consolidations and
discontinued operations (and the change of any associated fixed charge
obligations and the change in Consolidated Cash Flow resulting therefrom) had
occurred on the first day of the four-quarter reference period. If since the
beginning of such period any Person that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period shall have made any Investment, acquisition,
disposition, merger, consolidation or discontinued operation, in each case with
respect to an operating unit of a business, that would have required adjustment
pursuant to this definition, then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect thereto for such period as if such
Investment, acquisition, disposition, discontinued operation, merger or
consolidation had occurred at the beginning of the applicable four-quarter
period.

 

9

 

 

For purposes of this definition, whenever pro forma effect is to be given to any
pro forma event, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of the Company and determined on a
basis consistent with Article 11 of Regulation S-X promulgated under the
Securities Act and as interpreted by the staff of the SEC. Any such pro forma
calculation may include adjustments appropriate, in the reasonable good faith
determination of the Company as set forth in an Officer’s Certificate, to
reflect operating expense reductions and other operating improvements or
synergies reasonably expected to result within twelve months following the
applicable pro forma event so long as such adjustments are determined on a basis
consistent with Article 11 of Regulation S-X promulgated under the Securities
Act and as interpreted by the staff of the SEC.

 

If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness shall be calculated as if the
rate in effect on the Calculation Date had been the applicable rate for the
entire period (taking into account any Hedging Obligations applicable to such
Indebtedness if such Hedging Obligation has a remaining term in excess of twelve
months). Interest on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by a responsible financial or accounting
officer of the Company to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP. For purposes of making the computation
referred to above, interest on any Indebtedness under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the applicable period. Interest on
Indebtedness that may optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank offered rate, or
other rate, shall be deemed to have been based upon the rate actually chosen,
or, if none, then based upon such optional rate chosen as the Company may
designate.

 

“Fixed Charges” means, with respect to any specified Person for any period, the
sum, without duplication, of:

 

(1)the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of all payments associated with Capital Lease
Obligations, excluding the amortization of deferred financing fees and expensing
of any bridge or other financing fees, and net of the effect of all payments
made or received pursuant to Hedging Obligations in respect of interest rates;

 

(2)plus the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period;

 

(3)plus all cash dividends (excluding items eliminated in consolidation) on any
series of preferred stock of such Person or any of its Restricted Subsidiaries,

 

(4)minus interest income for such period,

 

in each case, determined on a consolidated basis in accordance with GAAP;
provided that non-cash interest expense in respect of long-term liabilities
incurred in connection with Royalty Transactions that do not constitute
Indebtedness for borrowed money shall not be included in Fixed Charges.

 

10

 

 

“Foreign Subsidiary” means a Subsidiary that is organized under the laws of a
jurisdiction other than the United States, any state or territory thereof or the
District of Columbia and does not guarantee or otherwise provide direct credit
support for any Indebtedness of the Company.

 

“GAAP” means generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.

 

“Global Note Legend” means the legend set forth in Section 2.06(f)(2) hereof,
which is required to be placed on all Global Notes issued under this Indenture.

 

“Global Notes” means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes deposited with or on behalf of
and registered in the name of the Depositary or its nominee, substantially in
the form of Exhibit A hereto and that bears the Global Note Legend and that has
the “Schedule of Exchanges of Interests in the Global Note” attached thereto,
issued in accordance with Section 2.01, 2.06(b)(3), 2.06(b)(4) or 2.06(d)(2)
hereof.

 

“Government Securities” means securities that are: (1) direct obligations of the
United States of America for the timely payment of which its full faith and
credit is pledged, or (2) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in each case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Government Securities
or a specific payment of principal of or interest on any such Government
Securities held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Securities or the specific payment of principal of or interest on
the Government Securities evidenced by such depository receipt.

 

“Guarantee” means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take or pay or to maintain financial statement
conditions or otherwise).

 

“Guarantor” means any Domestic Restricted Subsidiary of the Company that
executes a Note Guarantee in accordance with the provisions of this Indenture
and its successors and assigns, in each case, until the Note Guarantee of such
Person has been released in accordance with the provisions of this Indenture.

 

“Hedging Obligations” means, with respect to any specified Person, the
obligations of such Person under:

 

(1)interest rate swap agreements (whether from fixed to floating or from
floating to fixed), interest rate cap agreements and interest rate collar
agreements;

 

(2)other agreements or arrangements designed to manage interest rates or
interest rate risk; and

 

11

 

 

(3)other agreements or arrangements designed to protect such Person against
fluctuations in currency exchange rates or commodity prices.

 

“Holder” means a Person in whose name a Note is registered on the books of the
Registrar.

 

“IAI Global Note” means a Global Note substantially in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

 

“Indebtedness” means, with respect to any specified Person, any indebtedness of
such Person (excluding accrued expenses, deferred or prepaid revenue, trade
payables and Guarantees incurred in the ordinary course of business and not in
respect of borrowed money), whether or not contingent:

 

(1)in respect of borrowed money;

 

(2)evidenced by bonds, notes, debentures or similar instruments;

 

(3)all Obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction;

 

(4)representing Capital Lease Obligations;

 

(5)representing the balance deferred and unpaid of the purchase price of any
property or services due more than six months after such property is acquired or
such services are completed; or

 

(6)representing any Hedging Obligations,

 

if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
“Indebtedness” includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business).

 

“Indenture” means this Indenture, as amended or supplemented from time to time.

 

“Indenture Documents” means this Indenture, the Notes, the Note Guarantees, the
Fee Letter and the Collateral Documents.

 

“Indirect Participant” means a Person who holds a beneficial interest in a
Global Note through a Participant.

 

12

 

 

“Investments” means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Subsidiary of the Company sells or otherwise disposes of any Equity
Interests of any direct or indirect Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company will be deemed to have made an Investment
on the date of any such sale or disposition equal to the Fair Market Value of
the Company’s Investments in such Subsidiary that were not sold or disposed of
in an amount determined as provided in Section 4.07. The acquisition by the
Company or any Subsidiary of the Company of a Person that holds an Investment in
a third Person will be deemed to be an Investment by the Company or such
Subsidiary in such third Person in an amount equal to the Fair Market Value of
the Investments held by the acquired Person in such third Person in an amount
determined as provided in Section 4.07 Except as otherwise provided in this
Indenture, the amount of an Investment will be determined at the time the
Investment is made and without giving effect to subsequent changes in value. Any
payments (including payments under the existing intercompany agreement between
the Company and Nektar Therapeutics (India) Private Limited) made to a foreign
Restricted Subsidiary of the Company by the Company or a domestic Restricted
Subsidiary of the Company to the extent reflected as operating expenses of the
Company or such domestic Restricted Subsidiary in the financial statements of
the Company shall be deemed to not constitute an Investment in such foreign
Restricted Subsidiary.

 

“Institutional Accredited Investor” means an institution that is an “accredited
investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act, who are not also QIBs.

 

“Legal Holiday” means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction.

 

“LTM Royalty Revenue” means for the purpose of this Indenture, at any date of
determination, the lesser of (i) the actual last twelve months of royalty
revenue received by the Company and its Restricted Subsidiaries and (ii) the
actual last twelve months of royalty revenue received by the Company and its
Restricted Subsidiaries calculated as if the Company and its Restricted
Subsidiaries had received all such royalty revenue in the prior calendar year
and subject to any annual royalty tiers applicable in the prior calendar year.
For the avoidance of doubt, any royalties applied to this definition do not
include (i) milestones or other one-time payments or (ii) any royalties
associated with any license agreement or permit with respect to any Specified
Drug if such license or permit has been lost, suspended, revoked or not renewed.

 

“Material Adverse Effect” means a material adverse effect on the financial
condition, operations, assets, or business of the Company and its Subsidiaries,
taken as a whole.

 

13

 

 

“Make-Whole Premium” means an amount equal to (A) the difference between (1) the
aggregate amount of interest (including, without limitation, interest payable in
cash, in kind or deferred) which would have otherwise been payable on the amount
of the redemption from the date of redemption until the twenty-four month
anniversary of the date of this Indenture, minus (2) the aggregate amount of
interest Holders would earn if the redeemed amount were reinvested for the
period from the date of redemption until the twenty-four month anniversary of
the date of this Indenture at the Treasury Rate plus (B) an amount equal to the
Prepayment Premium that would otherwise be payable as if such redemption had
occurred on the day after the twenty-four month anniversary of the date of this
Indenture. The Company shall deliver a certificate to the Trustee containing the
calculation of the Make-Whole Premium and certifying that such calculation was
done in accordance with the Indenture.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” means a collective reference to each mortgage, deed of trust, deed
to secure debt and any other document or instrument under which any Lien on the
Premises or any other Collateral secured by and described in such mortgages,
deeds of trust, deeds to secure debt or other documents or instruments is
granted to secure any Obligations of the Company or a Guarantor under any of the
Indenture Documents or under which rights or remedies with respect to any such
Liens are governed.

 

“Net Income” means, with respect to any specified Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, any gain (or loss),
together with any related provision for taxes on such gain (or loss), realized
in connection with: (a) any Asset Sale; or (b) the disposition of any securities
by such Person or any of its Restricted Subsidiaries or the extinguishment of
any Indebtedness of such Person or any of its Restricted Subsidiaries.

 

“Net Proceeds” means the aggregate cash proceeds received by the Company or any
of its Restricted Subsidiaries in respect of any Asset Sale, Royalty Transaction
or Applicable Transaction (including, without limitation, any cash received upon
the sale or other disposition of any non-cash consideration received in any
Asset Sale, Royalty Transaction or Applicable Transaction, but only as and when
received), net of the direct costs relating to such Asset Sale, Royalty
Transaction or Applicable Transaction, including, without limitation, legal,
accounting and investment banking fees, and sales or brokerage commissions, and
any relocation expenses incurred as a result of the Asset Sale, Royalty
Transaction or Applicable Transaction, taxes paid or payable as a result of the
Asset Sale, Royalty Transaction or Applicable Transaction, in each case, after
taking into account any available tax credits or deductions and any tax sharing
arrangements, and amounts (including premiums and fees) required to be applied
to the repayment of Indebtedness required to be repaid as a result of such Asset
Sale, Royalty Transaction or Applicable Transaction and any reserve for
adjustment in respect of the sale price of such asset or assets, or any retained
liabilities or indemnities with respect to such Asset Sale, Royalty Transaction
or Applicable Transaction, established in accordance with GAAP; provided,
however, that the amount of Net Proceeds received with respect to an issuance of
Permitted Convertible Notes shall be deemed to be 35% of the amount that would
otherwise be determined pursuant to the foregoing definition.

 

“Non-Recourse Debt” means Indebtedness:

 

(1)as to which neither the Company nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (other than undertakings, including in
respect of ‘make-whole interest,’ that are customary in Royalty Transactions),
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;

 

(2)no default with respect to which (including any rights that the holders of
the Indebtedness may have to take enforcement action against a Royalty
Transaction Subsidiary) would permit upon notice, lapse of time or both any
holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment of the Indebtedness to be accelerated or payable prior to its Stated
Maturity; and

 

14

 

 

(3)as to which the lenders have been notified in writing that they will not have
any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.

 

“Non-U.S. Person” means a Person who is not a U.S. Person.

 

“Note Guarantee” means the Guarantee by each Guarantor of the Company’s
obligations under this Indenture and the Notes, executed pursuant to the
provisions of this Indenture.

 

“Notes” has the meaning assigned to it in the preamble to this Indenture.

 

“Obligations” means any principal, interest, penalties, fees, premiums, expenses
(including, without limitation, reasonable attorneys’, agents’ and professional
advisors’ fees and expenses), indemnifications, reimbursements, damages and
other liabilities payable under the documentation governing any Indebtedness.

 

“Officer” means the Chairman of the Board, Chief Executive Officer, Chief
Financial Officer, President, any Executive Vice President, Senior Vice
President or Vice President, the Treasurer or the Secretary of the Company.

 

“Officer’s Certificate” means a certificate signed on behalf of the Company by
an Officer of the Company that meets the requirements set forth in this
Indenture.

 

“Opinion of Counsel” means an opinion from legal counsel who is reasonably
acceptable to the Trustee or the Collateral Agent, as applicable, that meets the
requirements of Section 13.04 hereof. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.

 

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a
Person who has an account with the Depositary, Euroclear or Clearstream,
respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

 

“Permitted Business” means businesses which are the same, similar, ancillary or
reasonably related to the businesses in which the Company and its Restricted
Subsidiaries are engaged on the date of this Indenture.

 

“Permitted Investments” means:

 

(1)any Investment in the Company or in a Restricted Subsidiary of the Company
that is a Guarantor;

 

(2)any Investment in Cash Equivalents;

 

(3)any Investment by the Company or any Restricted Subsidiary of the Company in
a Person, if as a result of such Investment:

 

(a)          such Person becomes a Restricted Subsidiary of the Company and a
Guarantor; or

 

(b)          such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company and a Guarantor;

 

15

 

 

(4)any Investment made as a result of the receipt of non-cash consideration from
an Asset Sale that was made pursuant to and in compliance with Section 4.10;

 

(5)any acquisition of assets or Capital Stock solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Company;

 

(6)any Investments received in compromise or resolution of (A) obligations of
trade creditors or customers that were incurred in the ordinary course of
business of the Company or any of its Restricted Subsidiaries, including
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of any trade creditor or customer; or (B) litigation,
arbitration or other disputes;

 

(7)Investments represented by Hedging Obligations;

 

(8)loans or advances to employees made in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company in an aggregate principal
amount not to exceed $5.0 million at any one time outstanding;

 

(9)repurchases of the Notes;

 

(10)Collaboration Transactions and Royalty Transactions, to the extent involving
an Investment;

 

(11)guarantees not prohibited by Section 4.09 and guarantees required by Section
4.17;

 

(12)Investments in joint ventures of the Company or any of its Restricted
Subsidiaries not to exceed $15.0 million at any one time outstanding;

 

(13)Investments in Foreign Subsidiaries not to exceed $15.0 million at any one
time outstanding; and

 

(14)other Investments in any Person having an aggregate Fair Market Value
(measured on the date each such Investment was made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (14) that are at the time outstanding, not to
exceed $20.0 million.

 

For the avoidance of doubt, any Investment (other than a Royalty Transaction)
with respect to, or related to, any Specified Drugs (other than as set forth in
the following proviso) shall not constitute a Permitted Investment; provided
that any Investment in a Specified Drug otherwise permitted under this Indenture
shall constitute a Permitted Investment.

 

“Permitted Liens” means:

 

(1)Liens in favor of the Trustee or the Collateral Agent created pursuant to
this Indenture and the Collateral Documents with respect to the Note and Note
Guarantees;

 

(2)Liens in favor of the Company or the Guarantors;

 

(3)Liens on property of a Person existing at the time such Person is merged with
or into or consolidated with the Company or any Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company or the Subsidiary;

 

16

 

 

(4)Liens on property (including Capital Stock) existing at the time of
acquisition of the property by the Company or any Subsidiary of the Company;
provided that such Liens were in existence prior to, such acquisition, and not
incurred in contemplation of, such acquisition;

 

(5)Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business;

 

(6)Liens to secure Permitted Debt (including Capital Lease Obligations)
described in clause (4) of the definition thereof covering only the assets
acquired with or financed by such Indebtedness;

 

(7)Liens existing on the date of this Indenture; provided, that, in the case of
the Lien securing the Existing Secured Notes under the Existing Secured Notes
Indenture and the Collateral Documents (as defined in the Existing Secured Notes
Indenture), such Lien shall only be permitted prior to the date that is 90 days
after the date of this Indenture;

 

(8)Liens for taxes, assessments or governmental charges or claims that are not
yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that any
reserve or other appropriate provision as is required in conformity with GAAP
has been made therefor;

 

(9)Liens imposed by law, such as carriers’, warehousemen’s, landlord’s and
mechanics’ Liens, in each case, incurred in the ordinary course of business,
which are not overdue for a period of more than 30 days or which are being
contested in good faith and by appropriate proceedings diligently conducted;

 

(10)all Liens of record identified in any existing title policies, all survey
exceptions, all easements or reservations of, or rights of others for, licenses,
rights-of-way, sewers, electric lines, telegraph and telephone lines and other
utility or other similar purposes, all local and other Laws, including building
and zoning laws, regulations or ordinances, now or hereafter in effect relating
to or affecting any real property, and other Liens or imperfections of title to
or on real or personal property that are not material in amount or do not in the
aggregate materially adversely affect the value of said properties or materially
impair their use in the operation of the business of such Person;

 

(11)Liens to secure any Permitted Refinancing Indebtedness permitted to be
incurred under this Indenture; provided, however, that:

 

(a)the new Lien shall be limited to all or part of the same property and assets
that are subject to or, under the written agreements pursuant to which the
original Lien arose, could be subject to the original Lien (plus improvements
and accessions to, such property or proceeds or distributions thereof); and

  

(b)the Indebtedness secured by the new Lien is not increased to any amount
greater than the sum of (x) the outstanding principal amount, or, if greater,
committed amount, of the Permitted Refinancing Indebtedness and (y) an amount
necessary to pay any fees and expenses, including premiums, related to such
renewal, refunding, refinancing, replacement, defeasance or discharge; and

 

(12)Liens on assets of a Restricted Subsidiary that is not a Note Guarantor,
securing Indebtedness of such Restricted Subsidiary permitted to incurred
pursuant to Section 4.09;

 

17

 

 

(13)Collaboration Transactions and Royalty Transactions, to the extent involving
the incurrence of a Lien;

 

(14)grants of intellectual property licenses or sublicenses in the ordinary
course of business which do not materially interfere with the ordinary conduct
of the business of the Company or any of its Restricted Subsidiaries;

 

(15)judgment and attachment Liens not giving rise to an Event of Default;

 

(16)any encumbrance or restriction (including put and call arrangements) with
respect to Capital Stock of any joint venture or similar arrangement pursuant to
any joint venture or similar agreement;

 

(17)leases and subleases of real property in the ordinary course of business
which do not materially interfere with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries;

 

(18)Liens arising by virtue of any statutory or common law provisions relating
to banker’s liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a depository or financial
institution; and

 

(19)Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding.

 

Notwithstanding the foregoing, Liens on Specified Drugs (other than Liens on
Specified Drugs in favor of the Collateral Agent) shall not constitute Permitted
Liens; provided, that any restrictions set forth in any Collaboration Agreement
with respect to such Specified Drugs shall be permitted.

 

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to renew, refund, refinance, replace, defease or discharge
other Indebtedness of the Company or any of its Restricted Subsidiaries (other
than intercompany Indebtedness); provided that:

 

(1)the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness renewed, refunded, refinanced,
replaced, defeased or discharged (plus all accrued interest on the Indebtedness
and the amount of all fees and expenses, including premiums, incurred in
connection therewith);

 

(2)such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
renewed, refunded, refinanced, replaced, defeased or discharged;

 

(3)if the Indebtedness being renewed, refunded, refinanced, replaced, defeased
or discharged is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness is subordinated in right of payment to, the Notes on
terms at least as favorable to the holders of Notes as those contained in the
documentation governing the Indebtedness being renewed, refunded, refinanced,
replaced, defeased or discharged; and

 

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(4)such Indebtedness is incurred either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness being renewed, refunded,
refinanced, replaced, defeased or discharged.

 

“Person” means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.

 

“Preferred Stock” means any Equity Interest with preferential right of payment
of dividends or upon liquidation, dissolution, or winding up.

 

“Private Placement Legend” means the legend set forth in Section 2.06(f)(1)
hereof to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.

 

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

 

“Regulation S” means Regulation S promulgated under the Securities Act.

 

“Regulation S Global Note” means a Global Note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee, issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 903 of Regulation S.

 

“Responsible Officer,” when used with respect to the Trustee, means any officer
within the Corporate Trust Office of the Trustee (or any successor group of the
Trustee) or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject, and shall, in each case, have direct responsibility for
the administration of this Indenture.

 

“Restricted Definitive Note” means a Definitive Note bearing the Private
Placement Legend.

 

“Restricted Global Note” means a Global Note bearing the Private Placement
Legend.

 

“Restricted Investment” means an Investment other than a Permitted Investment.

 

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person
that is not a Royalty Transaction Subsidiary.

 

“Royalty Transaction” means any royalty monetization transaction with respect to
licenses or sublicenses of the intellectual property owned or controlled by the
Company or any Restricted Subsidiary, including but not limited to sales of
royalty streams, royalty bonds and other royalty financings, synthetic royalty
and revenue interest transactions and hybrid monetization transactions.

 

“Royalty Transaction Subsidiary” means any Subsidiary of the Company that is
designated by the Board of Directors of the Company as a Royalty Transaction
Subsidiary pursuant to a resolution of the Board of Directors, but only to the
extent that such Subsidiary:

 

(1)has no Indebtedness other than Non-Recourse Debt;

 

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(2)has no assets other than assets that are the subject of a Royalty Transaction
and is not engaged in any activities other than those related or incidental to a
Royalty Transaction;

 

(3)is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe
for additional Equity Interests or (b) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results, in each case other than pursuant to the terms of Non-Recourse
Debt; and

 

(4)has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries.

 

“Rule 144” means Rule 144 promulgated under the Securities Act.

 

“Rule 144A” means Rule 144A promulgated under the Securities Act.

 

“Rule 903” means Rule 903 promulgated under the Securities Act.

 

“Rule 904” means Rule 904 promulgated under the Securities Act.

 

“Sale/Leaseback Transaction” means an arrangement relating to property now owned
or hereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a Person and the
Company or such Restricted Subsidiary leases it from such Person, other than
leases between the Company and a Restricted Subsidiary of the Company or between
Restricted Subsidiaries of the Company.

 

“S&P” means Standard & Poor’s Ratings Group.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Account” means a securities account (as defined in the Uniform
Commercial Code (or any similar or equivalent legislation) as in effect in any
applicable jurisdiction).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Agreement” means the Pledge and Security Agreement, dated as of the
date of this Indenture, entered into by the Company and the Guarantors in favor
of the Collateral Agent, as amended, supplemented or otherwise modified from
time to time.

 

“Significant Subsidiary” means any Restricted Subsidiary (i) the total assets of
which constitute more than 5% of the consolidated total assets of the Company
and its Restricted Subsidiaries and (ii) the total revenues of which constitute
more than 5% of the consolidated revenues of the Company and its Restricted
Subsidiaries.

 

“Specified Drugs” means, collectively, each of the following and all of the
Intellectual Property related thereto (each individually, a “Specified Drug”):

 

(i)Any product falling within the definition of “Licensed Product” as defined in
Section 1.101 of the License Agreement by and between Astrazeneca AB and Nektar
Therapeutics, dated September 20, 2009, as amended (the “Movantik Agreement”),
and any other product that provides a basis for the payment of royalties,
milestones and/or other payments to the Company or an Affiliate of the Company
thereunder (this clause (i), collectively, “Movantik”);

 

20

 

 

(ii)Any product falling within the definition of “Commercial Product” as defined
in Section 1.13 and “Potential Product” as defined in Section 1.62 of the
Exclusive Research, Development, License and Manufacturing and Supply Agreement,
between Nektar Therapeutics AL, Corporation and Baxter Healthcare SA and Baxter
Healthcare Corporation, dated September 26, 2005, as amended (the “BAX-855
Agreement”), and any other product that provides a basis for the payment of
royalties, milestones and/or other payments to the Company or an Affiliate of
the Company thereunder;

 

(iii)Any product falling within the definition of “Product” as defined in
Section 1.57 of the License, Manufacturing and Supply Agreement between Nektar
Therapeutics AL, Corporation and (OSI) Eyetech, Inc., dated September 30, 2006,
as amended (the “Fovista Agreement”), and any other product that provides a
basis for the payment of royalties, milestones and/or other payments to the
Company or an Affiliate of the Company thereunder;

  

(iv)Any product falling within the definition of “Product” as defined in Section
1.98 of the Co-Development, License and Co-Promotion Agreement between Nektar
Therapeutics, Aerogen, Inc., and Bayer Healthcare LLC, dated August 1, 2007 as
amended (the “Amikacin Agreement”), and any other product that provides a basis
for the payment of royalties, milestones and/or other payments to the Company or
an Affiliate of the Company thereunder;

  

(v)Any product falling within the definition of “Product” as defined in Section
1.69 of the Collaborative Development and License Agreement between Nektar
Therapeutics and Bayer Healthcare AG, dated November 30, 2004, as amended (the
“CIPRO Agreement”), and any other product that provides a basis for the payment
of royalties, milestones and/or other payments to the Company or an Affiliate of
the Company thereunder; and

  

(vi)Any product falling within the definition of “Selected Product” as defined
in Section 1.56 of the License Agreement between Nektar Therapeutics AL,
Corporation and Halozyme, Inc., dated December 22, 2006, as amended (the
“PEG2H2O Agreement”), and any other product that provides a basis for the
payment of royalties, milestones and/or other payments to the Company or an
Affiliate of the Company thereunder.

  

“Specified Entity” means any Person listed on Schedule 1 attached to the Fee
Letter.

 

“Specified Revenue Amount” means, as of any date, the amount set forth opposite
such date below:

 

  Date     Amount   On or prior to December 31, 2016 $30,000,000 January 1, 2017
to and including December 31, 2017 $45,000,000 January 1, 2018 to and including
December 31, 2018 $60,000,000 January 1, 2019 to and including December 31, 2019
$95,000,000 January 1, 2020 and all times thereafter $140,000,000        

; provided that the above amounts will be reduced on a proportionate basis at
the time of any repayment (in accordance with the terms of this Indenture) of
the principal amount of Notes.

 

21

 

 

“Stated Maturity” means, with respect to any installment of principal on any
series of Indebtedness, the date on which the payment of principal was scheduled
to be paid in the documentation governing such Indebtedness as of the date of
this Indenture, and will not include any contingent obligations to repay, redeem
or repurchase any such principal prior to the date originally scheduled for the
payment thereof.

 

“Subsidiary” means, with respect to any specified Person:

 

(1)any corporation, association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency and after giving effect to any voting
agreement or stockholders’ agreement that effectively transfers voting power) to
vote in the election of directors, managers or trustees of the corporation,
association or other business entity is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person (or a combination thereof); and

 

(2)any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof).

 

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§
77aaa-77bbbb).

 

“Treasury Rate” means, as of any redemption date, a rate per annum (computed on
the basis of actual days elapsed over a year of 360 days) determined by the
Collateral Agent on the date three (3) Business Days prior to the date of
redemption, to be the yield expressed as a rate listed in The Wall Street
Journal for United States Treasury securities having a term of not greater than
twenty-four (24) months.

 

“Trustee” means Wilmington Trust, National Association, in its capacity as
trustee, until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

 

“Unrestricted Definitive Note” means a Definitive Note that does not bear and is
not required to bear the Private Placement Legend.

 

“Unrestricted Global Note” means a Global Note that does not bear and is not
required to bear the Private Placement Legend.

 

“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under
the Securities Act.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from
time to time in the State of New York.

 

“Voting Stock” of any specified Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years obtained by dividing:

 

(1)the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect of the
Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment; by

 

22

 

 

(2)the then outstanding principal amount of such Indebtedness.

 

Section 1.02         Other Definitions.

 

  Defined in Term   Section “Affiliate Transaction” 4.11 “Asset Sale Offer” 3.10
“Authentication Order” 2.02 “Change of Control Offer” 4.15 “Change of Control
Payment” 4.15 “Change of Control Payment Date” 4.15 “Covenant Defeasance” 8.03
“DTC” 2.03 “Event of Default” 6.01 “Excess Proceeds” 4.10 “Excess Royalty
Proceeds” 4.16 “incur” 4.09 “Legal Defeasance” 8.02 “Lenders’ Policies” 4.20
“Offer Amount” 3.10 “Offer Period” 3.10 “Paying Agent” 2.03 “Permitted Debt”
4.09 “Payment Default” 6.01 “Permitted Convertible Notes” 4.09 “Premises” 4.20
“Prepayment Premium” 3.07 “Prepayment Restricted Indebtedness” 4.07 “Purchase
Date” 3.10 “Registrar” 2.03 “Repurchase Date” 4.16 “Restricted Payments” 4.07
“Royalty Transactions Repurchase Offer” 4.16 “Royalty Transactions Repurchase
Offer Amount” 4.16 “Royalty Transactions Repurchase Offer Period” 4.16

 

Section 1.03          Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

 

The following TIA terms used in this Indenture have the following meanings:

 

“indenture securities” means the Notes;

 

“indenture security Holder” means a Holder of a Note;

 

23

 

 

“indenture to be qualified” means this Indenture;

 

“indenture Trustee” or “institutional Trustee” means the Trustee; and

 

“obligor” on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.

 

All other terms used in this Indenture that are defined by the TIA, defined by
TIA reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.

 

Section 1.04          Rules of Construction.

 

Unless the context otherwise requires:

 

(1)          a term has the meaning assigned to it;

 

(2)          an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;

 

(3)          “or” is not exclusive;

 

(4)          words in the singular include the plural, and in the plural include
the singular;

 

(5)          “will” shall be interpreted to express a command;

 

(6)          provisions apply to successive events and transactions; and

 

(7)          references to sections of or rules under the Securities Act will be
deemed to include substitute, replacement of successor sections or rules adopted
by the SEC from time to time.

 

ARTICLE 2
THE NOTES

 

Section 2.01          Form and Dating.

 

(a)          General. The Notes will be substantially in the form of Exhibit A
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Note will be dated the date of its
authentication. The Notes shall be in minimum denominations of $2,000 and
integral multiples of $1,000 in excess thereof.

 

The terms and provisions contained in the Notes will constitute, and are hereby
expressly made, a part of this Indenture and the Company, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

 

24

 

 

(b)          Notes. Notes issued in global form will be substantially in the
form of Exhibit A hereto (including the Global Note Legend thereon and the
“Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes
issued in definitive form will be substantially in the form of Exhibit A hereto
(but without the Global Note Legend thereon and without the “Schedule of
Exchanges of Interests in the Global Note” attached thereto). Each Global Note
will represent such of the outstanding Notes as will be specified therein and
each shall provide that it represents the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby will be made by the Trustee or the Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.

 

Section 2.02          Execution and Authentication.

 

At least one Officer must sign the Notes for the Company by manual or facsimile
signature.

 

If an Officer whose signature is on a Note no longer holds that office at the
time a Note is authenticated, the Note will nevertheless be valid.

 

A Note will not be valid until authenticated by the manual signature of the
Trustee. The signature will be conclusive evidence that the Note has been
authenticated under this Indenture.

 

The Trustee will, upon receipt of a written order of the Company signed by two
Officers (an “Authentication Order”), authenticate Notes for original issue that
may be validly issued under this Indenture. The aggregate principal amount of
Notes outstanding at any time may not exceed $250,000,000, except as provided in
Section 2.07 hereof.

 

The Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Notes. An authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.

 

Section 2.03          Registrar and Paying Agent.

 

The Company will maintain an office or agency where Notes may be presented for
registration of transfer or for exchange (“Registrar”) and an office or agency
where Notes may be presented for payment (“Paying Agent”). The Registrar will
keep a register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars. The term “Registrar” includes any
co-registrar and the term “Paying Agent” includes any additional paying agent.
The Trustee shall be the Paying Agent. The Company will notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar, the
Trustee shall act as such. The Company or any of its Subsidiaries may act as
Registrar.

 

The Company initially appoints The Depository Trust Company (“DTC”) to act as
Depositary with respect to the Global Notes.

 

The Company initially appoints the Trustee to act as the Registrar and Paying
Agent and to act as Custodian with respect to the Global Notes.

 

Section 2.04          Paying Agent to Hold Money in Trust.

 

The Company will require each Paying Agent to agree in writing that the Paying
Agent will hold in trust for the benefit of Holders or the Trustee all money
held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, and will notify the Trustee, in writing, of any default
by the Company in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Company at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent will have no
further liability for the money. At all times, the Trustee will serve as Paying
Agent for the Notes.

 

25

 

 

Section 2.05          Holder Lists.

 

The Trustee will preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of all Holders and
shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar,
the Company will furnish to the Trustee at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Company shall
otherwise comply with TIA § 312(a).

 

Section 2.06          Transfer and Exchange.

 

(a)          Transfer and Exchange of Global Notes. A Global Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if:

 

(1)          the Company delivers to the Trustee notice from the Depositary that
it is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary;

 

(2)          the Company in its sole discretion determines that the Global Notes
(in whole but not in part) should be exchanged for Definitive Notes and delivers
an Authentication Order to such effect, along with an Officer’s Certificate, to
the Trustee; or

 

(3)          there has occurred and is continuing a Default or Event of Default
with respect to the Notes and a request for such exchange has been made by DTC.

 

Upon the occurrence of either of the preceding events in (1), (2) or (3) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee. Global Notes also may be exchanged or replaced, in whole or in
part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Definitive Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (d) hereof.

 

26

 

 

(b)          Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes will be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes will be subject to restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also will require compliance with
either subparagraph (1) or (2) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

 

(1)          Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to Persons
who take delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set forth in
the Private Placement Legend. Beneficial interests in any Unrestricted Global
Note may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect the
transfers described in this Section 2.06(b)(1).

 

(2)          All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
that are not subject to Section 2.06(b)(1) above, the transferor of such
beneficial interest must deliver to the Registrar either:

 

(A)         both:

 

(i)          a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in another
Global Note in an amount equal to the beneficial interest to be transferred or
exchanged; and

 

(ii)          instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited with
such increase; or

 

(B)         both:

 

(i)          a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged; and

 

(ii)          instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above.

 

Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the Notes
or otherwise applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section 2.06(g)
hereof.

 

(3)          Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements of
Section 2.06(b)(2) above and the Registrar receives the following:

 

(A)         if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in item (1)
thereof;

 

27

 

 

(B)         if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications in
item (2) thereof; and

 

(C)         if the transferee will take delivery in the form of a beneficial
interest in the IAI Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.

 

(4)          Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in an Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any holder
thereof for a beneficial interest in an Unrestricted Global Note or transferred
to a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(2) above and:

 

(A)         the Registrar receives the following:

 

(i)          if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial interest in
an Unrestricted Global Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(a) thereof; or

 

(ii)          if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (A), if the Company or
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Company or Registrar stating that
such exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement Legend
are no longer required in order to maintain compliance with the Securities Act.

 

If any such transfer is effected pursuant to subparagraph (A) above at a time
when an Unrestricted Global Note has not yet been issued, the Company shall
issue and, upon receipt of an Authentication Order in accordance with Section
2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global
Notes in an aggregate principal amount equal to the aggregate principal amount
of beneficial interests transferred or exchanged pursuant to subparagraph (A)
above. Notwithstanding anything to the contrary contained herein, the Company
hereby agrees that, after the expiration of the six-month holding period under
Rule 144 and upon receipt by the Registrar of the certification set forth in
item (1)(a) of Exhibit C hereto or item (4) of Exhibit B hereto, as applicable,
but without any requirement to deliver an Opinion of Counsel, it shall issue one
or more Unrestricted Global Notes, an Authentication Order and provide the
Trustee with such other documentation as reasonably requested by the Trustee
(including the Officer’s Certificate and Opinion of Counsel set forth in Section
13.03 hereof) to exchange a beneficial interest in a Restricted Global Note into
a beneficial interest in an Unrestricted Global Note or to transfer a beneficial
interest in a Restricted Global Note to a Person who shall take delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note.

 

28

 

 

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a beneficial
interest in a Restricted Global Note.

 

(c)          Transfer or Exchange of Beneficial Interests for Definitive Notes.

 

(1)          Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:

 

(A)          if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note, a certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;

 

(B)          if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

 

(C)          if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

 

(D)          if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in accordance
with Rule 144, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;

 

(E)          if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;

 

(F)          if such beneficial interest is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(b) thereof; or

 

(G)          if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(c) thereof,

 

the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the
Company shall execute and the Trustee shall authenticate, upon receipt of an
Authentication Order, and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer contained therein.

 

29

 

 

(2)          [Reserved]

 

(3)          Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:

 

(A)         the Registrar receives the following:

 

(i)          if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for an Unrestricted
Definitive Note, a certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or

 

(ii)          if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note, a certificate
from such holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;

 

and, in each such case set forth in this subparagraph (A), if the Company or
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Company or Registrar to the effect
that such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.

 

(4)          Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee
will, upon receipt of an Authentication Order, authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(4) will be registered in such name or
names and in such authorized denomination or denominations as the holder of such
beneficial interest requests through instructions to the Registrar from or
through the Depositary and the Participant or Indirect Participant. The Trustee
will deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(4)will not bear the Private Placement Legend.

 

30

 

 

(d)          Transfer and Exchange of Definitive Notes for Beneficial Interests.

 

(1)          Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Restricted Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt by
the Registrar of the following documentation:

 

(A)          if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;

 

(B)          if such Restricted Definitive Note is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (1) thereof;

 

(C)          if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule
904, a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;

 

(D)          if such Restricted Definitive Note is being transferred pursuant to
an exemption from the registration requirements of the Securities Act in
accordance with Rule 144, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a) thereof;

 

(E)          if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;

 

(F)          if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof; or

 

(G)          if such Restricted Definitive Note is being transferred pursuant to
an effective registration statement under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in item
(3)(c) thereof,

 

the Trustee will cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global Note,
and in all other cases, the IAI Global Note.

 

(2)          Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:

 

(A)         the Registrar receives the following:

 

(i)          if the Holder of such Definitive Notes proposes to exchange such
Notes for a beneficial interest in the Unrestricted Global Note, a certificate
from such Holder in the form of Exhibit C hereto, including the certifications
in item (1)(c) thereof; or

 

31

 

 

(ii)          if the Holder of such Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (A), if the Company or
Registrar so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Company or Registrar to the effect
that such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.

 

Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause
to be increased the aggregate principal amount of the Unrestricted Global Note.

 

(3)          Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee will cancel
the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.

 

If any such exchange or transfer from a Definitive Note to a beneficial interest
is effected pursuant to subparagraphs (2)(A) or (3) above at a time when an
Unrestricted Global Note has not yet been issued, the Company will issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee will authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive Notes so
transferred.

 

(e)          Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder’s compliance with
the provisions of this Section 2.06(e), the Registrar will register the transfer
or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder must present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
must provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).

 

(1)          Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note if
the Registrar receives the following:

 

(A)          if the transfer will be made pursuant to Rule 144A, then the
transferor must deliver a certificate in the form of Exhibit B hereto, including
the certifications in item (1) thereof;

 

32

 

 

 

(B)         if the transfer will be made pursuant to Rule 903 or Rule 904, then
the transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and

 

(C)         if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.

 

(2)          Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:

 

(A)         the Registrar receives the following:

 

(i)           if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit C hereto, including the certifications in item
(1)(d) thereof; or

 

(ii)          if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form of
an Unrestricted Definitive Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;

 

and, in each such case set forth in this subparagraph (A), if the Company or
Registrar so requests, an Opinion of Counsel in form reasonably acceptable to
the Company or Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.

 

(3)          Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who
takes delivery thereof in the form of an Unrestricted Definitive Note. Upon
receipt of a request to register such a transfer, the Registrar shall register
the Unrestricted Definitive Notes pursuant to the instructions from the Holder
thereof.

 

(f)           Legends. The following legends will appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

 

(1)          Private Placement Legend.

 

(A)         Except as permitted by subparagraph (B) below, each Restricted
Global Note and each Restricted Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.

 

33

 

 

THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT
IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO SUCH PURCHASER IN THE
JURISDICTION IN WHICH SUCH PURCHASE IS MADE OR (C) IT IS AN INSTITUTIONAL
“ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) or
(7)UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE 6 MONTH HOLDING PERIOD WITH
RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 UNDER THE SECURITIES ACT,
ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES
ACT, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH
PURCHASE IS MADE, (D) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE
MEANING OF RULE 501 (a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, (E) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY’S AND THE TRUSTEE’S, OR REGISTRAR’S, AS APPLICABLE, RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR. THIS
LEGEND MAY BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE
6 MONTH HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE
144 UNDER THE SECURITIES ACT.

 

(B)          Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraphs (b)(4), (c)(3), (d)(2), (d)(3), (e)(2) or
(e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) will not bear the Private Placement Legend.

 

34

 

 

(2)           Global Note Legend. Each Global Note will bear a legend in
substantially the following form:

 

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR
DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF [__________________] OR SUCH OTHER NAME AS
MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO [______________] OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, [____________], HAS AN INTEREST HEREIN.”

 

(g)          Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note will be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note will be
reduced accordingly and an endorsement will be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note will be increased accordingly and
an endorsement will be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.

 

(h)          General Provisions Relating to Transfers and Exchanges.

 

(1)           To permit registrations of transfers and exchanges, the Company
will execute and the Trustee will authenticate Global Notes and Definitive Notes
upon receipt of an Authentication Order in accordance with Section 2.02 hereof
or at the Registrar’s request.

 

(2)           No service charge will be made to a Holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 4.10 and 4.15 hereof).

 

35

 

 

(3)          All Global Notes and Definitive Notes issued upon any registration
of transfer or exchange of Global Notes or Definitive Notes will be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.

 

(4)          Neither the Registrar nor the Company will be required:

 

(A)          to issue, to register the transfer of or to exchange any Notes
during a period beginning at the opening of business 15 days before the mailing
of a notice of redemption under Section 3.03 hereof and ending at the close of
business on the day of selection;

 

(B)          to register the transfer of or to exchange any Note selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part; or

 

(C)          to register the transfer of or to exchange a Note between a record
date and the next succeeding interest payment date.

 

(5)          Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and for
all other purposes, and none of the Trustee, any Agent or the Company shall be
affected by notice to the contrary.

 

(6)           The Trustee will, upon receipt of an Authentication Order,
authenticate Global Notes and Definitive Notes in accordance with the provisions
of Section 2.02 hereof.

 

(7)          All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar, Trustee or Company pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.

 

(8)          Trustee and the Registrar shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or among
Depositary participants, members or beneficial owners in any Global Note) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

 

(9)          Neither the Trustee nor any agent of the Trustee shall have any
responsibility for any actions taken or not taken by the Depositary.

 

36

 

 

(10)          The Trustee shall have no responsibility or obligation to any
Participant or Indirect Participant or any other Person with respect to the
accuracy of the books or records, or the acts or omissions, of the Depositary or
its nominee or of any participant or member thereof, with respect to any
ownership interest in the Notes or with respect to the delivery to any
Participant or Indirect Participant or other Person (other than the Depositary)
of any notice (including any notice of redemption) or the payment of any amount,
under or with respect to such Notes. All notices and communications to be given
to the Holders and all payments to be made to Holders under the Notes shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depositary or its nominee in the case of a Global Note). The rights of
beneficial owners in any Global Note shall be exercised only through the
Depositary subject to the Applicable Procedures. The Trustee may rely and shall
be fully protected in relying upon information furnished by the Depositary with
respect to its Participants or Indirect Participants.

 

(11)          So long as no Event of Default has occurred and is continuing, no
Holder shall, without the prior written consent of the Company, transfer any
Note to any Competitor or Specified Entity. In connection with any such
transfer, the transferee shall deliver to the Trustee a certificate in the form
of Exhibit D.

 

Section 2.07         Replacement Notes.

 

If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company will issue and the Trustee will, upon receipt of an
Authentication Order, authenticate a replacement Note if the Trustee’s
requirements are met. An indemnity bond must be supplied by the Holder that is
sufficient in the judgment of each of the Trustee and the Company to protect the
Company or the Trustee, as applicable, and any Agent and any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company may charge for its expenses in replacing a Note.

 

Every replacement Note is an additional obligation of the Company and will be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.

 

Section 2.08         Outstanding Notes.

 

The Notes outstanding at any time are all the Notes authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section 2.08
as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the Company or a Subsidiary of the Company
shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof.

 

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a protected purchaser.

 

If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.

 

If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any
thereof) holds, on a redemption date or maturity date, money sufficient to pay
Notes payable on that date, then on and after that date such Notes will be
deemed to be no longer outstanding and will cease to accrue interest.

 

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Section 2.09          Treasury Notes.

 

In determining whether the Holders of the required principal amount of Notes
have concurred in any direction, waiver or consent, Notes owned by the Company
or any Guarantor, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Guarantor, will be considered as though not outstanding, except that for the
purposes of determining whether the Trustee will be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee actually knows
are so owned will be so disregarded. Upon request of the Trustee, the Company
shall furnish to the Trustee promptly an Officer’s Certificate listing and
identifying all Notes, if any, known by the Company to be owned or held by or
for the account of any of the above described Persons, and the Trustee shall be
entitled to accept and rely upon such Officer’s Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Notes not
listed therein are outstanding for the purpose of any determination.

 

Section 2.10          Temporary Notes.

 

Until certificates representing Notes are ready for delivery, the Company may
prepare and the Trustee, upon receipt of an Authentication Order, will
authenticate temporary Notes. Temporary Notes will be substantially in the form
of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as may be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company will prepare and the Trustee
will, upon receipt of an Authentication Order, authenticate definitive Notes in
exchange for temporary Notes.

 

Holders of temporary Notes will be entitled to all of the benefits of this
Indenture.

 

Section 2.11          Cancellation.

 

The Company at any time may deliver Notes to the Trustee for cancellation. The
Registrar and Paying Agent will forward to the Trustee any Notes surrendered to
them for registration of transfer, exchange or payment. The Trustee and no one
else will cancel all Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and will destroy canceled Notes (subject to
the record retention requirement of the Exchange Act). Evidence of the
cancellation of all canceled Notes will be delivered to the Company. The Company
may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.

 

Section 2.12          Defaulted Interest.

 

If the Company defaults in a payment of interest on the Notes, it will pay the
defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company will notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company will fix or cause to be fixed each such
special record date and payment date; provided that no such special record date
may be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company will mail
or cause to be mailed (in the case of Notes held in book entry form, by
electronic transmission) to Holders a notice that states the special record
date, the related payment date and the amount of such interest to be paid.

 

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Section 2.13         Global Notes.

 

Notwithstanding anything to the contrary in this Indenture, no Global Notes
shall be issued without the prior written consent of the Collateral Agent.

 

ARTICLE 3
REDEMPTION AND PREPAYMENT

 

Section 3.01         Notices to Trustee.

 

If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 45
days (or such shorter period as the Trustee may agree) but not more than 60 days
before a redemption date, an Officer’s Certificate setting forth:

 

(1)           the clause of this Indenture pursuant to which the redemption
shall occur;

 

(2)           the redemption date;

 

(3)           the principal amount of Notes to be redeemed; and

 

(4)           the redemption price.

 

Section 3.02         Selection of Notes to Be Redeemed or Purchased.

 

If less than all of the Notes are to be redeemed at any time, the Trustee will
select Notes for redemption on a pro rata basis to the extent practicable,
subject to the applicable procedures of the Depositary unless otherwise required
by law or applicable stock exchange requirements.

 

In the event of partial redemption or purchase, the particular Notes to be
redeemed or purchased will be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption or purchase date by
the Trustee from the outstanding Notes not previously called for redemption or
purchase.

 

The Trustee will promptly notify the Company in writing of the Notes selected
for redemption or purchase and, in the case of any Note selected for partial
redemption or purchase, the principal amount thereof to be redeemed or
purchased. Notes and portions of Notes selected will be in minimum amounts of
$2,000 or whole multiples of $1,000 in excess thereof; except that if all of the
Notes of a Holder are to be redeemed or purchased, the entire outstanding amount
of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed or purchased. Except as provided in the preceding sentence, provisions
of this Indenture that apply to Notes called for redemption or purchase also
apply to portions of Notes called for redemption or purchase. No Notes of $2,000
or less can be redeemed in part.

 

Section 3.03         Notice of Redemption.

 

Subject to the provisions of Section 3.10 hereof, at least 30 days but not more
than 60 days before a redemption date, the Company will mail or cause to be
mailed, by first class mail (in the case of Global Notes, by electronic
transmission), a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address, except that redemption notices may be mailed
more than 60 days prior to a redemption date if the notice is issued in
connection with a defeasance of the Notes or a satisfaction and discharge of
this Indenture pursuant to Articles 8 or 12 hereof.

 

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The notice will identify the Notes to be redeemed and will state:

 

(1)           the redemption date;

 

(2)           the redemption price;

 

(3)           if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion will be issued upon cancellation of the original Note;

 

(4)           the name and address of the Paying Agent;

 

(5)           that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;

 

(6)           that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;

 

(7)           the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and

 

(8)           that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.

 

At the Company’s request, the Trustee will give the notice of redemption in the
Company’s name and at its expense; provided, however, that the Company has
delivered to the Trustee, at least 45 days (or such shorter notice period as may
be agreed to by the Trustee) prior to the redemption date, an Officer’s
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.

 

Section 3.04         Effect of Notice of Redemption.

 

Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.

 

Section 3.05         Deposit of Redemption or Purchase Price.

 

Prior to 10:00 a.m. (New York City Time) on the redemption or purchase date, the
Company will deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption or purchase price of and accrued interest on all Notes to
be redeemed or purchased on that date. Promptly following the redemption or
purchase date, the Trustee or the Paying Agent will return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption or purchase price of, and accrued
interest on, all Notes to be redeemed or purchased.

 

If the Company complies with the provisions of the preceding paragraph, on and
after the redemption or purchase date, interest will cease to accrue on the
Notes or the portions of Notes called for redemption or purchase. If a Note is
redeemed or purchased on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption or purchase is
not so paid upon surrender for redemption or purchase because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption or purchase date until such principal
is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.

 

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Section 3.06          Notes Redeemed or Purchased in Part.

 

Upon surrender of a Note that is redeemed or purchased in part, the Company will
issue and, upon receipt of an Authentication Order, the Trustee will
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed or unpurchased portion of the Note
surrendered.

 

Section 3.07          Optional Redemption.

 

(a)           At any time prior to October 5, 2017, upon the redemption of all
or a part of the Notes for any reason (including, but not limited to, any
redemption after the occurrence of an Event of Default or after acceleration of
the Notes including in connection with the commencement of any proceeding
pursuant to any Bankruptcy Law), the Company shall pay a redemption price equal
to 100% of the principal amount of Notes redeemed plus the Make-Whole Premium as
of, and accrued and unpaid interest, if any, to the date of redemption, subject
to the rights of holders of Notes on the relevant record date to receive
interest due on the relevant interest payment date occurring on or prior to the
redemption date.

 

(b)           Any redemption of Notes at the option of the Company shall be upon
not less than 30 nor more than 60 days’ prior notice.

 

(c)           On or after October 5, 2017, upon the redemption of all or a part
of the Notes for any reason (including, but not limited to, any redemption after
the occurrence of an Event of Default or after acceleration of the Notes
including in connection with the commencement of any proceeding pursuant to any
Bankruptcy Law), the Company shall pay the redemption prices (expressed as
percentages of principal amount) set forth below (the “Prepayment Premium”) plus
accrued and unpaid interest, if any, on the Notes redeemed, to the applicable
redemption date, if redeemed during the twelve-month period beginning on October
5 of the years indicated below, subject to the rights of holders of Notes on the
relevant record date to receive interest on the relevant interest payment date
occurring on or prior to the redemption date:

 

Year   Percentage 2017   104% 2018   102% 2019   100%

 

Unless the Company defaults in the payment of the redemption price, interest
will cease to accrue on the Notes or portions thereof called for redemption on
the applicable redemption date.

 

(d)           Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.

 

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(e)           Without limiting the generality of the foregoing, it is understood
and agreed that if the Obligations are accelerated for any reason, including
because of an Event of Default, the sale, disposition or encumbrance (including
that by operation of law or otherwise) as a result of an Event of Default or the
commencement of any proceeding pursuant to any Bankruptcy Law, the Make-Whole
Premium, if any, and Prepayment Premium, if any, determined as of the date of
acceleration will also be due and payable as though said Indebtedness was
voluntarily prepaid as of such date and shall constitute part of the
Obligations, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of each Holder’s lost profits as a result thereof. Any
Make-Whole Premium and Prepayment Premium payable in accordance with the
immediately preceding sentence shall be presumed to be the liquidated damages
sustained by each Holder as the result of the early redemption and the Company
agrees that it is reasonable under the circumstances currently existing. The
Make-Whole Premium, if any, and Prepayment Premium, if any, shall also be
payable (i) in the event the Obligations (and/or this Indenture or the Notes
evidencing the Obligations) are satisfied or released by foreclosure (whether by
power of judicial proceeding), deed in lieu of foreclosure or by any other means
and/or (ii) upon the satisfaction, release, payment, restructuring,
reorganization, replacement, reinstatement, defeasance or compromise of any of
the Obligations (and/or this Indenture or the Notes evidencing the Obligations)
in any proceeding pursuant to any Bankruptcy Law, foreclosure (whether by power
of judicial proceeding or otherwise), deed in lieu of foreclosure or by any
other means or the making of a distribution of any kind in any proceeding
pursuant to any Bankruptcy Law to the Collateral Agent, for the account of the
Holders, in full or partial satisfaction of the Obligations. THE COMPANY
EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT
PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING MAKE-WHOLE PREMIUM AND
PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION INCLUDING IN
CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY ACCELERATION OF THE OBLIGATIONS
PURSUANT TO ANY PROCEEDING PURSUANT TO ANY BANKRUPTCY LAW OR PURSUANT TO A PLAN
OF REORGANIZATION. The Company expressly agrees that: (A) the Make-Whole Premium
and Prepayment Premium are reasonable and are the product of an arm’s length
transaction between sophisticated business people, ably represented by counsel;
(B) the Make-Whole Premium and Prepayment Premium shall be payable
notwithstanding the then prevailing market rates at the time payment is made;
(C) there has been a course of conduct between Holders and the Company giving
specific consideration in this transaction for such agreement to pay the
Make-Whole Premium and Prepayment Premium; and (D) the Company shall be estopped
hereafter from claiming differently than as agreed to in this paragraph. The
Company expressly acknowledges that its agreement to pay the Make-Whole Premium
and Prepayment Premium to the Holders as herein described is a material
inducement to Holders to purchase the Notes.

 

Section 3.08          Mandatory Redemption.

 

The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.

 

Section 3.09          [Reserved]

 

Section 3.10          Offer to Purchase by Application of Excess Proceeds.

 

In the event that, pursuant to Section 4.10 hereof, the Company is required to
commence an offer to all Holders to purchase Notes (an “Asset Sale Offer”), it
will follow the procedures specified below.

 

The Asset Sale Offer shall be made to all Holders. The Asset Sale Offer will
remain open for a period of at least 20 Business Days following its commencement
and not more than 30 Business Days, except to the extent that a longer period is
required by applicable law (the “Offer Period”). No later than three Business
Days after the termination of the Offer Period (the “Purchase Date”), the
Company will apply all Excess Proceeds (the “Offer Amount”) to the purchase of
Notes or, if less than the Offer Amount has been tendered, all Notes and other
Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes
so purchased will be made in the same manner as interest payments are made.

 

42

 

 

If the Purchase Date is on or after an interest record date and on or before the
related interest payment date, any accrued and unpaid interest will be paid to
the Person in whose name a Note is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.

 

Upon the commencement of an Asset Sale Offer, the Company will send, by first
class mail, a notice to the Trustee and each of the Holders. The notice will
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the
terms of the Asset Sale Offer, will state:

 

(1)           that the Asset Sale Offer is being made pursuant to this Section
3.10 and Section 4.10 hereof and the length of time the Asset Sale Offer will
remain open;

 

(2)           the Offer Amount, the purchase price and the Purchase Date;

 

(3)           that any Note not tendered or accepted for payment will continue
to accrue interest;

 

(4)           that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer will cease to accrue
interest on and after the Purchase Date;

 

(5)           that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in minimum denominations of
$2,000 or an integral multiple of $1,000 in excess thereof;

 

(6)           that Holders electing to have Notes purchased pursuant to any
Asset Sale Offer will be required to surrender the Note, with the form entitled
“Option of Holder to Elect Purchase” attached to the Notes completed, or
transfer by book-entry transfer, to the Company, a Depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;

 

(7)           that Holders will be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;

 

(8)           that, if the aggregate principal amount of Notes surrendered by
holders thereof exceeds the Offer Amount, the Company will select the Notes to
be purchased on a pro rata basis based on the principal amount of Notes
surrendered (with such adjustments as may be deemed appropriate by the Company
so that only Notes in minimum denominations of $2,000, or integral multiples of
$1,000 in excess thereof, will be purchased); and

 

(9)           that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).

 

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On or before the Purchase Date, the Company will, to the extent lawful, accept
for payment, on a pro rata basis to the extent necessary and in the manner
described in clause (8) above, the Offer Amount of Notes or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes tendered, and will deliver or cause to be delivered to
the Trustee the Notes properly accepted together with an Officer’s Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.10. The Company, the
Depositary or the Paying Agent, as the case may be, will promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company will
promptly issue a new Note, and the Trustee, upon written request from the
Company in the form of an Authentication Order, will authenticate and mail or
deliver (or cause to be transferred by book entry) such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company will publicly announce the results of the Asset
Sale Offer on the Purchase Date.

 

Other than as specifically provided in this Section 3.10, any purchase pursuant
to this Section 3.10 shall be made pursuant to the provisions of Sections 3.01
through 3.06 hereof.

 

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of an Asset Sale Offer. To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this Section
3.10 hereof, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 3.10 by virtue of such compliance

 

ARTICLE 4
COVENANTS

 

Section 4.01          Payment of Notes.

 

The Company will pay or cause to be paid the principal of and interest and
premium, if any, on, the Notes on the dates and in the manner provided in the
Notes. Principal, interest and premium, if any, will be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, interest and premium, if any, then due.

 

The Company will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
2% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it will pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.

 

Section 4.02          Maintenance of Office or Agency.

 

The Company will maintain an office or agency (which may, in the case of clause
(i) below, be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where (i) Notes may be surrendered for registration of transfer
or for exchange and (ii) where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company fails to maintain
any such required office or agency or fails to furnish the Trustee with the
address thereof, such presentations and surrenders may be made or served at the
Corporate Trust Office of the Trustee.

 

44

 

 

The Company may also from time to time designate one or more other offices or
agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.

 

The Company hereby designates the Corporate Trust Office of the Trustee as one
such office or agency of the Company in accordance with Section 2.03 hereof.

 

Section 4.03         Reports.

 

(a)          Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes, within the time periods specified in the SEC’s rules and regulations:

 

(1)          all quarterly and annual reports that would be required to be filed
with the SEC on Forms 10-Q and 10-K if the Company were required to file such
reports; and

 

(2)          all current reports that would be required to be filed with the SEC
on Form 8-K if the Company were required to file such reports.

 

(b)          If the Company has designated any of its Subsidiaries as Royalty
Transaction Subsidiaries, then at the time of the quarterly and annual reports
referred to in Section 4.03(a)(1), the Company shall make available to the
Holders (separately from such reports, if the Company so elects) a reasonably
detailed presentation of the financial condition and results of operations of
the Company and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Royalty Transaction Subsidiaries of
the Company.

 

(c)          All such reports will be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K will include a report on the Company’s
consolidated financial statements by the Company’s certified independent
accountants. In addition, the Company will file a copy of each of the reports
referred to in clauses (a)(1) and (a)(2) above with the SEC for public
availability within the time periods specified in the rules and regulations
applicable to such reports (unless the SEC will not accept such filing) and will
post the reports on its website within those time periods. The availability of
the foregoing materials on the SEC’s EDGAR service (or any successor thereto)
shall be deemed to satisfy the Company’s delivery obligation, it being
understood that the Trustee shall have no obligation whatsoever to determine if
such information has been posted.

 

(d)          If, at any time, the Company is no longer subject to the periodic
reporting requirements of the Exchange Act for any reason, the Company will
nevertheless continue filing the reports specified in the preceding paragraphs
of this covenant with the SEC within the time periods specified above unless the
SEC will not accept such filings. The Company will not take any action for the
purpose of causing the SEC not to accept any such filings. If, notwithstanding
the foregoing, the SEC will not accept the Company’s filings for any reason, the
Company will post the reports referred to in the preceding paragraphs on its
website within the time periods that would apply if the Company were required to
file those reports with the SEC.

 

45

 

 

(e)          Furthermore, the Company agrees that, for so long as any Notes
remain outstanding, it will furnish to the holders of Notes, beneficial owners
of the Notes, bona fide prospective investors, securities analysts and market
makers, upon their request, the reports described above and any other
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

 

(f)           Without limiting any other obligations of the Company hereunder,
with a view to making available to the holders of Notes the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the holders to sell securities of the
Company to the public without registration, until the first anniversary of the
date of issuance of the Notes the Company shall:

 

(1)           make and keep public information available, as those terms are
understood and defined in Rule 144;

 

(2)           file with the SEC all reports and other documents specified in
applicable provisions of Rule 144 that are required of the Company under the
Securities Act and the Exchange Act within the time periods specified in the
SEC’s rules and regulations; and

 

(3)           so long as the holders own Notes, promptly upon request, furnish
to holders (i) a written statement by the Company that it has complied with the
reporting requirements of the Securities Act and the Exchange Act as required
for applicable provisions of Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents filed by
the Company with the Company and (iii) such other information as may be
reasonably requested to permit the holders to sell such securities pursuant to
Rule 144 without registration.

 

(g)          At the time of the quarterly reports referred to in Section
4.03(a)(1), the Company shall make available to the Holders (separately from
such reports, if the Company so elects) a reasonably detailed presentation of
the royalty revenue of the Company and its Restricted Subsidiaries for such
preceding quarter.

 

(h)          At the time of the quarterly reports referred to in Section
4.03(a)(1), the Company shall, to the extent permitted to do so under the
underlying license agreement, make available to the Holders copies of each
report of royalty revenue delivered to the Company or any of its Subsidiaries by
each licensee of any intellectual property owned by the Company or any of its
Subsidiaries relating to any Specified Drug (whether pursuant to a Royalty
Transaction or otherwise).

 

(i)           Promptly, but in any event within 5 Business Days, after the end
of each fiscal month of the Company, the Company shall promptly make available
to the Holders a report of the current cash and Cash Equivalent balances of the
Company and the Guarantors, which report shall identify unrestricted and
restricted cash and Cash Equivalents; provided, that at any time the current
cash and Cash Equivalent balances of the Company and the Guarantors is less than
$120,000,000, the Collateral Agent may request at any time, and the Company
shall promptly provide, a report of at least 95% of the current cash and Cash
Equivalent balances of the Company and the Guarantors, which report shall
identify unrestricted and restricted cash and Cash Equivalents (or, if greater,
all cash and Cash Equivalent balances required to satisfy the minimum cash
balance covenant set forth in Section 4.21).

 

(j)           Delivery of any such reports, information and documents to the
Trustee pursuant to this Section 4.03 is for informational purposes only, and
the Trustee’s receipt of such shall not constitute actual or constructive
knowledge or notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officer’s Certificates).

 

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Section 4.04          Compliance Certificate.

 

(a)           The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year, commencing with the fiscal year ending December 31,
2015, an Officer’s Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and the other Indenture Documents, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and the other Indenture Documents and is
not in default in the performance or observance of any of the terms, provisions
and conditions of this Indenture or the other Indenture Documents (or, if a
Default or Event of Default has occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.

 

(b)           So long as any of the Notes are outstanding, the Company will
deliver to the Trustee and the Collateral Agent, within 30 days of any Officer
becoming aware of any Default or Event of Default, an Officer’s Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto. The Company shall provide the
Collateral Agent prompt notice of any acceleration of the Notes.

 

Section 4.05          Taxes.

 

The Company will pay, and will cause each of its Subsidiaries to pay, prior to
delinquency, all material taxes, assessments, and governmental levies except
such as are contested in good faith and by appropriate proceedings or where the
failure to effect such payment is not adverse in any material respect to the
Holders of the Notes.

 

Section 4.06          Stay, Extension and Usury Laws.

 

The Company and each of the Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law has been enacted.

 

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Section 4.07          Restricted Payments.

 

(a)           The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

 

(1)           declare or pay any dividend or make any other payment or
distribution on account of the Company’s or any of its Restricted Subsidiaries’
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company (it being understood for the
avoidance of doubt that any right to purchase Equity Interests at a discount
pursuant to an implementation of the Company’s existing shelf shareholder rights
plan shall be deemed to be a distribution payable solely in Equity Interests)
and other than dividends or distributions payable to the Company or a Restricted
Subsidiary of the Company);

 

(2)           purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company;

 

(3)           (x) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value (i) any Indebtedness of the Company or any
Guarantor that is contractually subordinated to the Notes or to any Note
Guarantee (excluding any intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries), (ii) the Permitted Convertible Notes or
(iii) any other Indebtedness of the Company except those incurred pursuant to
clauses (2), (3), (4), (6) (to the extent the Indebtedness under such clause (6)
is owed to the Company or a Guarantor), (8), (10), (11), (13), (15) and (16) of
Section 4.09(b) hereof (such Indebtedness described in the preceding clauses
(i), (ii) and (iii) collectively, “Prepayment Restricted Indebtedness”), in each
case prior to the Stated Maturity thereof, or (y) make any interest payment on
any Prepayment Restricted Indebtedness, other than regularly scheduled interest;
or

 

(4)           make any Restricted Investment

 

(all such payments and other actions set forth in these clauses (1) through (4)
above being collectively referred to as “Restricted Payments”),

 

unless, at the time of and after giving effect to such Restricted Payment:

 

(1)           no Default or Event of Default has occurred and is continuing or
would occur as a consequence of such Restricted Payment;

 

(2)           the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09(a) hereof;

 

(3)           such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
since the date of this Indenture (excluding Restricted Payments permitted by
clauses (2), (3), (4), (5), (6) and (9) of paragraph (b) of this Section 4.07),
is less than the sum, without duplication, of

 

 (A)          50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from October 1, 2015 to the end of the
Company’s most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit); plus

 

48

 

 

(B)          100% of the aggregate net cash proceeds received by the Company
since the date of this Indenture as a contribution to its common equity capital
or from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of the Company
that have been converted into or exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary
of the Company); plus

 

(C)          to the extent that any Restricted Investment that was made after
the date of this Indenture is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (i) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (ii) the
initial amount of such Restricted Investment; and

 

(4)          the Company and the Guarantors would, at the time of such
Restricted Payment and after giving effect thereto, have unrestricted cash and
Cash Equivalents in an aggregate amount greater than or equal to $90.0 million.

 

Notwithstanding the foregoing, the Company may not make any Restricted Payments
of the type described in clause (3) of paragraph (a) of this Section 4.07 except
pursuant to clauses (3) and (10) of paragraph (b) of this Section 4.07.

 

(b)          The provisions of Section 4.07(a) hereof will not prohibit:

 

(1)          the payment of any dividend or the consummation of any irrevocable
redemption within 60 days after the date of declaration of the dividend or
giving of the redemption notice, as the case may be, if at the date of
declaration or notice, the dividend or redemption payment would have complied
with the provisions of this Indenture;

 

(2)          [Reserved];

 

(3)          the repayment, repurchase, redemption, defeasance or other
acquisition or retirement for value of Prepayment Restricted Indebtedness with
the net cash proceeds from, or in exchange for, a substantially concurrent
incurrence of Permitted Refinancing Indebtedness;

 

(4)          the payment of any dividend (or, in the case of any partnership or
limited liability company, any similar distribution) by a Restricted Subsidiary
of the Company to the holders of its Equity Interests on a pro rata basis;

 

(5)          the repurchase of Equity Interests deemed to occur upon the
exercise of stock options to the extent such Equity Interests represent a
portion of the exercise price of those stock options;

 

(6)          the declaration and payment of customary regularly scheduled or
accrued dividends to holders of any class or series of Disqualified Stock of the
Company or any Restricted Subsidiary of the Company issued on or after the date
hereof in compliance with Section 4.09;

 

(7)          so long as no Default has occurred and is continuing or would be
caused thereby, the declaration and payment of customary regularly scheduled or
accrued dividends to holders of any class or series of Designated Preferred
Stock (other than Disqualified Stock) issued after the date hereof; provided,
however, that (A) for the most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
of issuance of such Designated Preferred Stock, after giving effect to such
issuance (and the payment of dividends or distributions) on a pro forma basis
(including a pro forma application of the net proceeds therefrom), the Company
would have had a Fixed Charge Coverage Ratio of at least 2.00 to 1.00 and (B)
the aggregate amount of dividends declared and paid pursuant to this clause (7)
does not exceed the net cash proceeds actually received by the Company from any
such sale of Designated Preferred Stock (other than Disqualified Stock) issued
after the date hereof;

 

49

 

 

(8)           the payment of dividends on the Company’s common stock of up to 6%
per annum of the net proceeds received by the Company from a public offering of
common stock of the Company consummated concurrently with payment of such
dividend;

 

(9)           Restricted Payments by the Company or any Restricted Subsidiary to
allow the payment in good faith of cash in lieu of the issuance of fractional
shares upon the exercise of options or warrants or upon the conversion or
exchange of Capital Stock of any such Person;

 

(10)         the repurchase, redemption or other acquisition or retirement for
value of any convertible notes in connection with a Change of Control pursuant
to change of control provisions customary for convertible notes; provided that a
Change of Control Offer has been made with respect to such Change of Control and
all Notes tendered by Holders of the Notes in connection with such Change of
Control Offer have been repurchased; and

 

(11)         so long as no Default has occurred and is continuing or would be
caused thereby, other Restricted Payments in an aggregate amount not to exceed
$5.0 million since the date hereof.

 

The amount of all Restricted Payments (other than cash) will be the Fair Market
Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.
Notwithstanding the foregoing, (x) the aggregate amount of Restricted Payments
made by the Company (other than if made pursuant to clauses (3), (4), (5), (7),
(8), (9) or (10) of paragraph (b) of this Section 4.07) shall not exceed $50.0
million, whether made pursuant to Section 4.07(a) or 4.07(b) and (y) no
Restricted Payments shall be made pursuant to clauses (1), (6) or (11) of
paragraph (b) of this Section 4.07 unless the Company and the Guarantors have,
at the time of such Restricted Payment and after giving effect thereto,
unrestricted cash and Cash Equivalents in an aggregate amount greater than or
equal to $90.0 million.

 

Section 4.08         Dividend and Other Payment Restrictions Affecting
Subsidiaries.

 

(a)          The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:

 

(1)           pay dividends or make any other distributions on its Capital Stock
to the Company or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries;

 

(2)           make loans or advances to the Company or any of its Restricted
Subsidiaries; or

 

(3)           sell, lease or transfer any of its properties or assets to the
Company or any of its Restricted Subsidiaries.

 

50

 

 

(b)          The restrictions in Section 4.08(a) hereof will not apply to
encumbrances or restrictions existing under or by reason of:

 

(1)           agreements governing Existing Indebtedness as in effect on the
date of this Indenture;

 

(2)           the Indenture Documents;

 

(3)           agreements or instruments governing Indebtedness, Disqualified
Stock or Preferred Stock incurred in compliance with Section 4.09 hereof;
provided that the encumbrances or restrictions contained therein, taken as a
whole, are not materially more restrictive than those contained in the Indenture
Documents, in each case, as then in effect;

 

(4)           applicable law, rule, regulation or order, or pursuant to any
agreement relating to a judgment, settlement, or compromise of any litigation,
arbitration or other dispute;

 

(5)           any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such Indebtedness or Capital
Stock was incurred in connection with or in contemplation of such acquisition),
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property or
assets of the Person, so acquired; provided that, in the case of Indebtedness,
such Indebtedness was permitted by the terms of this Indenture to be incurred;

 

(6)           customary non-assignment provisions in contracts and licenses
entered into in the ordinary course of business;

 

(7)           purchase money obligations for property acquired in the ordinary
course of business and Capital Lease Obligations that impose restrictions on the
property purchased or leased of the nature described in Section 4.08(a)(3)
hereof;

 

(8)           any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary pending
the sale or other disposition;

 

(9)           Permitted Refinancing Indebtedness; provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are not materially more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced;

 

(10)         Liens permitted to be incurred under the provisions of Section 4.12
hereof that limit the right of the debtor to dispose of the assets subject to
such Liens;

 

(11)          provisions limiting the disposition or distribution of assets or
property in agreements governing Collaboration Transactions, agreements
governing Royalty Transactions, intellectual property licenses, joint venture
agreements, asset sale agreements, sale-leaseback agreements, stock sale
agreements, and other similar agreements entered into with the approval of the
Company’s Board of Directors, which limitation is applicable only to the assets
that are the subject of such agreements;

 

(12)         restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business; and

 

51

 

 

(13)         any amendments, restatements, modifications, renewals, supplements,
refundings, replacements or refinancings of any agreements specified in the
preceding clauses (1) through (12); provided that the amendments, restatements,
modifications, renewals, supplements, refundings, replacements or refinancings
are not materially more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the applicable
original agreement.

 

(c)          For purposes of determining compliance with this Section 4.08, (i)
the priority of any Preferred Stock in receiving dividends or liquidating
distributions prior to dividends or liquidating distributions being paid on
common stock shall not be deemed a restriction on the ability to make
distributions on Capital Stock and (ii) the subordination of loans or advances
made to the Company or a Restricted Subsidiary of the Company to other
Indebtedness incurred by the Company or any such Restricted Subsidiary shall not
be deemed a restriction on the ability to make loans or advances.

 

Section 4.09         Incurrence of Indebtedness and Issuance of Preferred Stock.

 

(a)          The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, “incur”) any Indebtedness (including Acquired
Debt), and the Company will not issue any Disqualified Stock and will not permit
any of its Restricted Subsidiaries to issue any shares of preferred stock;
provided that the Company may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and the Guarantors may incur Indebtedness (including
Acquired Debt) or issue preferred stock, if the Fixed Charge Coverage Ratio for
the Company’s most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or such preferred
stock is issued, as the case may be, would have been at least 2.00 to 1.00,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
Disqualified Stock or the preferred stock had been issued, as the case may be,
at the beginning of such four-quarter period.

 

(b)          The provisions of Section 4.09(a) hereof will not prohibit the
incurrence of any of the following items of Indebtedness (collectively,
“Permitted Debt”):

 

(1)           the incurrence by the Company or any Guarantor of Indebtedness
that is expressly subordinated to the prior payment in full in cash of all
Obligations then due with respect to the Notes, in the case of the Company, or
the Note Guarantee, in the case of a Guarantor, in an aggregate principal amount
at any one time outstanding under this clause (1) not to exceed $35.0 million;
provided that such subordinated Indebtedness has a final maturity date that is
no earlier than one year after the date on which the Notes mature;

 

(2)           the incurrence by the Company and its Restricted Subsidiaries of
Existing Indebtedness;

 

(3)           the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes and the related Note Guarantees to be issued on the
date hereof;

 

(4)           the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness, Disqualified Stock and Preferred Stock of
Restricted Subsidiaries of the Company (including Capitalized Lease Obligations)
to finance (whether prior to or within 270 days after) the purchase, lease,
construction or improvement of property (real or personal) or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person owning
such assets (but no other material assets)), including all Permitted Refinancing
Indebtedness incurred to renew, refund, refinance, replace, defease or discharge
any Indebtedness incurred pursuant to this clause (4), in an aggregate principal
amount not to exceed $5.0 million at any time outstanding;

 

52

 

 

(5)          the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to renew, refund, refinance, replace, defease or discharge any
Indebtedness (other than intercompany Indebtedness) that was permitted by this
Indenture to be incurred under Section 4.09(a) or clauses (2), (3), (4), (5),
(14) and (17) of this Section 4.09(b);

 

(6)          the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Restricted Subsidiaries; provided, however, that:

 

(a)           if the Company or any Guarantor is the obligor on such
Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness
must be expressly subordinated to the prior payment in full in cash of all
Obligations then due with respect to the Notes, in the case of the Company, or
the Note Guarantee, in the case of a Guarantor; and

 

(b)           (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the Company
or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary of the Company,

 

will be deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (6);

 

(7)          the issuance by any of the Company’s Restricted Subsidiaries to the
Company or to any of its Restricted Subsidiaries of shares of preferred stock;
provided, however, that:

 

(a)          any subsequent issuance or transfer of Equity Interests that
results in any such preferred stock being held by a Person other than the
Company or a Restricted Subsidiary of the Company; and

 

(b)          any sale or other transfer of any such preferred stock to a Person
that is not either the Company or a Restricted Subsidiary of the Company,

 

will be deemed, in each case, to constitute an issuance of such preferred stock
by such Restricted Subsidiary that was not permitted by this clause (7);

 

(8)          the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations in the ordinary course of business and not for
speculative purposes;

 

(9)          the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Restricted Subsidiary of the Company that was
permitted to be incurred by another provision of this Section 4.09; provided
that if the Indebtedness being guaranteed is subordinated to the Notes, then the
Guarantee shall be subordinated to the same extent as the Indebtedness
guaranteed;

 

53

 

 

(10)          the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in respect of workers’ compensation claims,
self-insurance obligations, bankers’ acceptances, performance and surety bonds
in the ordinary course of business;

 

(11)          the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
drawn against insufficient funds, so long as such Indebtedness is covered within
five business days;

 

(12)          [Reserved];

 

(13)          Collaboration Transactions and Royalty Transactions, to the extent
involving an incurrence of Indebtedness;

 

(14)          the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Debt that is not incurred in connection with, or in
contemplation of, the related acquisition; provided, however, that after giving
effect to the related acquisition and the Incurrence of such Indebtedness
either: (x) the Company would be permitted to Incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of this covenant; or (y) the Fixed Charge Coverage Ratio would
be greater than immediately prior to such acquisition;

 

(15)          Indebtedness of Foreign Subsidiaries in an aggregate principal
amount at any time outstanding not to exceed $2.5 million;

 

(16)          Indebtedness of the Company or any of its Restricted Subsidiaries
arising from agreements for adjustment of purchase price, earn-outs, contingent
milestone payments or similar obligations in each case incurred in connection
with (a) any disposition or acquisition of any business, asset, property or
Subsidiary of the Company, to the extent the related disposition or acquisition
is permitted under this Indenture, (b) any license arrangement pursuant to which
the Company or any of its Restricted Subsidiaries acquires intellectual property
or other rights useful in a Permitted Business; and

 

(17)          the incurrence by the Company or any of the Guarantors of
additional Indebtedness, Disqualified Stock or Preferred Stock of Restricted
Subsidiaries of the Company in an aggregate principal amount at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to renew,
refund, refinance, replace, defease or discharge any Indebtedness incurred
pursuant to this clause (17), not to exceed $10.0 million.

 

Notwithstanding anything to the contrary in the foregoing, other than (x)
Indebtedness incurred pursuant to clauses (2), (3), (4), (6) (to the extent the
Indebtedness under such clause (6) is owed to the Company or a Guarantor), (8),
(10), (11), (13), (15) and (16) of paragraph (b) of this Section 4.09 and (y)
Indebtedness (i) that constitutes an issuance of convertible notes at a rate of
interest no higher than 6.0% per annum, (ii) with an aggregate principal amount
at any time outstanding not exceeding $100.0 million, (iii) with no amortization
prior to Stated Maturity other than pursuant to customary change of control
provisions, (iv) with a Stated Maturity that is no earlier than 91 days after
the date on which the Notes mature and (v) the Net Proceeds of which are applied
in accordance with Section 4.10 (the “Permitted Convertible Notes”), all
Indebtedness incurred pursuant to this covenant shall be expressly subordinated
to the prior payment in full in cash of all Obligations then due with respect to
the Notes, will not provide for amortization prior to Stated Maturity and have a
Stated Maturity that is no earlier than 91 days after the date on which the
Notes mature.

 

54

 

 

The Company will not incur, and will not permit any Guarantor to incur, any
Indebtedness (including Permitted Debt) that is contractually subordinated in
right of payment to any other Indebtedness of the Company or such Guarantor
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes and the applicable Note Guarantee on substantially identical terms.

 

For purposes of determining compliance with this Section 4.09, in the event that
an item of proposed Indebtedness (or portion thereof) meets the criteria of more
than one of the categories of Permitted Debt described in clauses (1) through
(17) above or is entitled to be incurred pursuant to Section 4.09(a) hereof, the
Company will be permitted to classify such item of Indebtedness (or portion
thereof) on the date of its incurrence, or later reclassify all or a portion of
such item of Indebtedness (or portion thereof), in any manner that complies with
this Section 4.09. The accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, the reclassification of
preferred stock as Indebtedness due to a change in accounting principles, and
the payment of dividends on Disqualified Stock in the form of additional shares
of the same class of Disqualified Stock will not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of this
Section 4.09; provided, in each such case, that the amount of any such accrual,
accretion or payment is included in Fixed Charges of the Company as accrued.
Notwithstanding any other provision of this Section 4.09, the maximum amount of
Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to
this Section 4.09 shall not be deemed to be exceeded solely as a result of
fluctuations in exchange rates or currency values.

 

The amount of any Indebtedness outstanding as of any date will be:

 

(1)          the accreted value of the Indebtedness, in the case of any
Indebtedness issued with original issue discount;

 

(2)          the principal amount of the Indebtedness, in the case of any other
Indebtedness; and

 

(3)          in respect of Indebtedness of another Person secured by a Lien on
the assets of the specified Person, the lesser of:

 

(A)          the Fair Market Value of such assets at the date of determination;
and

 

(B)          the amount of the Indebtedness of the other Person.

 

Section 4.10         Asset Sales.

 

The Company will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:

 

(1)          the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least equal to the Fair
Market Value of the assets or Equity Interests issued or sold or otherwise
disposed of;

 

(2)          (i) in the case of Asset Sales other than those constituting
Royalty Transactions, at least 75% of the consideration received in the Asset
Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents and (ii) in the case of Asset Sales constituting Royalty
Transactions, 100% of the consideration received in the Asset Sale by the
Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents;

 

55

 

 

(3)          if the Asset Sale would constitute a Change of Control, the Company
shall have complied with all of its obligations under Section 4.15 hereof;
provided that with respect to such Asset Sale, the Company shall not be required
to make an Asset Sale Offer if a Change of Control Offer has been made;

 

(4)          in the case of Asset Sales constituting Royalty Transactions, (i)
at the time of such proposed Royalty Transaction (or any other time of
determination in accordance herewith) and after giving effect thereto, the
aggregate unencumbered LTM Royalty Revenue of the Company and its Restricted
Subsidiaries actually received from the Specified Drugs for the immediately
preceding twelve-month period is greater than the Specified Revenue Amount;
provided that for the avoidance of doubt, any LTM Royalty Revenue of the Company
and its Restricted Subsidiaries that was disposed of in a prior Royalty
Transaction cannot be used to achieve compliance with this Section 4.10(4)(i)
and (ii) for any Royalty Transaction involving a Specified Drug where only a
portion of the LTM Royalty Revenue of the Company and its Restricted
Subsidiaries for such Specified Drug is required to achieve satisfaction of this
Section 4.10(4)(i) above, only the Pro Rata Percentage (defined as the
percentage achieved by dividing (x) the LTM Royalty Revenue of the Company and
its Restricted Subsidiaries for such Specified Drug not required to achieve
satisfaction in accordance with this Section 4.10(4)(i) by (y) the total LTM
Royalty Revenue of the Company and its Restricted Subsidiaries for such
Specified Drug) of the future royalty stream of such Specified Drug can be sold
as part of the Royalty Transaction, with such Pro Rata Percentage being applied
equally to all royalty tiers. For purposes of this Indenture, when determining
whether or not if the LTM Royalty Revenue of the Company and its Restricted
Subsidiaries actually received from the Specified Drugs for the immediately
preceding twelve-month period is greater than the Specified Revenue Amount, (i)
first, such calculation shall include only the LTM Royalty Revenue of the
Company and its Restricted Subsidiaries actually received from Movantik for the
immediately preceding twelve-month period, and (ii) second, if necessary to
comply with the provisions of this Section 4.10(4), such calculation may include
the LTM Royalty Revenue of the Company and its Restricted Subsidiaries actually
received from the Specified Drugs (other than Movantik) for the immediately
preceding twelve-month period; and

 

(5)          no Default or Event of Default has occurred and is continuing or
would occur as a consequence of such Asset Sale.

 

For purposes of this provision, each of the following shall be deemed to be
cash:

 

(a)           any liabilities, as shown on the Company’s most recent
consolidated balance sheet, of the Company or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms subordinated
to the Notes or any Note Guarantee) that are assumed by the transferee of any
such assets pursuant to a customary novation or assumption agreement that
releases the Company or such Restricted Subsidiary from further liability or
that are otherwise cancelled or terminated in connection with the transaction
with such transferee;

 

(b)           any securities, notes or other obligations received by the Company
or any such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash within 90 days of the receipt
thereof, to the extent of the cash received in that conversion; and

 

56

 

 

 (c)           any stock or assets of the kind referred to in clause (1) or (3)
of the next paragraph of this Section 4.10.

 

Within (i) 360 days after the receipt of any Net Proceeds (other than Net
Proceeds of any Royalty Transaction which is subject to Section 4.16) from an
Asset Sale or Applicable Transaction described in clause (1) of the definition
of Applicable Transactions or (ii) 540 days after receipt of any Net Proceeds
from an Applicable Transaction described in clause (2) of the definition of
Applicable Transaction, the Company (or the applicable Restricted Subsidiary, as
the case may be) may apply such Net Proceeds:

 

(1)           to acquire all or substantially all of the assets of, or any
Capital Stock of, another Permitted Business, if, after giving effect to any
such acquisition of Capital Stock, the Permitted Business is or becomes a
Restricted Subsidiary of the Company;

 

(2)           to make a capital expenditure in a Permitted Business;

 

(3)           to license or acquire intellectual property and other rights in
respect of technologies, drug candidates, drugs and assets related or incidental
thereto; or

 

(4)           to make research and development expenditures that in the
Company’s good faith judgment are useful with respect to a Permitted Business.

 

Pending the final application of any Net Proceeds, the Company may invest the
Net Proceeds in any manner that is not prohibited by this Indenture; provided
that Net Proceeds attributable to an Asset Sale of assets, rights or Equity
Interests that constitute Collateral may only be invested in Cash Equivalents
that shall be held in an account in which the Collateral Agent has a first
priority perfected security interest, subject to Permitted Liens, for its
benefit, the benefit of the Trustee and the benefit of the Holders of the Notes
in accordance with this Indenture and the Collateral Documents; provided further
that a binding commitment to apply Net Proceeds as set forth in clause (1) or
(3) above or a statement in an Officer’s Certificate that Net Proceeds will be
applied as set forth in clause (4) above shall be treated as a permitted
application of the Net Proceeds from the date of such commitment or statement so
long as the Company or such Restricted Subsidiary enters into such commitment or
makes such statement with the good faith expectation that such Net Proceeds will
be applied in a manner consistent with such commitment or statement within 180
days of such commitment or statement and, in the event such commitment is later
cancelled or terminated, or such statement withdrawn, for any reason before the
Net Proceeds are applied in connection therewith, then such Net Proceeds shall
constitute Excess Proceeds.

 

Any Net Proceeds (other than Net Proceeds of any Royalty Transaction which is
subject to Section 4.16) from Asset Sales or Applicable Transactions that are
not applied or invested as provided in the second paragraph of this Section 4.10
will constitute “Excess Proceeds” (it being understood that Net Proceeds from an
Applicable Transaction described in clause (3) of the definition of Applicable
Transactions shall constitute Excess Proceeds immediately upon receipt). Within
five Business Days after the aggregate amount of Excess Proceeds exceeds $2.5
million, the Company will make an Asset Sale Offer to all Holders of Notes to
purchase the maximum principal amount of Notes that may be purchased with the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of the principal amount plus accrued and unpaid interest, if any, to the date of
purchase, and will be payable in cash. If any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use those Excess Proceeds
for any purpose not otherwise prohibited by this Indenture. If the aggregate
principal amount of Notes tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee will select the Notes to be purchased on a pro
rata basis to the extent practicable, subject to the applicable procedures of
the Depositary. Upon completion of each Asset Sale Offer, the amount of Excess
Proceeds will be reset at zero.

 

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The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with each repurchase of Notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of Section 3.10
hereof or this Section 4.10, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under Section 3.10 hereof or this Section 4.10 by virtue of such
compliance.

 

Section 4.11         Transactions with Affiliates.

 

(a)          The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each, an “Affiliate Transaction”), unless:

 

(1)          the Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and

 

(2)          the Company delivers to the Trustee:

 

(A)          with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, a resolution of the Board of Directors of the Company set forth in an
Officer’s Certificate certifying that such Affiliate Transaction complies with
clause (1) of this Section 4.11(a) and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors of
the Company; and

 

(B)          with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Company or such Restricted
Subsidiary of such Affiliate Transaction from a financial point of view issued
by an accounting, appraisal or investment banking firm of national standing,
which opinion shall be conclusive evidence that the standard set forth in clause
(1) of this Section 4.11(a) has been satisfied (whether or not such Affiliate
Transaction or series of related Affiliate Transactions involve aggregate
consideration in excess of $10.0 million).

 

(b)          The following items will not be deemed to be Affiliate Transactions
and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:

 

(1)          any employment agreement, employee benefit plan, officer or
director indemnification agreement or any similar arrangement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business and payments pursuant thereto;

 

(2)          transactions between or among the Company and/or its Restricted
Subsidiaries and transactions between or among the Company and/or Restricted
Subsidiaries on the one hand and a Royalty Transaction Subsidiary on the other
hand in connection with a Royalty Transaction;

 

58

 

 

(3)           payment of reasonable directors’ fees to Persons who are not
otherwise Affiliates of the Company;

 

(4)           any issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company to Affiliates of the Company;

 

(5)           Restricted Payments that do not violate the provisions of Section
4.07 hereof;

 

(6)           pledges of Equity Interests of Royalty Transaction Subsidiaries;
and

 

(7)           loans or advances to employees in the ordinary course of business
not to exceed $2.5 million in the aggregate at any one time outstanding.

 

Section 4.12         Liens.

 

The Company will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of any
kind on any asset now owned or hereafter acquired, except Permitted Liens.

 

Section 4.13         Business Activities.

 

The Company will not, and will not permit any of its Restricted Subsidiaries to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.

 

Section 4.14         Corporate Existence.

 

Subject to Article 5 hereof, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect:

 

(1)           its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary; and

 

(2)           the rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.

 

Section 4.15         Offer to Repurchase Upon Change of Control.

 

(a)          The Company shall not consummate any Change of Control unless, no
later than substantially concurrently with such consummation, each Holder will
have the right to require the Company to repurchase all or any part of that
Holder’s Notes pursuant to a Change of Control Offer.

 

(b)          At least 30 days prior to a Change of Control, the Company will
make an offer (a “Change of Control Offer”) to each Holder to repurchase all or
any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof)
of that Holder’s Notes at a purchase price in cash equal to 101% of the
aggregate principal amount of Notes repurchased plus accrued and unpaid
interest, if any, on the Notes repurchased to the date of purchase, subject to
the rights of Holders on the relevant record date to receive interest due on the
relevant interest payment date occurring prior to the Change of Control Payment
Date (the “Change of Control Payment”).

 

59

 

 

(c)          At least 30 days prior to a Change of Control, the Company will
send a notice to each Holder (with a copy to the Trustee) describing the
transaction or transactions that constitute the Change of Control and stating:

 

(1)           that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Notes tendered will be accepted for payment;

 

(2)           the purchase price and the purchase date, which shall be no
earlier than 15 days prior to and no later than the date on which such Change of
Control is consummated; provided that if the Change of Control Payment Date is
the date of consummation of the Change of Control, the payment for the
repurchase of Notes will be made at a time no later than substantially
concurrently with the consummation of such Change of Control (the “Change of
Control Payment Date”);

 

(3)           that any Note not tendered will continue to accrue interest;

 

(4)           that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest after the Change of Control Payment
Date;

 

(5)           that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the form
entitled “Option of Holder to Elect Purchase” attached to the Notes completed,
or transfer by book-entry transfer, to the Paying Agent at the address specified
in the notice prior to the close of business on the third Business Day preceding
the Change of Control Payment Date;

 

(6)           that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and

 

(7)           that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered, which unpurchased portion must be equal to $2,000 in
principal amount or an integral multiple of $1,000 in excess thereof.

 

(d)          A Change of Control Offer may be conditioned upon the occurrence of
the related Change of Control.

 

(e)          On the Change of Control Payment Date, the Company will, to the
extent lawful:

 

(1)           accept for payment all Notes or portions of Notes properly
tendered pursuant to the Change of Control Offer;

 

(2)           deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered;
and

 

60

 

 

(3)           deliver or cause to be delivered to the Trustee the Notes properly
accepted together with an Officer’s Certificate stating the aggregate principal
amount of Notes or portions of Notes being purchased by the Company.

 

The Paying Agent will promptly mail to each Holder of Notes properly tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that any such new Notes will be in minimum
denominations of $2,000 and integral multiples of $1,000 in excess thereof. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.

 

(f)           Notwithstanding anything to the contrary in this Section 4.15, the
Company will not be required to make a Change of Control Offer upon a Change of
Control if (1) a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and purchases all Notes properly tendered and not withdrawn under
the Change of Control Offer, or (2) notice of redemption for all of the Notes
has been given pursuant to Section 3.07 hereof, unless and until there is a
default in payment of the applicable redemption price.

 

(g)          The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change in Control. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.15 hereof, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Section 4.15 by virtue of such compliance.

 

Section 4.16         Royalty Transactions Repurchase Offer.

 

Within five Business Days of the receipt of any Net Proceeds of any Royalty
Transaction newly entered into by the Company or any of its Restricted
Subsidiaries following the date hereof, the Company shall send a notice to the
Holders describing the applicable Royalty Transaction and offering to repurchase
Notes (such offer, a “Royalty Transactions Repurchase Offer”) in an amount of
not less than 50% of such Net Proceeds, at a price of 101% of the principal
amount, plus accrued and unpaid interest, if any, to the Repurchase Date
(subject to the rights of Holders on the relevant record date to receive
interest due on the relevant interest payment date occurring on or prior to the
Repurchase Date).

 

The Royalty Transactions Repurchase Offer shall be made to all Holders and will
remain open for a period of at least 20 Business Days following its commencement
and not more than 30 Business Days, except to the extent that a longer period is
required by applicable law (the “Royalty Transactions Repurchase Offer Period”).
No later than three Business Days after the termination of the Royalty
Transactions Repurchase Offer Period (the “Repurchase Date”), the Company will
apply not less than 50% of the Net Proceeds of the Royalty Transaction (the
“Royalty Transactions Repurchase Offer Amount”) to the purchase of Notes or, if
less than the Royalty Transactions Repurchase Offer Amount has been tendered,
all Notes tendered in response to the Royalty Transactions Repurchase Offer.
Payment for any Notes so purchased will be made in the same manner as interest
payments are made.

 

If the Repurchase Date is on or after an interest record date and on or before
the related interest payment date, any accrued and unpaid interest will be paid
to the Person in whose name a Note is registered at the close of business on
such record date, and no additional interest will be payable to Holders who
tender Notes pursuant to the Royalty Transactions Repurchase Offer.

 

61

 

 

Upon the commencement of a Royalty Transactions Repurchase Offer, the Company
will send, by first class mail, a notice to the Trustee and each of the Holders.
The notice will contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Royalty Transactions Repurchase Offer.
The notice, which will govern the terms of the Royalty Transactions Repurchase
Offer, will state:

 

(1)           that the Royalty Transactions Repurchase Offer is being made
pursuant to this Section 4.16 and the length of time the Royalty Transactions
Repurchase Offer will remain open;

 

(2)           the Royalty Transactions Repurchase Offer Amount, the purchase
price and the Repurchase Date;

 

(3)           that any Note not tendered or accepted for payment will continue
to accrue interest;

 

(4)           that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Royalty Transactions Repurchase Offer will
cease to accrue interest after the Repurchase Date;

 

(5)           that Holders electing to have a Note purchased pursuant to a
Royalty Transactions Repurchase Offer may elect to have Notes purchased in
denominations of $2,000, or integral multiples of $1,000 in excess thereof;

 

(6)           that Holders electing to have Notes purchased pursuant to any
Royalty Transactions Repurchase Offer will be required to surrender the Note,
with the form entitled “Option of Holder to Elect Purchase” attached to the
Notes completed, or transfer by book-entry transfer, to the Company, a
Depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Repurchase Date;

 

(7)           that Holders will be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Royalty Transactions Repurchase Offer Period, a
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a statement
that such Holder is withdrawing his election to have such Note purchased;

 

(8)           that, if the aggregate principal amount of Notes surrendered by
holders thereof exceeds the Royalty Transactions Repurchase Offer Amount, the
Trustee will select the Notes to be purchased on a pro rata basis, subject to
applicable procedures of the Depositary (with such adjustments as may be deemed
appropriate by the Company so that only Notes in minimum denominations of
$2,000, or integral multiples of $1,000 in excess thereof, will be purchased);
and

 

(9)           that Holders whose Notes were purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).

 

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On or before the Repurchase Date, the Company will, to the extent lawful, accept
for payment, on a pro rata basis to the extent necessary (with such adjustments
as may be deemed appropriate by the Company so that only Notes in minimum
denominations of $2000 or integral multiples of $1000 in excess thereof will be
purchased), the Royalty Transactions Repurchase Offer Amount of Notes or
portions thereof tendered pursuant to the Royalty Transactions Repurchase Offer,
or if less than the Royalty Transactions Repurchase Offer Amount has been
tendered, all Notes tendered, and will deliver or cause to be delivered to the
Trustee the Notes properly accepted together with an Officer’s Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 4.16. The Company, the
Depositary or the Paying Agent, as the case may be, will promptly (but in any
case not later than five days after the Repurchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company will
promptly issue a new Note, and the Trustee, upon written request from the
Company in the form of an Authentication Order, will authenticate and mail or
deliver (or cause to be transferred by book entry) such new Note to such Holder,
in a principal amount equal to any unpurchased portion of the Note surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof. The Company will publicly announce the results of the
Royalty Transactions Repurchase Offer on the Repurchase Date.

 

Within 360 days after the receipt of any Net Proceeds of any Royalty Transaction
that are not applied pursuant to a Royalty Transactions Repurchase Offer as set
forth above, the Company (or the applicable Restricted Subsidiary, as the case
may be) may apply such Net Proceeds:

 

(1)          to acquire all or substantially all of the assets of, or any
Capital Stock of, another Permitted Business, if, after giving effect to any
such acquisition of Capital Stock, the Permitted Business is or becomes a
Restricted Subsidiary of the Company;

 

(2)          to make a capital expenditure in a Permitted Business;

 

(3)          to license or acquire intellectual property and other rights in
respect of technologies, drug candidates, drugs and assets related or incidental
thereto; or

 

(4)          to make research and development expenditures that in the Company’s
good faith judgment are useful with respect to a Permitted Business.

 

Pending the final application of any such Net Proceeds of any Royalty
Transaction that are not applied pursuant to a Royalty Transactions Repurchase
Offer, the Company may invest such Net Proceeds of any Royalty Transaction that
are not applied pursuant to a Royalty Transactions Repurchase Offer in any
manner that is not prohibited by this Indenture; provided that such Net Proceeds
may only be invested in Cash Equivalents that shall be held in an account in
which the Collateral Agent has a first priority perfected security interest,
subject to Permitted Liens, for its benefit, the benefit of the Trustee and the
benefit of the Holders of the Notes in accordance with this Indenture and the
Collateral Documents; provided further that a binding commitment to apply such
Net Proceeds as set forth in clause (1) or (3) above or a statement in an
Officer’s Certificate that such Net Proceeds will be applied as set forth in
clause (4) above shall be treated as a permitted application of the Net Proceeds
from the date of such commitment or statement so long as the Company or such
Restricted Subsidiary enters into such commitment or makes such statement with
the good faith expectation that such Net Proceeds will be applied in a manner
consistent with such commitment or statement within 180 days of such commitment
or statement and, in the event such commitment is later cancelled or terminated,
or such statement withdrawn, for any reason before the Net Proceeds are applied
in connection therewith, then such Net Proceeds shall constitute Excess Royalty
Proceeds.

 

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Any Net Proceeds of any Royalty Transaction that are not applied or invested as
provided in the preceding paragraphs of this Section 4.16 will constitute
“Excess Royalty Proceeds”. Within five Business Days after the end of the
reinvestment period set forth in this Section 4.16, the Company will make a
Royalty Transactions Repurchase Offer to all Holders of Notes to purchase the
maximum principal amount of Notes that may be purchased with the Excess Royalty
Proceeds. The offer price in such Royalty Transactions Repurchase Offer will be
equal to 101% of the principal amount plus accrued and unpaid interest, if any,
to the date of purchase, and will be payable in cash pursuant to the procedures
set forth above in this Section 4.16. If any Excess Royalty Proceeds remain
after consummation of an Royalty Transaction Repurchase Offer, the Company may
use those Excess Royalty Proceeds for any purpose not otherwise prohibited by
this Indenture. If the aggregate principal amount of Notes tendered into such
Royalty Transaction Repurchase Offer exceeds the amount of Excess Royalty
Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis,
subject to the applicable procedures of the depository. Upon completion of each
Royalty Transaction Repurchase Offer, the amount of Excess Royalty Proceeds will
be reset at zero.

 

The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with each repurchase of Notes
pursuant to a Royalty Transactions Repurchase Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
the Section 4.16, the Company will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
Section 4.16 hereof by virtue of such compliance.

 

Section 4.17          Additional Note Guarantees.

 

If the Company or any of its Domestic Restricted Subsidiaries acquires or
creates another Domestic Restricted Subsidiary after the date hereof, then such
newly acquired or created Domestic Restricted Subsidiary will within 10 Business
Days of the date on which it was acquired or created (i) execute and deliver to
the Trustee a supplemental indenture substantially in the form attached hereto
as Exhibit E pursuant to which such Domestic Restricted Subsidiary will
Guarantee the Notes, (ii) execute and deliver to the Collateral Agent joinder
agreements or other similar agreements with respect the applicable Collateral
Documents and (iii) deliver to the Trustee and the Collateral Agent an Opinion
of Counsel stating that such supplemental indenture and other documents required
to be delivered pursuant to clause (ii) above have been duly authorized,
executed and delivered and constitute legally valid and binding and enforceable
obligations (subject to customary qualifications and exceptions).

 

Section 4.18          Designation of Royalty Transaction Subsidiaries.

 

The Board of Directors of the Company may designate any newly-formed Subsidiary
to be a Royalty Transaction Subsidiary in connection with, or in contemplation
of, a Royalty Transaction.

 

Any designation of a Subsidiary of the Company as a Royalty Transaction
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of a resolution of the Board of Directors giving effect to such
designation and an Officer’s Certificate certifying that such designation
complied with the requirements specified in the definition of “Royalty
Transaction Subsidiary.” If, at any time, any Royalty Transaction Subsidiary
would fail to meet the requirements of a Royalty Transaction Subsidiary, it will
thereafter cease to be a Royalty Transaction Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date and, if such
Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company will be in default of such Section.

 

Section 4.19          Maintenance of Property and Insurance.

 

The Company will, and will cause each of its Restricted Subsidiaries to, keep
all property material to the operation of the business of the Company and its
Restricted Subsidiaries, taken as a whole, in good working order and condition
in all material respects, ordinary wear and tear and casualty loss excepted;
provided that the Company shall not be obligated to comply with the foregoing
provisions of this Section 4.19 to the extent that the failure to do so is not
adverse in any material respect to the Holders of the Notes.

 

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The Company will, and will cause each of its Restricted Subsidiaries to, (i)
maintain with one or more insurance companies of national standing insurance on
all property material to the operation of the business of the Company and its
Restricted Subsidiaries, taken as a whole, in at least such amounts and against
at least such risks as are determined by the Company in good faith to be
reasonable and prudent, taking into account the risks that are usually insured
against in the same general area by companies engaged in the same or similar
businesses (in each case, after giving effect to any self-insurance determined
by the Company to be reasonable and prudent, taking into account the practices
of similarly situated Persons engaged in the same or similar businesses), and
(ii) deliver copies of all such insurance policies to the Collateral Agent with
an endorsement naming the Collateral Agent as a loss payee or additional
insured, as appropriate.

 

Section 4.20         Real Estate Mortgages and Filings.

 

With respect to any real property owned in fee simple by the Company or any
Guarantor, where such owned real property has a Fair Market Value in excess of
$5.0 million and is located in the United States (the “Premises”), the Company
or such Guarantor shall, within 90 days (or such later date as determined by the
Collateral Agent in its reasonable discretion) of the later of (x) the date
hereof and (y) the acquisition thereof, deliver to the Collateral Agent:

 

(1)          as mortgagee, for its benefit, the benefit of the Trustee and the
benefit of the Holders of the Notes, fully executed counterparts of Mortgages,
duly executed by the Company or the applicable Guarantor, as the case may be,
and corresponding UCC fixture filings, together with evidence of the completion
(or satisfactory arrangements for the completion) of all recordings and filings
of such Mortgages and corresponding UCC fixture filings as may be necessary to
create a valid, perfected Lien, subject to Permitted Liens, against the Premises
purported to be covered thereby;

 

(2)          lenders’ or mortgagee’s title insurance policies (“Lenders’
Policies”) issued to the Collateral Agent in an amount equal to 100% of the Fair
Market Value of the Premises purported to be covered by the related Mortgages,
insuring Collateral Agent’s interest as mortgagee in such property, which
interests are created by the Mortgages and are free and clear of all Liens,
defects and encumbrances other than Permitted Liens, and such policies shall
also include, to the extent commercially available and issued at reasonable and
ordinary rates, customary endorsements and shall be accompanied by evidence of
the payment in full (or satisfactory arrangements for the payment in full) of
all premiums thereon; in furtherance of satisfaction of the delivery obligations
in this clause (2), Company shall deliver to the title insurer issuing the
Lenders’ Policies such customary affidavits, certificates, instruments of
indemnification and other items (including a so-called “gap” indemnification) as
shall be reasonably required of the title insurer to issue the Lenders’ Policies
and endorsements referenced herein with respect to each of the Premises;

 

(3)          (i) updated surveys of such Premises, or (ii) the most recent
surveys of such Premises, together with either (a) an updated survey
certification in favor of the Collateral Agent from the a licensed surveyor
stating that, based on a visual inspection of the applicable real property and
the actual knowledge of the surveyor, there appear to have been no change in the
facts depicted in the survey or (b) an affidavit and/or indemnity from the
Company or the applicable Guarantor, as the case may be, stating that, to its
actual knowledge, it has not caused or permitted any change in the facts
depicted in the survey, other than, in each case, changes that do not materially
adversely affect the use by the Company or such Guarantor, as applicable, of
such Premises for the Company or such Guarantor’s business as so conducted, or
intended to be conducted, at such Premises; and in each case, in form and
substance as may be reasonably requested by the title insurer issuing the
Lenders’ Policies so that it may remove the standard survey and survey-related
exceptions from such policies and issue the survey, survey-related, and other
endorsements required pursuant to clause (2) above to such policy;

 

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(4)          Opinions of Counsel in the jurisdictions where such Premises are
located, in each case that such Mortgage (i) has been duly authorized, executed
and delivered by the Company or such Guarantor, (ii) constitutes a legal, valid
and binding obligation of the Company or such Guarantor, enforceable against the
applicable mortgagor in accordance with its terms, and (iii) creates a valid,
perfected Lien on the Premises purported to be covered thereby; and

 

(5)          In the event any such Premises is located in a special flood hazard
area, evidence of flood insurance, in form and substance satisfactory to the
Collateral Agent, that satisfies the Federal Emergency Management Agency’s
private flood insurance criteria.

 

Section 4.21         Minimum Cash Balance.

 

The Company will not permit the aggregate amount of unrestricted cash and Cash
Equivalents of the Company and the Guarantors at any time to be less than
$60,000,000.

 

Section 4.22         Control Agreements.

 

Subject to Section 4(q) of the Security Agreement, neither the Company nor any
of its Restricted Subsidiaries shall establish or maintain a Deposit Account or
a Securities Account (other than an Excluded Account) that is not subject to a
Control Agreement.

 

Section 4.23          Access to Management.

 

(1)          The Company will, upon the request of the Collateral Agent,
participate in a meeting with the Collateral Agent and one (1) designated
representative of each Holder once during each fiscal year to be held at
Company’s corporate offices (or at such other location as may be agreed to by
Company and Collateral Agent) at such time as may be agreed to by Company and
Collateral Agent; and

 

(2)          Upon the request of the Collateral Agent, within ten (10) days of
delivery of financial statements and other information required to be delivered
pursuant to Section 4.03(a)(1), the Company shall cause its chief financial
officer or another Responsible Officer reasonably acceptable to the Collateral
Agent to participate in a conference call with the Collateral Agent and one (1)
designated representative of each Holder held at a mutually agreeable time with
the Collateral Agent during which conference call the chief financial officer or
such other Responsible Officer shall review the financial condition of the
Company and its Subsidiaries and such other matters as the Collateral Agent may
reasonably request.

 

Section 4.24         Amendments.

 

Neither the Company nor any of its Restricted Subsidiaries shall amend or permit
any amendments to, or terminate or waive any provision of, (i) any Specified
Drug related license agreement or any other Specified Drug related agreement or
(ii) any other material license agreement or any other material agreement, in
each case, relating to, or resulting in, royalty streams or other payments from
the licensing or sublicensing of intellectual property of the Company or any of
its Subsidiaries if such amendment, termination, or waiver would be materially
adverse to the Trustee, the Collateral Agent or the Holders.

 

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ARTICLE 5
SUCCESSORS

 

Section 5.01          Merger, Consolidation, or Sale of Assets.

 

The Company will not, directly or indirectly: (a) consolidate or merge with or
into another Person (whether or not the Company is the surviving corporation);
or (b) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries taken as a whole, in one or more related transactions (other than
any Royalty Transaction), to another Person, unless:

 

(1)          the Company is the surviving corporation or the Person to which
such sale, assignment, transfer, conveyance or other disposition has been made
assumes all the obligations of the Company under the Indenture and the other
Indenture Documents pursuant to a supplemental indenture delivered to the
Trustee, substantially in the form of Exhibit E hereto;

 

(2)          immediately after such transaction, no Default or Event of Default
exists;

 

(3)          the Company or the Person to which such sale, assignment, transfer,
conveyance or other disposition has been made would, on the date of such
transaction after giving pro forma effect thereto and any related financing
transactions as if the same had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.09(a) hereof, or after so giving pro forma effect, the Fixed Charge
Coverage Ratio would be greater than immediately prior to so giving pro forma
effect;

 

(4)          if the applicable transaction would constitute a Change of Control,
the Company shall have complied with all of its obligations under Section 4.15;
and

 

(5)          the Company delivers to the Trustee an Officer’s Certificate and
Opinion of Counsel, both of which certify that the transactions noted in this
Section are authorized and permitted by this Indenture and all conditions
precedent, including this Section, under the Indenture have been satisfied.

 

In addition, the Company will not, directly or indirectly, lease all or
substantially all of the properties and assets of it and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to any other
Person.

 

Clauses (2) and (3) of the prior paragraph will not apply to:

 

(i)          a merger of the Company with an Affiliate solely for the purpose of
reincorporating the Company in another jurisdiction; or

 

(ii)         any consolidation or merger, or any sale, assignment, transfer,
conveyance, lease or other disposition of assets between or among the Company
and the Guarantors.

 

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Section 5.02         Successor Corporation Substituted.

 

Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the properties or
assets of the Company in a transaction that is subject to, and that complies
with the provisions of, Section 5.01 hereof, the successor Person formed by such
consolidation or into or with which the Company is merged or to which such sale,
assignment, transfer, lease, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition, the provisions of this Indenture referring to the “Company” shall
refer instead to the successor Person and not to the Company), and may exercise
every right and power of the Company under this Indenture with the same effect
as if such successor Person had been named as the Company herein; provided,
however, that the predecessor Company shall not be relieved from the obligation
to pay the principal of and interest on the Notes except in the case of a sale
of all of the Company’s assets in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof.

 

ARTICLE 6
DEFAULTS AND REMEDIES

 

Section 6.01         Events of Default.

 

Each of the following is an “Event of Default”:

 

(1)          default for 5 days in the payment when due of interest on the
Notes;

 

(2)          default in the payment when due (at maturity, upon redemption or
otherwise) of the principal of, or premium, if any, on, the Notes;

 

(3)          (i) failure by the Company or any of its Restricted Subsidiaries to
comply with the provisions of Sections 2.06(b)(4), 3.10, 4.10, 4.15, 4.16, 4.22,
4.24 or 5.01 hereof or Section 4(q) of the Security Agreement, (ii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
of Sections 4.07, 4.08, 4.09, 4.12 or 4.21 hereof and such default continues for
a period of 5 Business Days after the earlier of the date an Executive Officer
(as defined in the Securities Act) of the Company has knowledge of such failure
and the date written notice of such default has been given by the Trustee or the
Collateral Agent to the Company; provided, that no such grace period shall be
applicable to a failure by the Company or any of its Restricted Subsidiaries to
comply with the provisions of Section 4.12 as a result of a breach of the
proviso of clause (7) of the definition of “Permitted Liens” or (iii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
of Section 4.03(f), 4.03(g), 4.03(h) or 4.03(i) hereof and such default
continues for a period of 20 days;

 

(4)          failure by the Company or any of its Restricted Subsidiaries for 60
days after notice to the Company by the Trustee, the Collateral Agent or the
holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class to comply with any of the other agreements
in the Indenture Documents;

 

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(5)          default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness (other than Indebtedness owed to the Company or any Restricted
Subsidiary of the Company) for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now
exists, or is created after the date of this Indenture, if that default:

 

(A)          is caused by a failure to pay such Indebtedness at final maturity
prior to the expiration of the grace period provided in such Indebtedness (a
“Payment Default”);

 

(B)          results in the acceleration of such Indebtedness prior to its
express maturity; or

 

(C)          permits the acceleration of such Indebtedness prior to its express
maturity and has continued without cure or waiver for a period of 30 days from
the date on which such acceleration was first permitted,

 

and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$15.0 million or more;

 

(6)          failure by the Company or any of its Restricted Subsidiaries to pay
final judgments entered by a court or courts of competent jurisdiction
aggregating in excess of $15.0 million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in writing), which
judgments are not paid, discharged or stayed within a period of 60 days of the
entry thereof;

 

(7)          the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries of the Company
that, taken together, would constitute a Significant Subsidiary pursuant to or
within the meaning of Bankruptcy Law (provided that such events with respect to
a Restricted Subsidiary that is not a Significant Subsidiary shall nonetheless
constitute an Event of Default to the extent such events have had or would
reasonably be expected to result in a Material Adverse Effect):

 

(A)          commences a voluntary case,

 

(B)          consents to the entry of an order for relief against it in an
involuntary case,

 

(C)          consents to the appointment of a custodian of it or for all or
substantially all of its property,

 

(D)          makes a general assignment for the benefit of its creditors, or

 

(E)          generally is not paying its debts as they become due;

 

(8)          a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (provided that such events with respect to a Restricted
Subsidiary that is not a Significant Subsidiary shall nonetheless constitute an
Event of Default to the extent such events have had or would reasonably be
expected to result in a Material Adverse Effect):

 

(A)          is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary in an involuntary case;

 

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(B)          appoints a custodian of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary or for all or substantially all of the property of the Company or any
of its Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a
Significant Subsidiary; or

 

(C)          orders the liquidation of the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary;

 

and the order or decree remains unstayed and in effect for 60 consecutive days;
or

 

(9)          except as permitted by this Indenture and the Collateral Documents,
with respect to any assets or property having a Fair Market Value in excess of
$2.5 million, individually or in the aggregate, that constitutes or, under this
Indenture or the Collateral Documents is required to constitute, Collateral, (a)
any of the Collateral Documents shall for any reason cease to be in full force
and effect in all material respects, or the Company or a Guarantor shall so
assert, or (b) any security interest created, or purported to be created, by any
of the Collateral Documents shall cease to be enforceable and of the same effect
and priority purported to be created thereby, except in each case solely as a
result of the Collateral Agent taking or refraining from taking any action in
its sole control;

 

(10)        except as permitted by this Indenture, any Note Guarantee is held in
any judicial proceeding to be unenforceable or invalid or ceases for any reason
to be in full force and effect, or any Guarantor, or any Person acting on behalf
of any Guarantor, denies or disaffirms its obligations under its Note Guarantee;

 

(11)        any order, judgment or decree shall be entered against the Company
or any of its Restricted Subsidiaries decreeing the dissolution or split up of
the Company or such Restricted Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of thirty days;

 

(12)        (x) the loss, suspension or revocation of, or failure to renew, any
material license (it being understood that any licenses under the applicable
Collaboration Agreements for any Specified Drugs shall not constitute material
licenses for purposes of this Section 6.01(12)(x) unless the loss, suspension or
revocation of, or failure to renew, any licenses under the applicable
Collaboration Agreements for any Specified Drugs results from a breach by the
Company or any of its Restricted Subsidiaries under such agreements) or material
permit with respect to any Specified Drug now held or hereafter acquired by the
Company or any of its Restricted Subsidiaries or (y) the loss, suspension or
revocation of, or failure to renew, any material license or material permit
other than with respect to any Specified Drug now held or hereafter acquired by
the Company or any of its Restricted Subsidiaries, if, in the case of this
clause (y), such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Effect; and

 

(13)        the indictment of the Company or any of its Restricted Subsidiaries
under any criminal statute, or commencement of criminal or civil proceedings
against the Company or any of its Restricted Subsidiaries pursuant to which
statute or proceedings the penalties actually sought include forfeiture to any
governmental authority of any material portion of the property of the Company
and its Restricted Subsidiaries, taken as a whole, constituting Collateral.

 

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Section 6.02          Acceleration.

 

In the case of an Event of Default specified in clause (7) or (8) of Section
6.01 hereof, with respect to the Company, any Restricted Subsidiary of the
Company that is a Significant Subsidiary or any group of Restricted Subsidiaries
of the Company that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes will become due and payable immediately without further
action or notice. If any other Event of Default occurs and is continuing, the
Trustee or the Holders of at least 50.1% in aggregate principal amount of the
then outstanding Notes by written notice to the Company (and the Trustee if by
the Holders) may declare all the Notes to be due and payable immediately.

 

Upon any such declaration, the Notes shall become due and payable immediately.

 

The Holders of at least 50.1% in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may, on behalf of all of the
Holders, rescind an acceleration and its consequences, if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.

 

Section 6.03          Other Remedies.

 

If an Event of Default occurs and is continuing, the Collateral Agent may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.

 

The Collateral Agent may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Collateral Agent or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.

 

If an Event of Default occurs and is continuing, the Holders of at least 50.1%
in aggregate principal amount of the Notes at the time outstanding (not
including Notes held by the Issuer or any of its Affiliates), may provide
directions directly to the Collateral Agent to cause the foreclosure on any or
all of the Collateral and/or proceed to enforce the remedies available to the
Collateral Agent pursuant to the terms of the Collateral Documents or otherwise
as a matter of law, in each case, in accordance with and as contemplated by the
Collateral Documents.

 

Section 6.04          Waiver of Past Defaults.

 

Holders of not less than at least 50.1% in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase); provided, however, that the
Holders of at least 50.1% in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration. Upon any such waiver, such
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

 

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Section 6.05         Control by Majority.

 

Holders of at least 50.1% in aggregate principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee under this Indenture or the Collateral Agent under the
Collateral Documents. However, the Trustee or the Collateral Agent may refuse to
follow any direction that conflicts with law or this Indenture, that the Trustee
or Collateral Agent determines may be unduly prejudicial to the rights of other
Holders of Notes or that may involve the Trustee or the Collateral Agent in
personal liability.

 

Section 6.06         Limitation on Suits.

 

A Holder may pursue a remedy with respect to this Indenture or the Notes only
if:

 

(1)          such Holder gives to the Trustee written notice that an Event of
Default is continuing;

 

(2)          Holders of at least 50.1% in aggregate principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;

 

(3)          such Holder or Holders offer and, if requested, provide to the
Trustee security or indemnity satisfactory to the Trustee against any loss,
liability or expense;

 

(4)          the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and

 

(5)          during such 60-day period, Holders of at least 50.1% in aggregate
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with such request.

 

A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.

 

Section 6.07         Rights of Holders of Notes to Receive Payment.

 

Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal, premium, if any, and interest on the
Note, on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.

 

Section 6.08         Collection Suit by Trustee.

 

If an Event of Default specified in Section 6.01(1) or (2) hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium, if any, and interest remaining unpaid on, the Notes and
interest on overdue principal and, to the extent lawful, interest and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

 

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Section 6.09         Trustee May File Proofs of Claim.

 

The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.10          Priorities.

 

If the Trustee collects any money or property pursuant to this Article 6, it
shall pay out the money in the following order:

 

First:          to the Trustee and the Collateral Agent, their agents and
attorneys for amounts due under this Indenture and the Collateral Documents,
including payment of all compensation, expenses and liabilities incurred, and
all advances made, by the Trustee and the Collateral Agent and the costs and
expenses of collection;

 

Second:      to Holders of Notes for amounts due and unpaid on the Notes for
principal, indemnities, if any, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the Notes for principal, premium, if any and interest, respectively; and

 

Third:         to the Company or to such party as a court of competent
jurisdiction shall direct.

 

The Trustee may fix a record date and payment date for any payment to Holders of
Notes pursuant to this Section 6.10.

 

Section 6.11         Undertaking for Costs.

 

In any suit for the enforcement of any right or remedy under this Indenture or
in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate
principal amount of the then outstanding Notes.

 

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ARTICLE 7
TRUSTEE

 

Section 7.01         Duties of Trustee.

 

(a)          If an Event of Default has occurred and is continuing, the Trustee
will exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own
affairs.

 

(b)          Except during the continuance of an Event of Default:

 

(1)          the duties of the Trustee will be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties that
are specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and

 

(2)          in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee will examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.

 

(c)          The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

 

(1)          this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;

 

(2)          the Trustee will not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved in a court of competent
jurisdiction that the Trustee was negligent in ascertaining the pertinent facts;
and

 

(3)          the Trustee will not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.

 

(4)          No provision of this Indenture shall require the Trustee to risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk is not reasonably assured to it.

 

(d)          Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.01.

 

(e)          The Trustee will not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.

 

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Section 7.02         Rights of Trustee.

 

(a)          The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.

 

(b)          Before the Trustee acts or refrains from acting, it shall be
entitled to receive an Officer’s Certificate or an Opinion of Counsel or both.
The Trustee will not be liable for any action it takes or omits to take in good
faith in reliance on such Officer’s Certificate or Opinion of Counsel. The
Trustee may consult with counsel of its selection and the advice of such counsel
or any Opinion of Counsel will be full and complete authorization and protection
from liability in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

 

(c)          The Trustee may act through its attorneys and agents and will not
be responsible for the misconduct or negligence of any agent appointed with due
care, and the Trustee shall not be responsible for the supervision of officers
and employees of such agents or attorneys or the application of any money by any
Agent other than the Trustee.

 

(d)          The Trustee will not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.

 

(e)          Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company will be sufficient if
signed by an Officer of the Company.

 

(f)          The rights, privileges, protections, immunities and benefits given
to the Trustee, including, its right to be compensated, reimbursed, and
indemnified, and its right to resign, are extended to, and shall be enforceable
by, the Trustee in each of its capacities hereunder or in any Indenture Document
or Collateral Document, including but not limited to its capacities as Paying
Agent and Registrar, and to each agent, custodian and other Person employed to
act hereunder or in any Indenture Document or Collateral Document.

 

(g)          The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders have offered to the Trustee indemnity or
security satisfactory to the Trustee against the losses, liabilities and
expenses that might be incurred by it in compliance with such request or
direction.

 

(h)          The Trustee need not investigate any fact or matter stated in any
document delivered to it, but the Trustee, in its discretion or if directed to
do so, may make such further inquiry or investigation into such facts or
matters, and, if the Trustee shall determine in good faith or if directed to do
so to make such further inquiry or investigation, it shall be entitled upon
reasonable notice during normal business hours to examine the books, records and
premises of the Company and the Guarantors, personally or by agent or attorney
at the sole cost of the Company and the Guarantors and shall incur no liability
or additional liability of any kind by reason of such inquiry or investigation.

 

(i)          The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by a Responsible Officer of the Trustee, and such notice
references the Notes and this Indenture and such notice states that it is a
“notice of default”.

 

(j)          Any permissive right or authority granted to the Trustee shall not
be construed as a mandatory duty.

 

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(k)          The Trustee may request that the Company deliver an Officer’s
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officer’s Certificate may be signed by any person authorized to sign an
Officer’s Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

 

(k)          In no event shall the Trustee be responsible or liable for special,
indirect, punitive or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss or profit) irrespective of whether the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.

 

(l)          The Company shall provide prompt written notice to the Trustee of
any change to its fiscal year.

 

(m)        The Trustee shall not be responsible for the actions or inactions of
the Collateral Agent. The Collateral Agent shall not be responsible for the
actions or inactions of the Trustee.

 

Section 7.03        Individual Rights of Trustee and Collateral Agent.

 

The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee (if this Indenture has been qualified under the TIA) or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof. The Collateral Agent in its individual or any
other capacity may become the owner or pledgee of Notes and may otherwise deal
with the Company or any Affiliate of the Company with the same rights it would
have if it were not the Collateral Agent.

 

Section 7.04        Trustee’s and Collateral Agent’s Disclaimer.

 

The Trustee will not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Collateral Documents or the Notes,
it shall not be accountable for the Company’s use of the proceeds from the Notes
or any money paid to the Company or upon the Company’s direction under any
provision of this Indenture, it will not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it will not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication. The Collateral Agent will not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Collateral
Documents or the Notes, it shall not be accountable for the Company’s use of the
proceeds from the Notes or any money paid to the Company or upon the Company’s
direction under any provision of this Indenture, it will not be responsible for
the use or application of any money received by any Paying Agent, and it will
not be responsible for any statement or recital herein or any statement in the
Notes or any other document in connection with the sale of the Notes or pursuant
to this Indenture.

 

Section 7.05        Notice of Defaults.

 

If a Default or Event of Default occurs and is continuing and if it is actually
known to the Trustee, the Trustee will mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs or, if later, 30 days
after obtaining knowledge thereof. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on, any Note,
the Trustee may withhold the notice if and so long as it in good faith
determines that withholding the notice is in the interests of the Holders of the
Notes.

 

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Section 7.06         Reports by Trustee to Holders of the Notes.

 

(a)          Within 60 days after each January 15th beginning with the January
15th following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee will mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA § 313(a) (but if no event
described in TIA § 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also will comply
with TIA § 313(b)(2). The Trustee will also transmit by mail all reports as
required by TIA § 313(c).

 

(b)          A copy of each report at the time of its mailing to the Holders of
Notes will be mailed by the Trustee to the Company and filed by the Trustee with
the SEC and each stock exchange or market, if any, on which the Notes are listed
or quoted in accordance with TIA § 313(d). The Company will promptly notify the
Trustee in writing if the Notes become listed or quoted on any stock exchange or
market or any delisting thereof.

 

Section 7.07         Compensation and Indemnity.

 

(a)          The Company will pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as
agreed to in writing. The Trustee’s compensation will not be limited by any law
on compensation of a trustee of an express trust. The Company will reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses will include the reasonable compensation, disbursements
and expenses of the Trustee’s agents and counsel. The Company will reimburse the
Collateral Agent promptly upon request for all reasonable disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its services. Such expenses will include the reasonable compensation,
disbursements and expenses of the Collateral Agent’s agents and counsel.

 

(b)          The Company and the Guarantors will jointly and severally indemnify
the Trustee against any and all losses, liabilities or expenses (including
reasonable attorney’s expenses and fees) incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors, any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense is attributable to its negligence or willful
misconduct as determined by a court of competent jurisdiction. The Trustee will
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company will not relieve the Company or
any of the Guarantors of their obligations hereunder. The Company or such
Guarantor will defend such claim and the Trustee will cooperate in the defense.
The Trustee may have separate counsel and the Company will pay the reasonable
fees and expenses of such counsel. Neither the Company nor any Guarantor need
pay for any settlement made without its consent, which consent will not be
unreasonably withheld. The Company and the Guarantors will jointly and severally
indemnify the Collateral Agent against any and all losses, liabilities or
expenses (including reasonable attorney’s expenses and fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under the Indenture Documents, including the costs and expenses of
enforcing this Indenture against the Company and the Guarantors (including this
Section 7.07) and defending itself against any claim (whether asserted by the
Company, the Guarantors, any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense is
attributable to its negligence, bad faith or willful misconduct as determined by
a court of competent jurisdiction. The Collateral Agent will notify the Company
promptly of any claim for which it may seek indemnity. Failure by the Collateral
Agent to so notify the Company will not relieve the Company or any of the
Guarantors of their obligations hereunder. The Company or such Guarantor will
defend such claim and the Collateral Agent will cooperate in the defense. The
Collateral Agent may have separate counsel and the Company will pay the
reasonable fees and expenses of such counsel. Neither the Company nor any
Guarantor need pay for any settlement made without its consent, which consent
will not be unreasonably withheld

 

77

 

 

(c)          The obligations of the Company and the Guarantors under this
Section 7.07 will survive the satisfaction and discharge of this Indenture or
earlier resignation or removal of the Trustee or the Collateral Agent.

 

(d)          To secure the Company’s and the Guarantors’ payment obligations in
this Section 7.07, the Trustee will have a Lien prior to the Notes on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien will survive the
satisfaction and discharge of this Indenture or earlier resignation or removal
of the Trustee. To secure the Company’s and the Guarantors’ payment obligations
in this Section 7.07, the Collateral Agent will have a Lien prior to the Notes
on all money or property held or collected by the Collateral Agent, except that
held in trust to pay principal and interest on particular Notes. Such Lien will
survive the satisfaction and discharge of this Indenture or earlier resignation
or removal of the Collateral Agent.

 

(e)          When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(9) or (10) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law. When the Collateral Agent incurs expenses or renders services
after an Event of Default specified in Section 6.01(9) or (10) hereof occurs,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

 

(f)          The Trustee will comply with the provisions of TIA § 313(b)(2) to
the extent applicable.

 

Section 7.08         Replacement of Trustee.

 

(a)          A resignation or removal of the Trustee and appointment of a
successor Trustee will become effective only upon the successor Trustee’s
acceptance of appointment as provided in this Section 7.08.

 

(b)          The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of 50.1%
in aggregate principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:

 

(1)          the Trustee fails to comply with Section 7.10 hereof;

 

(2)          the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;

 

(3)          a custodian or public officer takes charge of the Trustee or its
property; or

 

78

 

 

 (4)           the Trustee becomes incapable of acting.

 

(c)           If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company will, with the consent of the
Collateral Agent, promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of at least 50.1% in aggregate
principal amount of the then outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.

 

(d)           If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company,
or the Holders of at least 10% in aggregate principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.

 

(e)           If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10 hereof, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

 

(f)            A successor Trustee will deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee will become effective, and the
successor Trustee will have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee will mail a notice of its succession
to Holders. The retiring Trustee will promptly transfer all property held by it
as Trustee to the successor Trustee; provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company’s obligations under Section 7.07 hereof will continue for the
benefit of the retiring Trustee.

 

Section 7.09          Successor Trustee by Merger, etc.

 

If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act will be the successor Trustee. If
the Collateral Agent consolidates, merges or converts into, or transfers all or
substantially all of its business to, another corporation, the successor
corporation without any further act will be the successor Collateral Agent.

 

Section 7.10          Eligibility; Disqualification.

 

There will at all times be a Trustee hereunder that is a corporation organized
and doing business under the laws of the United States of America or of any
state thereof that is authorized under such laws to exercise corporate trustee
power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100.0
million as set forth in its most recent published annual report of condition.

 

This Indenture will always have a Trustee who satisfies the requirements of TIA
§ 310(a)(1), (2) and (5). The Trustee is subject to TIA § 310(b).

 

Section 7.11          Preferential Collection of Claims Against Company.

 

The Trustee is subject to TIA § 311(a), excluding any creditor relationship
listed in TIA § 311(b). A Trustee who has resigned or been removed shall be
subject to TIA § 311(a) to the extent indicated therein.

 

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Section 7.12         Trustee as Paying Agent.

 

References to the Trustee in Sections 7.02, 7.03, 7.04, 7.07, 7.08 and 7.09
shall include the Trustee in its role as Paying Agent and as Registrar.

 

ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01         Option to Effect Legal Defeasance or Covenant Defeasance.

 

The Company may at any time, at the option of its Board of Directors evidenced
by a resolution set forth in an Officer’s Certificate, elect to have either
Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article 8.

 

Section 8.02         Legal Defeasance and Discharge.

 

Upon the Company’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.02, the Company and each of the Guarantors will, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Notes (including the Note Guarantees and their obligations under Article 10
hereof) on the date the conditions set forth below are satisfied (hereinafter,
“Legal Defeasance”). For this purpose, Legal Defeasance means that the Company
and the Guarantors will be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes (including the Note
Guarantees), which will thereafter be deemed to be “outstanding” only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in clauses (1) and (2) below, and to have satisfied all their other
obligations under such Notes, the Note Guarantees and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute
instruments as reasonably requested by the Company acknowledging the same),
except for the following provisions which will survive until otherwise
terminated or discharged hereunder:

 

(1)          the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium, if any, on, such Notes when
such payments are due from the trust referred to in Section 8.04 hereof;

 

(2)          the Company’s obligations with respect to such Notes under Article
2 and Section 4.02 hereof;

 

(3)          the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company’s and the Guarantors’ obligations in connection
therewith; and

 

(4)          this Article 8.

 

Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.

 

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Section 8.03         Covenant Defeasance.

 

Upon the Company’s exercise under Section 8.01 hereof of the option applicable
to this Section 8.03, the Company and each of the Guarantors will, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of their obligations under the covenants contained in Sections 4.03,
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20,
4.21 and 4.22 hereof and clause (4) of Section 5.01 hereof and Article 10 hereof
with respect to the outstanding Notes on and after the date the conditions set
forth in Section 8.04 hereof are satisfied (hereinafter, “Covenant Defeasance”),
and the Notes will thereafter be deemed not “outstanding” for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but will
continue to be deemed “outstanding” for all other purposes hereunder (it being
understood that such Notes will not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Note Guarantees, the Company and the Guarantors may omit
to comply with and will have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply will not constitute a Default or an Event
of Default under Section 6.01 hereof, but, except as specified above, the
remainder of this Indenture and such Notes and Note Guarantees will be
unaffected thereby. In addition, upon the Company’s exercise under Section 8.01
hereof of the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(3) through 6.01(5) hereof will not constitute Events of Default.

 

Section 8.04         Conditions to Legal or Covenant Defeasance.

 

In order to exercise either Legal Defeasance or Covenant Defeasance under either
Section 8.02 or 8.03 hereof:

 

(1)          the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized investment bank, appraisal firm, or firm
of independent public accountants, to pay the principal of, premium, if any, and
interest on, the outstanding Notes on the stated date for payment thereof or on
the applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to such stated date for payment or to a
particular redemption date;

 

(2)          in the case of an election under Section 8.02 hereof, the Company
must deliver to the Trustee an Opinion of Counsel confirming that:

 

(A)          the Company has received from, or there has been published by, the
Internal Revenue Service a ruling; or

 

(B)          since the date of this Indenture, there has been a change in the
applicable federal income tax law,

 

in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;

 

(3)          in the case of an election under Section 8.03 hereof, the Company
must deliver to the Trustee an Opinion of Counsel confirming that the Holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred;

 

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(4)          no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) and the
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which the Company or any Guarantor is a party or
by which the Company or any Guarantor is bound;

 

(5)          such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;

 

(6)          the Company must deliver to the Trustee an Officer’s Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding any creditors of the
Company or others; and

 

(7)          the Company must deliver to the Trustee an Officer’s Certificate
and an Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied with.

 

Section 8.05          Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.

 

Subject to Section 8.06 hereof, all money and non-callable Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant
to Section 8.04 hereof in respect of the outstanding Notes will be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes and
this Indenture, to the payment, either directly or through any Paying Agent as
the Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest.

 

The Company will pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

 

Notwithstanding anything in this Article 8 to the contrary, the Trustee will
deliver or pay to the Company from time to time upon the request of the Company
any money or non-callable Government Securities held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(1) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 8.06          Repayment to Company.

 

Subject to applicable law, any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of the principal
of, premium, if any, or interest on, any Note and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) will be discharged from such trust; and the Holder of such Note will
thereafter be permitted to look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, will thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which will not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.

 

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Section 8.07          Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any U.S. dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company’s and the Guarantors’ obligations under this
Indenture and the Notes and the Note Guarantees will be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if the Company makes any payment of principal of, premium, if
any, or interest on, any Note following the reinstatement of its obligations,
the Company will be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.

 

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01          Without Consent of Holders of Notes.

 

Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors, if
any, the Collateral Agent and the Trustee may amend or supplement the Indenture
Documents without the consent of any Holder of Note:

 

(1)          to cure any ambiguity, defect or inconsistency that does not
adversely affect the holders of the Notes in any material respect;

 

(2)          to provide for uncertificated Notes in addition to or in place of
certificated Notes;

 

(3)          to provide for the assumption of the Company’s or a Guarantor’s
obligations to the Holders of the Notes and Note Guarantees by a successor to
the Company or such Guarantor pursuant to Article 5 hereof;

 

(4)          to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder; or

 

(5)          to allow any Guarantor to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes or to release a Guarantor from its Note
Guarantee in accordance with the terms of this Indenture.

 

Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
13.03 hereof, the Trustee will join with the Company and the Guarantors in the
execution of any amended or supplemental indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee will not be
obligated to enter into such amended or supplemental indenture that affects its
own rights, duties, liabilities or immunities under this Indenture or otherwise.

 

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Section 9.02          With Consent of Holders of Notes.

 

Except as provided below in this Section 9.02, the Company, the Guarantors, if
any, the Trustee, and the Collateral Agent may amend or supplement the Indenture
Documents with the consent of the Holders of at least 50.1% in aggregate
principal amount of the then outstanding Notes voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04
and 6.07 hereof, any existing Default or Event of Default (other than a Default
or Event of Default in the payment of the principal of, premium, if any, or
interest on, the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of the Indenture
Documents may be waived with the consent of the Holders of at least 50.1% in
aggregate principal amount of the then outstanding Notes voting as a single
class (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes). Section 2.08 hereof
shall determine which Notes are considered to be “outstanding” for purposes of
this Section 9.02.

 

Upon the written request of the Company accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
indenture or waiver, and upon the filing with the Trustee and the Collateral
Agent of evidence of the consent of the Holders of Notes as aforesaid, and upon
receipt by the Trustee and the Collateral Agent of the documents described in
Section 13.03 hereof, the Trustee and the Collateral Agent will join with the
Company and the Guarantors in the execution of such amended or supplemental
indenture or waiver unless such amended or supplemental indenture or waiver
affects the Trustee’s and the Collateral Agent’s own rights, duties, liabilities
or immunities under this Indenture or otherwise, in which case the Trustee or
the Collateral Agent, as applicable, may in its discretion, but will not be
obligated to, enter into such amended or supplemental indenture or waiver.

 

It is not necessary for the consent of the Holders of Notes under this Section
9.02 to approve the particular form of any proposed amendment, supplement or
waiver, but it is sufficient if such consent approves the substance thereof.

 

After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company will send to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to send such notice, or any defect therein, will not, however, in
any way impair or affect the validity of any such amended or supplemental
indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of at
least 50.1% in aggregate principal amount of the Notes then outstanding voting
as a single class may waive compliance in a particular instance by the Company
with any provision of the Indenture Documents. However, without the consent of
each Holder affected, an amendment, supplement or waiver under this Section 9.02
may not (with respect to any Notes held by a non-consenting Holder):

 

(1)          reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;

 

(2)          reduce the principal of or change the fixed maturity of any Note or
reduce the premium payable upon the redemption of any Note or change the time at
which any Note may be redeemed;

 

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(3)          reduce the rate of or change the time for payment of interest,
including default interest, on any Note;

 

(4)          waive a Default or Event of Default in the payment of principal of,
or interest or premium, if any, on, the Notes (except a rescission of
acceleration of the Notes by the holders of at least 50.1% in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);

 

(5)          make any Note payable in money other than that stated in the Notes;

 

(6)          make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or interest or premium, if any, on, the Notes;

 

(7)          waive a redemption payment with respect to any Note (other than a
payment required by Sections 4.10, 4.15 and 4.16 hereof);

 

(8)          release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture;

 

(9)          expressly subordinate the Notes or any Note Guarantees in right of
payment, or expressly subordinate the Lien securing the Notes and the Note
Guarantees;

 

(10)        make any change in the preceding amendment and waiver provisions; or

 

(11)        release all or substantially all of the Collateral from the Liens
securing the Notes.

 

Section 9.03          Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a
Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder’s Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.

 

Section 9.04          Notation on or Exchange of Notes.

 

The Trustee may place an appropriate notation about an amendment, supplement or
waiver on any Note thereafter authenticated. The Company in exchange for all
Notes may issue and the Trustee shall, upon receipt of an Authentication Order,
authenticate new Notes that reflect the amendment, supplement or waiver.

 

Failure to make the appropriate notation or issue a new Note will not affect the
validity and effect of such amendment, supplement or waiver.

 

Section 9.05          Trustee to Sign Amendments, Waivers, etc.

 

The Trustee will sign any amended or supplemental indenture authorized pursuant
to this Article 9 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. The Company may not
sign an amended or supplemental indenture until the Board of Directors of the
Company approves it. In executing any amended or supplemental indenture, the
Trustee will receive and (subject to Section 7.01 hereof) will be fully
protected in relying upon, in addition to the documents required by Section
13.03 hereof, an Officer’s Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture and that such amendment, supplement or waiver is the
legal, valid and binding obligation of the Company and any Guarantors party
thereto, enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions of this Indenture.

 

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ARTICLE 10
COLLATERAL AND SECURITY

 

Section 10.01          Grant of Security Interest; Collateral Documents.

 

The due and punctual payment of the principal of and interest, if any, on the
Notes when and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, repurchase, redemption or otherwise,
and interest on the overdue principal of and interest (to the extent permitted
by law), if any, on the Notes and performance of all other obligations of the
Company to the Holders of Notes or the Trustee under the Indenture Documents,
according to the terms hereunder or thereunder, are secured as provided in the
Collateral Documents which the Company has entered into simultaneously with the
execution of this Indenture. Each Holder of Notes, by its acceptance thereof,
consents and agrees to the terms of the Collateral Documents (including, without
limitation, the provisions providing for foreclosure and release of Collateral)
as the same may be in effect or may be amended from time to time in accordance
with its terms and authorizes and directs the Collateral Agent to enter into the
Collateral Documents and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company will deliver to the Trustee
copies of all documents delivered to the Collateral Agent pursuant to the
Collateral Documents, and will do or cause to be done all such acts and things
as may be required by the provisions of the Collateral Documents, to assure and
confirm to the Trustee and the Collateral Agent the security interest in the
Collateral contemplated hereby, by the Collateral Documents or any part thereof,
as from time to time constituted, so as to render the same available for the
security and benefit of this Indenture and of the Notes secured hereby,
according to the intent and purposes herein expressed. The Company will take,
and will cause its Subsidiaries to take, upon request of the Collateral Agent,
any and all actions reasonably required to cause the Collateral Documents to
create and maintain, as security for the Obligations of the Company hereunder, a
valid and enforceable perfected first priority Lien in and on all the
Collateral, in favor of the Collateral Agent for its benefit, the benefit of the
Trustee and for the benefit of the Holders, superior to and prior to the rights
of all third Persons and subject to no other Liens than Permitted Liens. For the
avoidance of doubt, neither the Trustee nor the Collateral Agent shall be
responsible for the existence, genuineness or value of any of the Collateral or
for the validity, perfection, priority or enforceability of the security
interest in any of the Collateral.

 

Section 10.02          Recording and Opinions.

 

(a)          The Company will furnish to the Trustee and the Collateral Agent
for their records simultaneously with the execution and delivery of this
Indenture an Opinion of Counsel with respect to the Collateral Documents and the
Lien created by the Collateral Documents in a form acceptable to the initial
purchasers of the Notes and their counsel.

 

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(b)          The Company will furnish to the Collateral Agent and the Trustee,
within 60 days after each January 15th, beginning with the January 15th
following the date of this Indenture, an Opinion of Counsel, dated as of such
date, either:

 

(1)          (A) stating that, in the opinion of such counsel, action has been
taken with respect to the recording, registering, filing, re-recording,
re-registering and re-filing of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance as
is necessary to maintain the Lien of the Collateral Documents and reciting with
respect to the security interests in the Collateral the details of such action
or referring to prior Opinions of Counsel in which such details are given, and
(B) stating that, in the opinion of such counsel, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Notes and the Collateral Agent and the Trustee hereunder and
under the Collateral Documents with respect to the security interests in the
Collateral; or

 

(2)          stating that, in the opinion of such counsel, no such action is
necessary to maintain such Lien and assignment.

 

Section 10.03        Release of Collateral.

 

(a)          The Collateral Agent shall not at any time release Collateral from
the security interests created by the Collateral Documents unless such release
is in accordance with the provisions of this Indenture and the applicable
Collateral Documents.

 

(b)          The Collateral Agent shall be entitled to request and rely upon an
Officer’s Certificate and/or an Opinion of Counsel in connection with any
release of Collateral from the Lien and security interest created by the
Collateral Documents.

 

(c)          At any time when a Default or Event of Default has occurred and is
continuing and the maturity of the Notes has been accelerated (whether by
declaration or otherwise) and the Trustee has delivered a notice of acceleration
to the Collateral Agent, no release of Collateral pursuant to the provisions of
the Collateral Documents will be effective as against the Holders of Notes.

 

Section 10.04        [Reserved].

 

Section 10.05        [Reserved].

 

Section 10.06        Authorization of Actions to Be Taken by the Trustee Under
the Collateral Documents.

 

Upon the occurrence and during the continuance of an Event of Default and
acceleration of the Notes, subject to the provisions of Section 7.01 and 7.02
hereof, the Trustee shall at the direction of a majority of the Holders of
Notes, direct, on behalf of the Holders of Notes, the Collateral Agent to, take
all actions necessary or appropriate in order to:

 

(1)          enforce any of the terms of the Collateral Documents; and

 

(2)          collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder.

 

The Collateral Agent will have power to institute and maintain such suits and
proceedings as directed to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Collateral Documents or this
Indenture, and such suits and proceedings as the Collateral Agent may be
directed to preserve or protect its interests and the interests of the Holders
of Notes in the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of Notes or of the Collateral Agent).

 

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Section 10.07        Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.

 

The Trustee is authorized to receive any funds for the benefit of the Holders of
Notes distributed under the Collateral Documents, and to make further
distributions of such funds to the Holders of Notes according to the provisions
of this Indenture.

 

Section 10.08        Termination of Security Interest.

 

Upon the payment in full of all Obligations of the Company under this Indenture
and the Notes, or upon Legal Defeasance, the Trustee will, at the written
request of the Company, deliver a certificate to the Collateral Agent stating
that such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Collateral Documents.

 

ARTICLE 11
NOTE GUARANTEES

 

Section 11.01       Guarantee.

 

(a)          Subject to this Article 11, each of the Guarantors hereby, jointly
and severally, unconditionally guarantees to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:

 

(1)          the principal of, premium, if any, and interest on, the Notes will
be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal of and interest
on the Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and

 

(2)          in case of any extension of time of payment or renewal of any Notes
or any of such other obligations, that same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.

 

Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.

 

(b)          The Guarantors hereby agree that their obligations hereunder are
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee will not be discharged except by complete
performance of the obligations contained in the Indenture Documents.

 

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(c)          If any Holder or the Trustee is required by any court or otherwise
to return to the Company, the Guarantors or any custodian, trustee, liquidator
or other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, will be reinstated in full
force and effect.

 

(d)          Each Guarantor agrees that it will not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (1) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (2) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) will forthwith become due and payable by the Guarantors for
the purpose of this Note Guarantee. The Guarantors will have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Note Guarantee.

 

Section 11.02        Limitation on Guarantor Liability.

 

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms
that it is the intention of all such parties that the Note Guarantee of such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will be limited to the maximum amount that will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.

 

Section 11.03        Execution and Delivery of Note Guarantee.

 

Each Guarantor hereby agrees that its execution and delivery of this Indenture
or any supplemental indenture in the form of Exhibit E hereto on behalf of such
Guarantor by an Officer thereof in accordance with Section 4.17 hereof shall
evidence its Note Guarantee set forth in this Article 11 without the need for
any further notation on the Notes.

 

If an Officer whose signature is on this Indenture no longer holds that office
at the time the Trustee authenticates the Note guaranteed by any Guarantor under
its Note Guarantee, the Note Guarantee will be valid nevertheless.

 

The delivery of any Note by the Trustee, after the authentication thereof
hereunder, will constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.

 

In the event that the Company or any of its Domestic Restricted Subsidiaries
creates or acquires any Domestic Restricted Subsidiary after the date of this
Indenture, if required by Section 4.17 hereof, the Company will cause such
Domestic Restricted Subsidiary to comply with the provisions of Section 4.17
hereof and this Article 11, to the extent applicable.

 

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Section 11.04        Guarantors May Consolidate, etc., on Certain Terms.

 

Except as otherwise provided in Section 11.05 hereof, no Guarantor may sell or
otherwise dispose of all or substantially all of its assets to, or consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person) another Person, other than the Company or another Guarantor, unless:

 

(1)          immediately after giving effect to such transaction, no Default or
Event of Default exists; and

 

(2)          such sale or other disposition (which for the avoidance of doubt
shall constitute an Asset Sale or, if applicable, a Change of Control) does not
violate Section 4.10 hereof or, if such sale or disposition constitutes a Change
of Control, Section 4.15 hereof.

 

Except as set forth in Articles 4 and 5 hereof, and notwithstanding clause 2
above, nothing contained in this Indenture or in any of the Notes will prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or will prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.

 

Section 11.05       Releases.

 

(a)          In the event of any sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the Capital
Stock of any Guarantor, in each case to a Person that is not (either before or
after giving effect to such transactions) the Company or a Restricted Subsidiary
of the Company, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the Capital
Stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Note
Guarantee; provided that the sale or other disposition (which for the avoidance
of doubt shall constitute an Asset Sale or, if applicable, a Change of Control)
does not violate Section 4.10 hereof or Section 4.16 hereof or, if such sale or
disposition constitutes a Change of Control, Section 4.15 hereof. Upon delivery
by the Company to the Trustee of an Officer’s Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made by the
Company in accordance with the provisions of this Indenture, including without
limitation Section 4.10 hereof or Section 4.16 hereof or, if such sale or
disposition constitutes a Change of Control, Section 4.15 hereof, the Trustee
will execute any documents reasonably requested by the Company in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.

 

(b)          Upon the liquidation or dissolution of such Guarantor where the
assets of such Guarantor are conveyed to the Company or a Restricted Subsidiary;
provided that no Default or Event of Default shall occur as a result thereof or
has occurred and is continuing, each Guarantor will be released and relieved of
any obligations under its Note Guarantee.

 

(c)          Upon Covenant Defeasance or Legal Defeasance in accordance with
Article 8 hereof or satisfaction and discharge of this Indenture in accordance
with Article 12 hereof, each Guarantor will be released and relieved of any
obligations under its Note Guarantee.

 

Any Guarantor not released from its obligations under its Note Guarantee as
provided in this Section 11.05 will remain liable for the full amount of
principal of and interest and premium, if any, on the Notes and for the other
obligations of any Guarantor under this Indenture as provided in this Article
11.

 

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ARTICLE 12
satisfaction and discharge

 

Section 12.01        Satisfaction and Discharge.

 

This Indenture (including the obligations under Article 10 hereof) will be
discharged and will cease to be of further effect as to all Notes issued
hereunder, when:

 

(1)          either:

 

(a)          all Notes that have been authenticated, except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for whose payment
money has been deposited in trust and thereafter repaid to the Company, have
been delivered to the Trustee for cancellation; or

 

(b)          all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the sending of a notice of
redemption, are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense of, the Company, or otherwise or will
become due and payable within one year and the Company or any Guarantor has
irrevocably deposited or caused to be deposited with the Trustee as trust funds
in trust solely for the benefit of the holders, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S. dollars and
non-callable Government Securities, in amounts as will be sufficient as
determined by the Company (with an Opinion of Counsel delivered to the Trustee),
without consideration of any reinvestment of interest, to pay and discharge the
entire Indebtedness on the Notes not delivered to the Trustee for cancellation
for principal, premium, if any, and accrued interest to the date of maturity or
redemption;

 

(2)          no Default or Event of Default has occurred and is continuing on
the date of the deposit (other than a Default or Event of Default resulting from
the borrowing of funds to be applied to such deposit);

 

(3)          the Company or any Guarantor has paid or caused to be paid all sums
payable by it under this Indenture; and

 

(4)          the Company has delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the payment of the
Notes at maturity or on the redemption date, as the case may be.

 

In addition, the Company must deliver an Officer’s Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.

 

Notwithstanding the satisfaction and discharge of this Indenture, if money has
been deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section 12.01, the provisions of Sections 12.02 and 8.06 hereof will survive. In
addition, nothing in this Section 12.01 will be deemed to discharge those
provisions of Section 7.07 hereof, that, by their terms, survive the
satisfaction and discharge of this Indenture.

 

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Section 12.02        Application of Trust Money.

 

Subject to the provisions of Section 8.06 hereof, all money deposited with the
Trustee pursuant to Section 12.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 12.01 hereof by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company’s and any Guarantor’s obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 12.01 hereof; provided that if the Company has made any payment of
principal of, premium, if any, or interest on, any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities held by the Trustee or Paying Agent.

 

ARTICLE 13
MISCELLANEOUS

 

Section 13.01        Notice

 

Any notice or communication by the Company, any Guarantor or the Trustee to the
others is duly given if in writing and delivered in Person or by first class
mail (registered or certified, return receipt requested), electronic
transmission (whether facsimile or .pdf format) or overnight air courier
guaranteeing next day delivery, to the others’ address:

 

If to the Company and/or any Guarantor:

Nektar Therapeutics
455 Mission Bay Boulevard South
San Francisco, CA 94158
Attention: Gil Labrucherie, Esq

 

With a copy to:

Sidley Austin LLP
2001 Ross Avenue
Suite 3600
Dallas, Texas 75201
Attention: Christopher Gleason, Esq.

 

If to the Trustee:

 
Wilmington Trust, National Association

50 South Sixth St, Suite 1290
Minneapolis, MN 55402
Attention: Nektar Therapeutics Administrator

 

92

 

 

With a copy to:

 

Alston & Bird LLP

101 South Tryon St, Suite 4000 

Charlotte, NC 28280

Attention: Adam Smith, Esq.

 

If to the Collateral Agent:

 
TC Lending, LLC

301 Commerce Street, Suite 3300
Fort Worth, Texas 76102

Attention: Legal Compliance Department

 

With a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY 10022

Attention: Frederic L. Ragucci, Esq.

 

The Company, any Guarantor or the Trustee, by notice to the others, may
designate additional or different addresses for subsequent notices or
communications.

 

All notices and communications (other than those sent to Holders) will be deemed
to have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when receipt acknowledged, if transmitted electronically; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.

 

Any notice or communication to a Holder will be mailed by first class mail,
certified or registered, return receipt requested, or by overnight air courier
guaranteeing next day delivery to its address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Holder or any defect
in it will not affect its sufficiency with respect to other Holders.

 

Notwithstanding any other provision of this Indenture or any Note, where this
Indenture or any Note provides for notice of any event to a Holder of a Global
Note (whether by mail or otherwise), such notice shall be sufficiently given if
given to the Depositary for such Note (or its designee) pursuant to the standing
instructions from such Depositary.

 

If a notice or communication is mailed in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it.

 

If the Company mails a notice or communication to Holders, it will mail a copy
to the Trustee and each Agent at the same time.

 

93

 

 

Section 13.02        Communication by Holders of Notes with Other Holders of
Notes.

 

Holders may communicate pursuant to TIA § 312(b) with other Holders with respect
to their rights under this Indenture or the Notes. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA § 312(c).

 

Section 13.03        Certificate and Opinion as to Conditions Precedent.

 

Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:

 

(1)          an Officer’s Certificate in form and substance reasonably
satisfactory to the Trustee (which must include the statements set forth in
Section 13.04 hereof) stating that, in the opinion of such Officer, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and

 

(2)          an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which must include the statements set forth in Section 13.04
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.

 

Section 13.04        Statements Required in Certificate or Opinion.

 

Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA § 314(a)(4)) must comply with the provisions of TIA § 314(e) and
must include:

 

(1)          a statement that the Person making such certificate or opinion has
read such covenant or condition;

 

(2)          a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;

 

(3)          a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and

 

(4)          a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.

 

Section 13.05        Rules by Trustee and Agents.

 

The Trustee may make reasonable rules for action by or at a meeting of Holders.
The Registrar or Paying Agent may make reasonable rules and set reasonable
requirements for its functions.

 

Section 13.06        Force Majeure

 

In no event shall the Trustee be responsible or liable for any failure or delay
in the performance of its obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond its control, including, without
limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil
or military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer
(software and hardware) services; it being understood that the Trustee shall use
reasonable efforts which are consistent with accepted practices in the banking
industry to resume performance as soon as practicable under the circumstances.

 

94

 

 

Section 13.07        No Personal Liability of Directors, Officers, Employees and
Stockholders.

 

No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, will have any liability
for any obligations of the Company or the Guarantors under the Indenture
Documents or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. The waiver may not be effective to
waive liabilities under the federal securities laws.

 

Section 13.08        Governing Law; Waiver of Jury Trial.

 

THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE
THE INDENTURE DOCUMENTS WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY. EACH OF THE COMPANY AND THE TRUSTEE
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 13.09        No Adverse Interpretation of Other Agreements.

 

This Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

 

Section 13.10        Successors.

 

All agreements of the Company in the Indenture Documents will bind its
successors. All agreements of the Trustee in this Indenture will bind its
successors. All agreements of each Guarantor in the Indenture Documents will
bind its successors, except as otherwise provided in Section 11.05 hereof.

 

Section 13.11        Severability.

 

In case any provision in any of the Indenture Documents is invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

 

Section 13.12        Counterpart Originals.

 

The parties may sign any number of copies of this Indenture. Each signed copy
will be an original, but all of them together represent the same agreement. The
exchange of copies of this Indenture and of signature pages by facsimile or PDF
transmission shall constitute effective execution and delivery of this Indenture
as to the parties hereto and may be used in lieu of the original Indenture for
all purposes. Signature of the parties hereto transmitted by facsimile or PDF
shall be deemed to be their original signatures for all purposes.

 

95

 

 

Section 13.13        Table of Contents, Headings, etc.

 

The Table of Contents and Headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part of this Indenture and will in no way modify or restrict any of
the terms or provisions hereof.

 

Section 13.14        U.S.A. Patriot Act.

 

The parties hereto acknowledge that in accordance with Section 326 of the U.S.A.
Patriot Act, the Trustee, like all financial institutions and in order to help
fight the funding of terrorism and money laundering, is required to obtain,
verify and record information that identifies each person or legal entity that
establishes a relationship or opens an account with the Trustee. The parties to
this Indenture agree that they will provide the Trustee with such information as
it may request in order for the Trustee to satisfy the requirements of the
U.S.A. Patriot Act.

 

[Remainder of page intentionally left blank]

 

96

 

 

SIGNATURES

 

Dated as of October 5, 2015

        NEKTAR THERAPEUTICS         By:       Name:     Title:

 

 

 

 

        WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee         By:      
Name:     Title:

 

 

 

 

        TC LENDING, LLC, as Collateral Agent         By:       Name:     Title:

 

 

 

 

EXHIBIT A

 

[Face of Note]

 

CUSIP ____________

 

7.750% Senior Secured Notes due 2020

 

No. ___ $____________      [or such other principal amount as shall be set forth
in the Schedule of Exchanges of Interests in the Global Note attached hereto]1

 

NEKTAR THERAPEUTICS

 

promises to pay to [ ] or registered assigns, the principal sum of ___________
DOLLARS [or such other principal amount as shall be set forth on the Schedule of
Exchanges of Interests in the Global Note attached hereto]2 on October 5, 2020.

 

Interest Payment Dates: January 15, April 15, July 15 and October 15, commencing
October 15, 2015

 

Record Dates: October 5, 2015; thereafter, January 1, April 1, July 1 and
October 1

 

 

 

1 Insert in Global Notes.

 

2 Insert in Global Notes.

 

A-1

 

 

        NEKTAR THERAPEUTICS         By:       Name:     Title:

 

A-2

 

 

This is one of the Notes referred to in the within-mentioned Indenture:

      WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee         By:      
Authorized Signatory  

 

Dated:__________________________

 

A-3

 

 

[Back of Note]

7.750% Senior Secured Notes due 2020

 

[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]

 

[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]

 

Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

 

(1)          Interest. Nektar Therapeutics, a Delaware corporation (the
“Company”), promises to pay interest on the principal amount of this Note at
7.750% per annum from October 5, 2015 until maturity. The Company will pay
interest, quarterly in arrears on January 15, April 15, July 15 and October 15
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each, an “Interest Payment Date”). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided further that the first Interest Payment Date shall be
October 15, 2015. The Company will pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 2% per annum in
excess of the rate then in effect to the extent lawful; it will pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year for the actual number
of days elapsed.

 

(2)          Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Paying Agent on behalf of the Persons who are
registered Holders of Notes at the close of business on the January 1, April 1,
July 1 or October 1 next preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest may be made by check mailed to the Trustee, for the
benefit of the Holders, at the Trustee’s address set forth in the Indenture;
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium on, all Global Notes
and all other Notes for which wire transfer instructions have been provided by
the Trustee to the Company or the Paying Agent. Such payment will be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

 

(3)          Paying Agent and Registrar. Initially, Wilmington Trust, National
Association, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act as Registrar.

 

(4)          Indenture. The Company issued the Notes under an Indenture dated as
of October 5, 2015 (the “Indenture”) among the Company, the Trustee and the
Collateral Agent. The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the TIA. The Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. To the extent any provision of this Note
conflicts with the express provisions of the Indenture, the provisions of the
Indenture shall govern and be controlling. The Notes are secured obligations of
the Company.

 

A-4

 

 

(5)          Optional Redemption.

 

(a)          At any time prior to October 5, 2017, upon the redemption of all or
a part of the Notes for any reason (including, but not limited to, any
redemption after the occurrence of an Event of Default or after acceleration of
the Notes including in connection with the commencement of any proceeding
pursuant to any Bankruptcy Law), the Company shall pay a redemption price equal
to 100% of the principal amount of Notes redeemed plus the Make-Whole Premium as
of, and accrued and unpaid interest, if any, to the date of redemption, subject
to the rights of holders of Notes on the relevant record date to receive
interest due on the relevant interest payment date occurring on or prior to the
redemption date.

 

(b)          Any redemption of Notes at the option of the Company shall be upon
note less than 30 nor more than 60 days’ prior notice.

 

(c)          On or after October 5, 2017, upon the redemption of all or a part
of the Notes for any reason (including, but not limited to, any redemption after
the occurrence of an Event of Default or after acceleration of the Notes
including in connection with the commencement of any proceeding pursuant to any
Bankruptcy Law), the Company shall pay the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest, if any, on the Notes redeemed, to the applicable redemption date, if
redeemed during the twelve-month period beginning on October 5 of the years
indicated below, subject to the rights of holders of Notes on the relevant
record date to receive interest on the relevant interest payment date occurring
on or prior to the redemption date:

 

Year   Percentage 2017 104% 2018 102% 2019 100%

 

 

Unless the Company defaults in the payment of the redemption price, interest
will cease to accrue on the Notes or portions thereof called for redemption on
the applicable redemption date.

 

Without limiting the generality of the foregoing, it is understood and agreed
that if the Obligations are accelerated for any reason, including because of an
Event of Default, the sale, disposition or encumbrance (including that by
operation of law or otherwise) as a result of an Event of Default or the
commencement of any proceeding pursuant to any Bankruptcy Law, the Make-Whole
Premium, if any, and Prepayment Premium, if any, determined as of the date of
acceleration will also be due and payable as though said Indebtedness was
voluntarily prepaid as of such date and shall constitute part of the
Obligations, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of each Holder’s lost profits as a result thereof. Any
Make-Whole Premium and Prepayment Premium payable in accordance with the
immediately preceding sentence shall be presumed to be the liquidated damages
sustained by each Holder as the result of the early redemption and the Company
agrees that it is reasonable under the circumstances currently existing. The
Make-Whole Premium, if any, and Prepayment Premium, if any, shall also be
payable (i) in the event the Obligations (and/or the Indenture or the Notes
evidencing the Obligations) are satisfied or released by foreclosure (whether by
power of judicial proceeding), deed in lieu of foreclosure or by any other means
and/or (ii) upon the satisfaction, release, payment, restructuring,
reorganization, replacement, reinstatement, defeasance or compromise of any of
the Obligations (and/or the Indenture or the Notes evidencing the Obligations)
in any proceeding pursuant to any Bankruptcy Law, foreclosure (whether by power
of judicial proceeding or otherwise), deed in lieu of foreclosure or by any
other means or the making of a distribution of any kind in any proceeding
pursuant to any Bankruptcy Law to the Collateral Agent, for the account of the
Holders, in full or partial satisfaction of the Obligations. THE COMPANY
EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT
PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING MAKE-WHOLE PREMIUM AND
PREPAYMENT PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION INCLUDING IN
CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY ACCELERATION OF THE OBLIGATIONS
PURSUANT TO ANY PROCEEDING PURSUANT TO ANY BANKRUPTCY LAW OR PURSUANT TO A PLAN
OF REORGANIZATION. The Company expressly agrees that: (A) the Make-Whole Premium
and Prepayment Premium are reasonable and are the product of an arm’s length
transaction between sophisticated business people, ably represented by counsel;
(B) the Make-Whole Premium and Prepayment Premium shall be payable
notwithstanding the then prevailing market rates at the time payment is made;
(C) there has been a course of conduct between Holders and the Company giving
specific consideration in this transaction for such agreement to pay the
Make-Whole Premium and Prepayment Premium; and (D) the Company shall be estopped
hereafter from claiming differently than as agreed to in this paragraph. The
Company expressly acknowledges that its agreement to pay the Make-Whole Premium
and Prepayment Premium to the Holders as herein described is a material
inducement to Holders to purchase the Notes.

 

A-5

 

 

(6)          Mandatory Redemption.

 

The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.

 

(7)          Repurchase at the Option of Holder.

 

(a)          If there is a Change of Control, the Company shall not consummate
the Change of Control unless at least 30 days prior to the Change of Control, it
has made an offer (a “Change of Control Offer”) to each Holder to repurchase all
or any part (equal to $2,000 or an integral multiple of $1,000 in excess
thereof) of each Holder’s Notes at a purchase price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest thereon to
the date of purchase, subject to the rights of Holders on the relevant record
date to receive interest due on the relevant interest payment date occurring on
or prior to the redemption date (the “Change of Control Payment”); provided that
if the Change of Control Payment Date is the date of consummation of the Change
of Control, the payment for the repurchase of Notes will be made at a time no
later than substantially concurrently with the consummation of such Change of
Control. The Company will mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture
within the time periods required by the Indenture.

 

(b)          If the Company consummates any Asset Sales or Applicable
Transactions (other than any Royalty Transaction which is subject to Section
4.16 of the Indenture), within five Business Days of each date on which the
aggregate amount of Excess Proceeds exceeds $2.5 million, the Company will
commence an offer to all Holders of Notes (an “Asset Sale Offer”) pursuant to
Section 3.10 of the Indenture to purchase the maximum principal amount of Notes
that may be purchased out of the Excess Proceeds at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Restricted Subsidiary) may use such deficiency
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes tendered into such Asset Sale Offer exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be purchased on a pro
rata basis, subject to the applicable procedures of the Depositary. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled “Option of Holder to Elect
Purchase” attached to the Notes.

 

A-6

 

 

(c)          Within five Business Days of the receipt of any Net Proceeds of any
Royalty Transaction newly entered into by the Company or any of its Restricted
Subsidiaries following the date of the Indenture, the Company shall send a
notice describing the applicable Royalty Transaction and offering to repurchase
Notes (such offer, a “Royalty Transactions Repurchase Offer”) in an amount of
not less than 50% of such Net Proceeds, at a price of 101% of the principal
amount, plus accrued and unpaid interest, if any, to the Repurchase Date. The
Royalty Transactions Repurchase Offer shall be made to all Holders and will
remain open for a period of at least 20 Business Days following its commencement
and not more than 30 Business Days, except to the extent that a longer period is
required by applicable law (the “Royalty Transactions Repurchase Offer Period”).
No later than three Business Days after the termination of the Royalty
Transactions Repurchase Offer Period (the “Repurchase Date”), the Company will
apply not less than 50% of such Net Proceeds (the “Royalty Transactions
Repurchase Offer Amount”) to the purchase of Notes or, if less than the Royalty
Transactions Repurchase Offer Amount has been tendered, all Notes tendered in
response to the Royalty Transactions Repurchase Offer. Payment for any Notes so
purchased will be made in the same manner as interest payments are made. If
there are Excess Royalty Proceeds, such Excess Royalty Proceeds shall be subject
to the reinvestment and application provisions set forth in Section 4.16 of the
Indenture with respect to such Excess Royalty Proceeds.

 

(8)          Notice of Redemption. Notice of redemption will be given at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address, except that redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in connection with a defeasance of the Notes or a satisfaction or
discharge of the Indenture. Notes in denominations larger than $2,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed.

 

(9)          Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $2,000 and integral multiples of $1,000 in
excess thereof. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before the mailing of a notice of redemption or during
the period between a record date and the corresponding Interest Payment Date.

 

(10)        Persons Deemed Owners. The registered Holder of a Note shall be
treated as its owner for all purposes.

 

A-7

 

 

(11)          Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Note Guarantees may be amended or supplemented
with the consent of the Holders of at least 50.1% in aggregate principal amount
of the then outstanding Notes voting as a single class, and any existing Default
or Event or Default or compliance with any provision of the Indenture, the Notes
or the Note Guarantees may be waived with the consent of the Holders of at least
50.1% in aggregate principal amount of the then outstanding Notes voting as a
single class. Without the consent of any Holder of a Note, the Indenture, the
Notes or the Note Guarantees may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company’s or a Guarantor’s obligations to Holders of the Notes and Note
Guarantees in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder or to allow any Guarantor to execute a supplemental indenture to the
Indenture and/or a Note Guarantee with respect to the Notes or to release a
Guarantor from its Note Guarantee in accordance with the terms of the Indenture.

 

(12)          Defaults and Remedies. Events of Default include: (i) default for
5 days in the payment when due of interest on the Notes; (ii) default in the
payment when due (at maturity, upon redemption or otherwise) of the principal
of, or premium, if any, on, the Notes; (iii) (x)failure by the Company or any of
its Restricted Subsidiaries to comply with the provisions of Sections
2.06(b)(4), 3.10, 4.10, 4.15, 4.16, 4.22, 4.24 or 5.01 of the Indenture or
Section 4(q) of the Security Agreement, (y) failure by the Company or any of its
Restricted Subsidiaries to comply with the provisions of Sections 4.07, 4.08,
4.09, 4.12 or 4.21 hereof and such default continues for a period of 5 Business
Days after the earlier of the date an Executive Officer (as defined in the
Securities Act) of the Company has knowledge of such failure and the date
written notice of such default has been given by the Trustee or the Collateral
Agent to the Company or (z) failure by the Company or any of its Restricted
Subsidiaries to comply with the provisions of Section 4.03(f), 4.03(g), 4.03(h)
or 4.03(i) of the Indenture, and such default continues for a period of 20 days;
(iv) failure by the Company or any of its Restricted Subsidiaries for 60 days
after notice to the Company by the Trustee, the Collateral Agent or the holders
of at least 25% in aggregate principal amount of the Notes then outstanding
voting as a single class to comply with any of the other agreements in the
Indenture Documents; (v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness (other than Indebtedness owed to the Company or any Restricted
Subsidiary of the Company) for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now
exists, or is created after the date of the indenture, if that default meets
certain criteria set forth in the Indenture; (vi) failure by the Company or any
of its Restricted Subsidiaries to pay final judgments entered by a court or
courts of competent jurisdiction aggregating in excess of $15.0 million (net of
any amounts that a reputable and creditworthy insurance company has acknowledged
liability for in writing), which judgments are not paid, discharged or stayed
within a period of 60 days of the entry thereof; (vii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary (or
such events in respect of Restricted Subsidiaries that are not Significant
Subsidiaries to the extent they have had or would reasonably be expected to
result in a Material Adverse Effect); (viii) except as permitted by the
Indenture and the Collateral Documents, with respect to any assets or property
having a Fair Market Value in excess of $2.5 million, individually or in the
aggregate, that constitutes or, under the indenture or the Collateral Documents
is required to constitute, Collateral, (a) any of the Collateral Documents shall
for any reason cease to be in full force and effect in all material respects, or
the Company or a Guarantor shall so assert, or (b) any security interest
created, or purported to be created, by any of the Collateral Documents shall
cease to be enforceable and of the same effect and priority purported to be
created thereby, except in each case solely as a result of the Collateral Agent
taking or refraining from taking any action in its sole control; (ix) except as
permitted by the Indenture, any Note Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in full
force and effect, or any Guarantor, or any Person acting on behalf of any
Guarantor, denies or disaffirms its obligations under its Note Guarantee; (x)
any order, judgment or decree shall be entered against the Company or any of its
Restricted Subsidiaries decreeing the dissolution or split up of the Company or
such Restricted Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of thirty days; (xi) (A) the loss, suspension or
revocation of, or failure to renew, any material license (it being understood
that any licenses under the applicable Collaboration Agreements for any
Specified Drugs shall not constitute material licenses for purposes of this
clause (xi)(A) unless the loss, suspension or revocation of, or failure to
renew, any licenses under the applicable Collaboration Agreements for any
Specified Drugs results from a breach under such agreements by the Company or
any of its Restricted Subsidiaries) or material permit with respect to any
Specified Drug now held or hereafter acquired by the Company or any of its
Restricted Subsidiaries or (B) the loss, suspension or revocation of, or failure
to renew, any material license or material permit other than with respect to any
Specified Drug now held or hereafter acquired by the Company or any of its
Restricted Subsidiaries, if, in the case of this clause (B), such loss,
suspension, revocation or failure to renew could reasonably be expected to have
a Material Adverse Effect; and (xii) the indictment of the Company or any of its
Restricted Subsidiaries under any criminal statute, or commencement of criminal
or civil proceedings against the Company or any of its Restricted Subsidiaries
pursuant to which statute or proceedings the penalties actually sought include
forfeiture to any governmental authority of any material portion of the property
of the Company and its Restricted Subsidiaries, taken as a whole, constituting
Collateral.

 

A-8

 

 

If any Event of Default occurs and is continuing, the Trustee or the Holders of
at least 50.1% in aggregate principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of at least 50.1% in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest or premium, if any,) if it determines that
withholding notice is in their interest. The Holders of at least 50.1% in
aggregate principal amount of the then outstanding Notes by notice to the
Trustee may, on behalf of the Holders of all of the Notes, rescind an
acceleration or waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest or premium, if any, on, or the principal of, the
Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required, upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

 

(13)          Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

 

A-9

 

 

(14)          No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, will have any liability for any obligations of the Company or the
Guarantors under the Indenture Documents or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes. The waiver may not be
effective to waive liabilities under the federal securities laws.

 

(15)          Authentication. This Note will not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

 

(16)          Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

 

(17)          CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption, and reliance may be placed only on the
other identification numbers placed thereon.

 

(18)          GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL
GOVERN AND BE USED TO CONSTRUE THE INDENTURE DOCUMENTS WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

The Company will furnish to any Holder upon written request and without charge a
copy of the Indenture. Requests may be made to:

 

Nektar Therapeutics
455 Mission Bay Boulevard South
San Francisco, CA 94158
Attention: Gil Labrucherie, Esq

 

A-10

 

 

Assignment Form

 

To assign this Note, fill in the form below:

      (I) or (we) assign and transfer this Note to:     (Insert assignee’s legal
name)   (Insert assignee’s soc. sec. or tax I.D. no.)         (Print or type
assignee’s name, address and zip code)     and irrevocably appoint   to transfer
this Note on the books of the Company. The agent may substitute another to act
for him.

 

Date: _______________

 

  Your Signature:     (Sign exactly as your name appears on the face of this
Note)

 

Signature Guarantee*: _________________________

 

*          Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

 

A-11

 

 

Option of Holder to Elect Purchase

 

If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10, 4.15 or 4.16 of the Indenture, check the appropriate box below:

 

¬Section 4.10¬Section 4.15¬Section 4.16

 

If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10, 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:

 

$_______________

 

Date: _______________

 

  Your Signature:         (Sign exactly as your name appears on the face of this
Note)   Tax Identification No.:          

 

Signature Guarantee*: _________________________

 

*          Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

 

A-12

 

 

Schedule of Exchanges of Interests in the Global Note *

 

The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:

 

Date of Exchange   Amount of decrease in
Principal Amount
of
this Global Note   Amount of increase in
Principal Amount
 of
this Global Note   Principal Amount
of this Global Note
following such
decrease
(or increase)   Signature of authorized
signatory of Trustee or
Custodian

 

*This schedule should be included only if the Note is issued in global form.

 

A-13

 

 

EXHIBIT B

 

FORM OF CERTIFICATE OF TRANSFER

 

Nektar Therapeutics
455 Mission Bay Boulevard South
San Francisco, CA 94158

 

Wilmington Trust, National Association,

as Trustee and Registrar

50 South Sixth St, Suite 1290
Minneapolis, MN 55402

 

Re: 7.750% Senior Secured Notes due 2020

 

Reference is hereby made to the Indenture, dated as of October 5, 2015 (the
“Indenture”), between, Nektar Therapeutics, as issuer (the “Company”) and
Wilmington Trust, National Association, as trustee (in such capacity, the
“Trustee”) and TC Lending, LLC, as collateral agent (in such capacity, the
“Collateral Agent”). Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.

 

___________________, (the “Transferor”) owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the “Transfer”),
to ___________________________ (the “Transferee”), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:

 

[CHECK ALL THAT APPLY]

 

1. ¨ Check if Transferee will take delivery of a beneficial interest in the 144A
Global Note or a Restricted Definitive Note pursuant to Rule 144A. The Transfer
is being effected pursuant to and in accordance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the
Transferor hereby further certifies that the beneficial interest or Definitive
Note is being transferred to a Person that the Transferor reasonably believes is
purchasing the beneficial interest or Definitive Note for its own account, or
for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a “qualified
institutional buyer” within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A, and such Transfer is in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the 144A Global Note and/or the Restricted Definitive Note and
in the Indenture and the Securities Act.

 

2. ¨ Check if Transferee will take delivery of a beneficial interest in the
Regulation S Global Note or a Restricted Definitive Note pursuant to Regulation
S. The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a Person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act and (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Restricted
Definitive Note and in the Indenture and the Securities Act.

 

B-1

 

 

3. ¨ Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Restricted Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):

 

(a)          ¨ such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;

 

or

 

(b)          ¨ such Transfer is being effected to the Company or a subsidiary
thereof;

 

or

 

(c)          ¨ such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;

 

or

 

(d)          ¨ such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the
Transferor hereby further certifies that it has not engaged in any general
solicitation within the meaning of Regulation D under the Securities Act and the
Transfer complies with the transfer restrictions applicable to beneficial
interests in a Restricted Global Note or Restricted Definitive Notes and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the effect
that such Transfer is in compliance with the Securities Act. Upon consummation
of the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Note and/or the Restricted Definitive Notes and in the Indenture
and the Securities Act.

 

4. ¨ Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.

 

(a) ¨ Check if Transfer is pursuant to Rule 144. (i) The Transfer is being
effected pursuant to and in accordance with Rule 144 under the Securities Act
and in compliance with the transfer restrictions contained in the Indenture and
(ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.

 

B-2

 

 

(b) ¨ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being
effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.

 

(c) ¨ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is
being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and (ii) the restrictions on transfer contained in the Indenture and
the Private Placement Legend are not required in order to maintain compliance
with the Securities Act. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.

 

This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

 

          [Insert Name of Transferor]         By:       Name:     Title:

 

Signature Guarantee*: _________________________

 

*          Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).

 

Dated: _______________________

 

B-3

 

 

ANNEX A TO CERTIFICATE OF TRANSFER

 

1.          The Transferor owns and proposes to transfer the following:

 

[CHECK ONE OF (a) OR (b)]

 

(a)   ¨ a beneficial interest in the:

 

(i)          ¨ 144A Global Note (CUSIP _________), or

 

(ii)         ¨ Regulation S Global Note (CUSIP _________), or

 

(iii)        ¨ IAI Global Note (CUSIP _________); or

 

(b)   ¨ a Restricted Definitive Note.

 

2.          After the Transfer the Transferee will hold:

 

[CHECK ONE]

 

(a)   ¨ a beneficial interest in the:

 

(i)          ¨ 144A Global Note (CUSIP _________), or

 

(ii)         ¨ Regulation S Global Note (CUSIP _________), or

 

(iii)        ¨ IAI Global Note (CUSIP _________); or

 

(iv)        ¨ Unrestricted Global Note (CUSIP _________); or

 

(b)   ¨ a Restricted Definitive Note; or

 

(c)   ¨ an Unrestricted Definitive Note,

 

in accordance with the terms of the Indenture.

 

B-4

 

 

EXHIBIT C

 

FORM OF CERTIFICATE OF EXCHANGE

 

Nektar Therapeutics
455 Mission Bay Boulevard South
San Francisco, CA 94158

 

Wilmington Trust, National Association,

as Trustee and Registrar

50 South Sixth St, Suite 1290
Minneapolis, MN 55402

 

Re: 7.750% Senior Secured Notes due 2020

 

(CUSIP ____________)

 

Reference is hereby made to the Indenture, dated as of October 5, 2015 (the
“Indenture”), between, Nektar Therapeutics, as issuer (the “Company”) and
Wilmington Trust, National Association, as trustee (in such capacity, the
“Trustee”) and TC Lending, LLC, as collateral agent (in such capacity, the
“Collateral Agent”). Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.

 

__________________________, (the “Owner”) owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the “Exchange”). In connection with
the Exchange, the Owner hereby certifies that:

 

1.          Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note

 

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to beneficial interest in an Unrestricted Global Note. In connection with the
Exchange of the Owner’s beneficial interest in a Restricted Global Note for a
beneficial interest in an Unrestricted Global Note in an equal principal amount,
the Owner hereby certifies (i) the beneficial interest is being acquired for the
Owner’s own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with the Securities Act of 1933, as amended (the
“Securities Act”) and (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act.

 

(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Definitive Note is being acquired for
the Owner’s own account without transfer, (ii) such Exchange has been effected
in compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

 

(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner’s Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner’s own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

 

C-1

 

 

(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted
Definitive Note. In connection with the Owner’s Exchange of a Restricted
Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies
(i) the Unrestricted Definitive Note is being acquired for the Owner’s own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

 

2.          Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes

 

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note
to Restricted Definitive Note. In connection with the Exchange of the Owner’s
beneficial interest in a Restricted Global Note for a Restricted Definitive Note
with an equal principal amount, the Owner hereby certifies that the Restricted
Definitive Note is being acquired for the Owner’s own account without transfer.
Upon consummation of the proposed Exchange in accordance with the terms of the
Indenture, the Restricted Definitive Note issued will continue to be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Definitive Note and in the Indenture and the Securities Act.

 

(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial
interest in a Restricted Global Note. In connection with the Exchange of the
Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
¨ 144A Global Note, ¨ Regulation S Global Note, ¨ IAI Global Note with an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner’s own account without transfer and (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.

 

This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

 

          [Insert Name of Transferor]         By:       Name:     Title:

 

C-2

 

 

Signature Guarantee*: _________________________

 

*                    Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor acceptable to the Trustee).

 

Dated: ______________________

 

C-3

 

 

EXHIBIT D

 

FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

 

Nektar Therapeutics
455 Mission Bay Boulevard South
San Francisco, CA 94158

 

Wilmington Trust, National Association,

as Trustee and Registrar

50 South Sixth St, Suite 1290
Minneapolis, MN 55402

 

Re: 7.750% Senior Secured Notes due 2020

 

Reference is hereby made to the Indenture, dated as of October 5, 2015 (the
“Indenture”), between, Nektar Therapeutics, as issuer (the “Company”) and
Wilmington Trust, National Association, as trustee (in such capacity, the
“Trustee”) and TC Lending, LLC, as collateral agent (in such capacity, the
“Collateral Agent”). Capitalized terms used but not defined herein shall have
the meanings given to them in the Indenture.

 

In connection with our proposed purchase of $____________ aggregate principal
amount of:

 

(a) ¨ a beneficial interest in a Global Note, or

 

(b) ¨ a Definitive Note,

 

we confirm that:

 

1.          We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the Securities Act of
1933, as amended (the “Securities Act”).

 

2.          We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a “qualified institutional
buyer” (as defined therein), (C) to an institutional “accredited investor” (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144 under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any Person purchasing the Definitive Note or beneficial interest in a Global
Note from us in a transaction meeting the requirements of clauses (A) through
(D) of this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.

 

D-1

 

 

3.          We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications and, except in the case of a resale pursuant to Rule
144 under the Securities Act, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes purchased
by us will bear a legend to the foregoing effect.

 

4.          We are an institutional “accredited investor” (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment. We [are] [are not] a Competitor or Specified Entity.

 

5.          We are acquiring the Notes or beneficial interest therein purchased
by us for our own account or for one or more accounts (each of which is an
institutional “accredited investor”) as to each of which we exercise sole
investment discretion; provided that, by making such representations, we do not
agree to hold any of the Notes for any minimum or other specific term and
reserve the right to dispose of the Notes at any time in accordance with an
exemption under the Securities Act or pursuant to an effective registration
statement thereunder.

 

You and the Company are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.

 

          [Insert Name of Accredited Investor]         By:       Name:    
Title:

 

Signature Guarantee*: _________________________

 

*                              Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor acceptable to the Trustee).

 

Dated: _______________________

 

D-2

 

 

EXHIBIT E

 

[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS]

 

THIS [______] Supplemental Indenture (this “Supplemental Indenture”), dated as
of ________________, 20__, among __________________ (the “Guaranteeing
Subsidiary”), a [direct or indirect] domestic subsidiary of Nektar Therapeutics
(or its permitted successor), a Delaware corporation (the “Company”), the
Company, the other Guarantors (as defined in the Indenture referred to herein)
and Wilmington Trust, National Association, as trustee (the “Trustee”) under the
Indenture referred to below.

 

W I T N E S S E T H

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee an
indenture (the “Indenture”), dated as of October 5, 2015 providing for the
issuance of 7.750% Senior Secured Notes due 2020 (the “Notes”);

 

WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company’s Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the “Note Guarantee”); and

 

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to
execute and deliver this Supplemental Indenture.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

 

1.          Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.

 

2.          Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees to
provide an unconditional Guarantee on the terms and subject to the conditions
set forth in the Note Guarantee and in the Indenture including but not limited
to Article 11 thereof.

 

4.          No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver may
not be effective to waive liabilities under the federal securities laws and it
is the view of the SEC that such a waiver is against public policy.

 

5.          NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

 

6.          Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

 

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7.          Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.

 

8.          The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed, all as of the date first above written.

          [Guaranteeing Subsidiary]       By:         Name:       Title:        
    NEKTAR THERAPEUTICS           By:         Name:       Title:            
[Existing Guarantors]           By:         Name:       Title:            
WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee           By:         Name:  
    Title:  

 

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